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Inventory Visibility inventory allocation

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Business background and purpose

Organizations often have to preallocate their on-hand stock to their most important sales channels, customer groups, regions, and promotional events to ensure that the preallocated stock is protected against any other use and can be consumed only via sales transactions that are relevant to the allocation. Inventory allocation in Inventory Visibility is a component of the sales operational planning process, and is done before any actual sales activities occur or a sales order is created.

For example, a company that's named Contoso produces a popular bike. Unfortunately, because a recent supply chain disruption has affected all in-transit stock of that bike, Contoso has only limited on-hand stock and must make best use of it. Contoso operates both online and in-store sales. In each sales channel, the company has a few important corporate partners (marketplaces and large retailers) that demand that a specific portion of the bike's available inventory be saved for them. Therefore, the bicycle company must be able to balance stock distribution across channels and also manage the expectations of its VIP partners. The best way to achieve both goals is to use inventory allocation, so that each channel and retailer can receive specific allocated quantities that can be sold to consumers later.

Inventory allocation has two basic business purposes:

  • Inventory protection (ring fencing) – Organizations want to preallocate restricted or limited stock to prioritized channels, regions, VIP customers, and subsidiary companies. The Inventory Visibility allocation feature aims to protect the allocated inventory, so that the other allocations, reservations, or other sales demands won't affect the previously allocated inventory.
  • Oversell control – The Inventory Visibility allocation feature aims to put a restriction on the previously allocated quantities, so that the receiving party (for example, a channel or customer group) won't over-consume them when the actual sales transaction that's based on a soft reservation goes into effect.

Allocation definition in Inventory Visibility Service

Allocation virtual pool

Although the allocation feature in Inventory Visibility doesn't set aside physical inventory quantities, it does refer to the available physical inventory quantity to define its initial available to allocate virtual pool quantity. Inventory allocation in Inventory Visibility is a soft allocation. It's done before actual sales transactions occur and doesn't depend on sales orders. For example, you can allocate stock to your most important sales channels or large corporate retailers before any end customers visit the sales channel or retail store to purchase it.

Difference between inventory allocation and soft reservation

Soft reservations are often linked to actual sales transactions (sales order lines). Both allocation and soft reservation can be used independently, but if you want to use them together, soft reservation should be done after allocation. We recommend that you do inventory allocation first and then soft reserve against the allocated quantities to achieve near-real-time consumption against allocation. For more information, see the Consume as a soft reservation section of this article.

The inventory allocation feature lets sales planners or key account managers manage and preallocate important stock across allocation groups (such as channels, regions, and customer groups). It also supports real-time tracking, adjustment, and analytics of consumption against allocated quantities, to ensure that replenishment or reallocation can be done on time. This ability to have real-time visibility into allocation, consumption, and allocation balance is especially important at fast-sale or promotion events.

Terminology

The following terms and concepts are useful in discussions of inventory allocation:

  • Allocation group – The group that owns the allocation, such as a sales channel, customer group, or order type.
  • Allocation group name – The name of each allocation group. For example, web or store might be the name of the sales channel allocation group, whereas VIP or normal might be the name of the customer allocation group.
  • Allocation hierarchy – A means to combine allocation groups in a hierarchical manner. A maximum of eight levels of hierarchy are supported. In Microsoft Power Apps, on the Allocation configuration page for Inventory Visibility, they're labeled Group0 to Group7. For example, you could define Channel as hierarchy level 1 (Group0), Region as level 2 (Group1), and Customer group as level 3 (Group2). During inventory allocation, you must follow the allocation hierarchy sequence when you specify the value of the allocation group. For example, you could create an allocation of 200 red bikes to the Web channel, the London region, and the VIP customer group.
  • Available to allocate – The virtual common pool that indicates the quantity that's available for further allocation. It's a calculated measure that you can freely define by using your own formula. If you're also using the soft reservation feature, we recommend that you use the same formula to calculate available-to-allocate and available-to-reserve.
  • Allocated – A physical measure that shows the allocated quota that can be consumed by the allocation groups. It's deducted at the same time that the consumed quantity is added.
  • Consumed – A physical measure that indicates that quantities that have been consumed against the original allocated quantity. As numbers are added to this physical measure, the Allocated physical measure is automatically reduced.

The following illustration shows the business workflow for inventory allocation.

Inventory Visibility allocation business workflow.

The following illustration shows the allocation hierarchy and allocation groups. The virtual common pool shown here is the available-to-allocate quantity.

Inventory Visibility allocation hierarchy.

Turn on and set up inventory allocation in UI version 2

This section applies when you're using Inventory Visibility UI version 2.

To set up inventory allocation, you must complete the following tasks, which are described in the subsections of this section:

  • Enable the allocation feature, and update the configuration to initialize it.
  • Set up the available to allocate calculated measure (and include the allocated physical measure in the calculation).
  • Set up your allocation groups.
  • Update the configuration to activate your new settings.

Enable the inventory allocation feature

Follow these steps to enable the inventory allocation feature.

  1. In Power Apps, open the Inventory Visibility app.

  2. On the navigation pane, select Feature Management.

  3. On the Inventory allocation tile, select Manage.

  4. Set the Enable feature option to Yes.

  5. On the toolbar, select Save.

  6. On the navigation pane, select Admin Settings.

  7. On the Update configuration tile, select Manage.

  8. Review your modifications in the dialog box.

    Important

    Be sure to verify all the important modifications that are about to be made to your data sources, physical measures, and dimension mappings.

  9. Select Confirm Update to apply your configuration change.

Set up the available to allocate calculated measure

When you enable the inventory allocation feature and update the configuration as described in the previous section, Inventory Visibility creates one predefined data source and several initial measures.

The data source is named @iv. It includes the following set of default physical measures:

  • @allocated
  • @cumulative_allocated
  • @consumed
  • @cumulative_consumed

To use allocation, you must correctly set up the formula for the available-to-allocate calculated measure (*@iv.@available\_to\_allocate*). For example, you have the onordered physical measure in the fno data source and the inbound physical measure in the pos data source. You can then allocate on-hand stock for the sum of fno.onordered and pos.inbound. In this case, *@iv.@available\_to\_allocate* should contain pos.inbound and fno.onordered in the formula. Here's an example calculation:

*@iv.@available\_to\_allocate* = fno.onordered + pos.inbound – *@iv.@allocated*

Note

The @iv data source is a predefined data source, and the physical measures in @iv that have an at sign (@) as a prefix are predefined measures. These measures are a predefined configuration for the allocation feature. Therefore, don't change or delete them. Otherwise, you're likely to encounter unexpected errors when you use the allocation feature.

You can add new physical measures to the predefined *@iv.@available\_to\_allocate* calculated measure. However, you must not change its name.

Follow these steps to set up the available to allocate calculated measure:

  1. In the Inventory Visibility app, select Feature Management on the navigation pane.
  2. On the Data source settings tile, select Manage.
  3. Open the data source that's named @iv.
  4. In the Calculated Measures section, open the record that's named @available_to_allocate if it exists. Otherwise, create a record where the Calculated measure name value is @available_to_allocate, and Save the new record.
  5. In the Calculated measure details section, add the physical measures that you want to use to calculate your available-to-allocate quantities. Be sure to include the *@iv.@allocated* physical measure in the formula.

Set up your allocation groups and hierarchy

Every allocation that's created in Inventory Visibility must be assigned to a specific allocation group. You can create up to eight allocation groups, each of which has a name and a level. You must assign a level to establish a group hierarchy.

Each level is defined as an integer from 0 (zero) through 7 that corresponds to Group0 through Group7 in the group hierarchy. The level determines the order in which the groups are used in the allocation hierarchy. The group that's assigned to level 0 is the highest level in the hierarchy, and the group that's assigned to level 7 is the lowest level in the hierarchy.

When you create an allocation, you must specify hierarchies in order from the highest level to the lowest level. For example, your configuration has Country/region for Group0, State for Group1, and City for Group2. In this case, both Country/region and State are required when City is specified. However, an allocation can be created by using only Country/region and State, or by using only Country/region.

Follow these steps to set up your allocation groups and hierarchy.

  1. In the Inventory Visibility app, select Feature Management on the navigation pane.
  2. On the Inventory allocation tile, select Manage.
  3. In the Allocation group section, use the New allocation group button on the toolbar to add a row for each allocation group that you need. Assign a level between 0 and 7. To edit an existing group, select its name in the Allocation group name column.
  4. On the toolbar at the top of the page, select Save.

Important

Be careful when you delete or change the allocation hierarchy. For guidance, see the Tips for using allocation section.

Update the configuration to activate your new settings

After you've finished updating your configuration, you must apply the changes to activate them.

  1. In the Inventory Visibility app, select Admin Settings on the navigation pane.

  2. On the Update configuration tile, select Manage.

  3. Review your modifications in the dialog box.

    Important

    Be sure to verify all the important modifications that are about to be made to your data sources, physical measures, and dimension mappings.

  4. Select Confirm Update to apply your configuration changes.

Turn on and set up inventory allocation in UI version 1

This section applies when you're using Inventory Visibility UI version 1.

Follow these steps to enable inventory allocation and set up allocation groups if you're using UI version 1.

  1. Enable the inventory allocation feature.

    1. Go to Legacy UI > Configuration.
    2. On the Feature Management & Settings tab, turn on the feature that's named Inventory Allocation.
    3. Select Update configuration in the upper-right corner to apply the new setting.

  2. Configure the available to allocate calculated measure and the allocated physical measure.

    1. On the Calculated Measure tab, review the initial calculated measure, which is named *@iv.@available\_to\_allocate*.
    2. Edit the formula to meet your business needs by adding and removing physical measures. Be sure to include the *@iv.@allocated* physical measure in the formula.

  3. Set up your allocation groups and hierarchy.

    1. Select the Allocation tab.
    2. In the default allocation configuration, there are four levels of hierarchy. These levels, from highest to lowest, are Channel (Group0), customerGroup (Group1), Region (Group2), and OrderType (Group3). You can edit the groups by working in the Edit configuration field. To remove an existing allocation group, select the X next to its name. To add an allocation group, enter the name directly in the Edit configuration field.
    3. When you've finished editing the groups, select Save.

  4. Update the configuration to activate your new settings.

    • When you've finished configuring the allocation group and hierarchy settings, select Save, and then select Update Configuration in the upper-right corner.

The values of the configured allocation groups will be updated when you create an allocation by using either the user interface or API POST (/api/environment/{environmentId}/allocation/allocate). Details about both approaches are provided later in this article. If you use four group names and set them to [channel, customerGroup, region, orderType], these names will be valid for allocation-related requests when you call the configuration update API.

Note

Settings that are applied for the enabled status of the allocation feature and for allocation groups in UI version 1 don't affect the corresponding settings in UI version 2. Likewise, setting for the enabled status and allocation groups in UI version 2 don't affect the corresponding settings in UI version 1. Only those settings that are applied in the active UI version apply.

Important

Be careful when you delete or change the allocation hierarchy. For guidance, see the Tips for using allocation section.

Tips for using allocation

  • For every product, the allocation function must use the same dimension level according to the on-hand index configuration that's set up in the on-hand index configuration. For example, your index hierarchy is [Site, Location, Color, Size]. You allocate some quantity for one product at the [Site, Location, Color] dimension level. In this case, the next time that you want to allocate the same product, you must allocate at the same level. If you use the [Site, Location, Color, Size] level or the [Site, Location] level, the data will be inconsistent.
  • When you modify allocation groups and the hierarchy, if allocation data already exists in the system, deletion of existing allocation groups or a shift in the allocation group hierarchy will corrupt the existing mapping between the allocation groups. Therefore, be sure to use the unallocate API to remove all old data before you update the configuration. However, you don't have to clean up the data if you're just adding new allocation groups to the lowest hierarchy.
  • Allocation will succeed only for products that have a positive available_to_allocate quantity.
  • To allocate products from a high allocation hierarchy group to a subgroup, use the Reallocate API. For example, your allocation group hierarchy is [channel, customerGroup, region, orderType], and you want to allocate some product from the [Online, VIP] allocation group to the [Online, VIP, EU] allocation subgroup. In this case, use the Reallocate API to move the quantity. When you use the Allocate API, it will allocate the quantity from the virtual common pool.
  • To view overall product availability (the common pool), use the query on-hand API to request the inventory amount that's available to allocate. You can then make allocation decisions based on this information.

Use the allocation APIs

The following table lists the allocation APIs that are available.

Method API Description
POST /api/environment/{environmentId}/allocation/allocate Create an allocation
POST /api/environment/{environmentId}/allocation/unallocate Revert or remove allocated records
POST /api/environment/{environmentId}/allocation/reallocate Move allocated quantities from an existing allocation to other allocation groups
POST /api/environment/{environmentId}/allocation/consume Deduct (use) the allocated quantity
POST /api/environment/{environmentId}/allocation/query Check existing allocation records against the allocation groups and hierarchy

Allocate

Call the Allocate API to allocate a product that has specific dimensions. Here's the schema for the request body.

{
    "id": "string",
    "productId": "string",
    "dimensionDataSource": "string",
    "groups": {
        "groupA": "string",
        "groupB": "string",
        "groupC": "string"
    },
    "quantity": decimal,
    "organizationId": "string",
    "dimensions": {
        "dimension1": "string",
        "dimension2": "string",
        "dimension3": "string"
    }
}

For example, you want to allocate a quantity of 10 for product Bike, site 1, location 11, color red, channel Online, customer group VIP, and region US. To do this allocation, you can make a call that has the following body content.

{
    "id": "test101",
    "productId": "Bike",
    "groups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "US"
    },
    "quantity": 10,
    "organizationId": "usmf",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    }
}

The quantity must always be more than 0 (zero).

Unallocate

Use the Unallocate API to reverse the Allocate operation. Negative quantity isn't allowed in an Allocate operation. The body of Unallocate is identical to the body of Allocate.

Reallocate

Use the Reallocate API to move some allocated quantity to another group combination. Here's the schema for the request body.

{
    "id": "string",
    "productId": "string",
    "dimensionDataSource": "string",
    "sourceGroups": {
        "groupA": "string",
        "groupB": "string",
        "groupC": "string"
    },
    "groups": {
        "groupD": "string",
        "groupE": "string",
        "groupF": "string"
    },
    "quantity": decimal,
    "organizationId": "string",
    "dimensions": {
        "dimension1": "string",
        "dimension2": "string",
        "dimension3": "string"
    }
}

For example, you can move two bikes that have the dimensions [site=1, location=11, color=red] from allocation group [Online, VIP, US] to allocation group [Online, VIP, EU] by calling the Reallocate API and providing the following body text.

{
    "id": "test102",
    "productId": "Bike",
    "sourceGroups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "US"
    },
    "groups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "EU"
    },
    "quantity": 2,
    "organizationId": "usmf",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    }
}

Consume

Use the Consume API to post the consumption quantity against allocation. For example, you could use this API to move allocated quantity to some real measures. Here's the schema for the request body.

{
    "id": "string",
    "productId": "string",
    "dimensionDataSource": "string",
    "groups": {
        "groupA": "string",
        "groupB": "string",
        "groupC": "string"
    },
    "quantity": decimal,
    "organizationId": "string",
    "dimensions": {
        "dimension1": "string",
        "dimension2": "string",
        "dimension3": "string"
    },
    "physicalMeasures": {
        "datasource1": {
            "measure": "string" // Addition or Subtraction
        }
    }
}

For example, there are eight allocated bikes that have the dimensions [site=1, location=11, color=red] for allocation group [Online, VIP, US]. The following available-to-allocate formula is used:

@iv.@available_to_allocate = fno.onordered + pos.inbound – @iv.@allocated

The eight bikes are allocated from the pos.inbound measure.

Now, three bikes are sold, and they're taken from the allocation pool. To register this move, you can make a call that has the following request body.

{
    "id": "test103",
    "organizationId": "usmf",
    "productId": "Bike",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    },
    "groups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "US"
    },
    "quantity": 3,
    "physicalMeasures": {
        "pos": {
            "inbound": "Subtraction"
        }
    }
}

After this call, the allocated quantity for the product will be reduced by 3. In addition, Inventory Visibility will generate an on-hand change event where pos.inbound = -3. Alternatively, you can keep the pos.inbound value as is, and just consume the allocated quantity. However, in this case, you must either create another physical measure to keep the consumed quantities or use the predefined measure @iv.@consumed.

In this request, notice that the physical measure you use in the consume request body should use the opposite modifier type (Addition or Subtraction), compared with the modifier type used in the calculated measure. So in this consume body, iv.inbound has the value Subtraction, not Addition.

The fno data source can't be used in the consume body as we always claimed that Inventory Visibility can't change any data for the fno data source. The data flow is one-way, which means that all quantity changes for the fno data source must come from your Supply Chain Management environment.

Consume as a soft reservation

The Consume API can also consume the allocated quantity as a soft reservation. In this case, the Consume operation will reduce the allocated quantity and then create a soft reservation for that quantity. To use this approach, you must also be using the soft reservation feature of Inventory Visibility.

For example, you've set a soft reservation physical measure as iv.softreserved. The following formula is used for the available-to-reserve calculated measure:

iv.available_to_reserve = fno.onordered + pos.inbound – iv.softreserved

To use this setup with the allocation feature, add @iv.@allocated to iv.available_to_reserve to produce the following formula:

iv.available_to_reserve = fno.onordered + pos.inbound – iv.softreserved – @iv.@allocated

Then update @iv.@available_to_allocate to the same value.

When you want to consume a quantity of 3 and directly reserve this quantity, you can make a call that has the following request body.

{
    "id": "???",
    "organizationId": "usmf",
    "productId": "Bike",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    },
    "groups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "US"
    },
    "quantity": 3,
    "physicalMeasures": {
        "iv": {
            "softreserved": "Addition"
        }
    }
}

In this request, notice that iv.softreserved has the value Addition, not Subtraction.

Query

Use the Query API to retrieve allocation related information for some products. You can use dimension filters and allocation group filters to narrow down the results. The dimensions must match exactly the one you want to retrieve, for example, [site=1, location=11] will have unrelated results compared with [site=1, location=11, color=red].

{
    "productId": "string",
    "organizationId": "string",
    "dimensions": {
        "dimension1": "string",
        "dimension2": "string",
        "dimension3": "string"
    },
    "groups": {
        "additionalProp1": "string",
        "additionalProp2": "string",
        "additionalProp3": "string"
    },
}

For example, use [site=1, location=11, color=red] and empty groups field to get all allocation records:

{
    "organizationId": "usmf",
    "productId": "Bike",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    },
    "groups": {},
}

Use [site=1, location=11, color=red] and groups [channel=Online, customerGroup=VIP, region=US] to get allocation records for this group:

{
    "organizationId": "usmf",
    "productId": "Bike",
    "dimensions": {
        "siteId": "1",
        "locationId": "11",
        "colorId": "red"
    },
    "groups": {
        "channel": "Online",
        "customerGroup": "VIP",
        "region": "US"
    },
}

Use the allocation user interface

You can manually manage allocations by using the Inventory Visibility app in Power Apps.

Important

In the current version of the Inventory Visibility app, you can manage allocations only when you're using Inventory Visibility UI version 1. If you're using UI version 2, you must use the APIs to manage allocations. For more information about the two UI versions and how to switch between them, see Inventory Visibility app user interface versions.

Open the allocation user interface

The Allocation tab on the Operational visibility page serves as the user interface where you can create, consume, reallocate, and query allocations, as described in later subsections.

To open the allocation user interface, follow these steps.

  1. Sign in to your Power Apps environment, and open the Inventory Visibility app.
  2. On the Change area menu at the bottom of the navigation pane, select Legacy UI.
  3. On the navigation pane, select Operational visibility.
  4. Select the Allocation tab.

Create an allocation

Follow these steps to create an allocation in the Inventory Visibility app.

  1. On the toolbar of the Allocation tab, select Allocate.
  2. Set the Base fields, Dimensions, and Target allocation groups values. When you're selecting values in the Dimensions section, first select a data source, then select a dimension from that data source, and then enter dimension values in the fields that appear each time you add a dimension.
  3. Select Submit.

Consume an allocation

On the toolbar of the Allocation tab, select Consume to consume an allocation. To ensure that you consume within the correct allocation group and hierarchy, enter the same sets of organization and dimension details that you specified when you created the allocation.

Reallocate an allocation

On the toolbar of the Allocation tab, select Reallocate to move existing allocated quantity from one set of allocation groups to another.

Query existing allocations

On the toolbar of the Allocation tab, select Query, and then enter product, organization, dimension, and allocation group values to obtain query results of existing allocations.