Excess redistribution | Netstock Help Center

The Excess redistribution module offers businesses the capability to improve inventory balance between locations by suggesting transfer recommendations.

Using the redistribution module, businesses can obtain three key benefits:

Reducing orders placed on suppliers by unlocking excess at other locations
Increasing sales by covering demand during projected out-of-stock periods
Focused excess reduction at specific locations by redirecting stock to other locations

Traditionally, stock to a location will be ordered from an external supplier, or an internal DC. Let’s assume a DC setup as follows:

In the event that Location A requires stock, it will place an order against the DC and wait a lead time (14 days) for stock to arrive. However, Location B and C both have excess stock and could easily redistribute the excess stock to Location A where it is needed. The lead time between Location A and Locations B and C may also be shorter than the lead time between Location A and the DC, resulting in Location A receiving stock sooner than it would have if it had ordered from the DC. This is known as excess redistribution.

By utilizing the Excess redistribution feature, not only will stocked out locations receive stock sooner, thus reducing potential lost sales, but locations with excess will also be able to reduce their excess and thus the capital unnecessarily tied up in stock that is not required. Excess redistribution is therefore great at balancing a business’s inventory, ensuring stock is available where it’s needed, and limited where it’s not.

Using the Excess redistribution functionality

The app allows for two functions:

Order FROM other locations when stocked out or potentially stocked out
Send excess stock TO other locations where it’s more needed

This section will explain both methods followed by how to commit and/or clear.

Order from locations

In the app, navigate to Orders > Order from locations

Select the Destination that requires stock

Select whether to view stocked items, non-stocked items, or both.

Use the “+” button to select one or more sources the destination location may source from. The top location is the most preferred location to obtain stock from while the bottom location is the least preferred. This provides users with the ability to prioritize nearby locations without the need to introduce complex rules.

Confirm the lead time from the selected locations and override it if needed.

Click the “Create order” button to have the app calculate a recommended redistribution based on the selection.

The following sections are color-coded on the image below:

Yellow - Product data is for the user to identify the product
Blue - Destination location data explains the stock position at the location with a requirement
Red - Source location data explains the stock position and constraints at each potential supplying location
Green - Transfer data relates to the quantity that will be transferred

View the destination location (one) and supplying locations (one or many) by clicking on the ellipses.

Distribute excess

In the app, navigate to Orders > Distribute excess

Select the Source that will redistribute excess to where it’s needed

Select whether to view stocked items, non-stocked items, obsolete items or all.

NOTE: Obsolete items appear in the selection to allow stock to be redistributed from a location where it’s obsolete to a location where it is required.

Use the “+” button to select one or more destinations the source location may send excess to. The top location is the most preferred location to send stock to while the bottom location is the least preferred. This provides users with the ability to prioritize nearby locations without the need to introduce complex rules.

Confirm the lead time to the selected locations and override it if needed.

Click the “Create order” button to have the app calculate a recommended redistribution based on the selection.

The following sections are color-coded on the image below:

Yellow - Product data is for the user to identify the product
Blue - Destination location data explains the stock position at each location with a requirement
Red - Source location data explains the stock position and constraints at the supplying location
Green - Transfer data relates to the quantity that will be transferred

View the supplying location (one) and destination locations (one or many) by clicking on the ellipses.

Commit and clear

The redistribution order may be committed or cleared.

Commit - When an order is committed, the quantities available and required for redistribution for each product at each location will be adjusted to take account of the order’s current quantities. This allows a user to create a subsequent redistribution order which does not attempt to reallocate the same stock or fulfill the same requirement.

Clear - When an order is “cleared”, the quantities available and required for redistribution for each product at each location are cleared from the impact of the current redistribution order. This allows the user to start with a clean slate and create a new redistribution order, perhaps with a different set of locations, location priorities or lead times than the current order. Clear essentially reverses the Commit process.

Refer to the article Placing orders easily and quickly for a detailed explanation on order review in general.

Required stock, redistribution stock and recommended transfer quantities

How is stock available for redistribution calculated?

The app uses a distinct calculation to determine how much stock is available for redistribution to other locations.

For stocked items, a location will release any net stock greater than:

Safety stock + Replenishment cycle + Available stock buffer, provided there is enough existing stock on order due to arrive within the lead time.

Available stock buffer is a Configuration parameter for the Redistribution module which is specified in days and intended to reduce the chance of recommending a redistribution that will result in a new supplier replenishment at the source location shortly afterwards.

For non-stocked and obsolete items, a location will release the portion of net stock greater than any firm demand found within the lead time.

Hint: The Excess status and its calculated units is a separate calculation which gives provision to supplier minimum order quantities. For this reason, stock available for redistribution may exceed stated excess.

How is required stock calculated?

Stock required by a location is the greater of:

The ideal order recommendation (which excludes supplier minimum and multiple constraints), and
For stocked out and potential stock out items, forecast demand during out-of-stock periods within the lead time

The second calculation is subject to an additional check: the predicted out-of-stock period must be at least as long as the Minimum stockout duration. This Config parameter is designed to avoid sending stock that will arrive too late to cover the shortfall.

How are the redistribution quantities calculated?

Redistribution quantities are determined by matching available stock at source location/s to required stock at the destination location/s. In effect, the redistribution quantity will be the lower of the two figures, with the Minimum order quantity and Order multiple constraints applied on top (if enabled in the Configuration parameters).

Stock will be allocated to/from the top priority location first, based on the sort order of selected locations when the order was created. Then the next highest priority location will be considered, and so on, until all selected locations have been processed.

Quantities for new orders will take account of previously committed redistribution orders within the current data refresh cycle.

Process flow for creating redistribution, DC distribution and supplier orders

There are two rules that should be followed to ensure the best order recommendations are available:

Firstly, each redistribution order should be reviewed, amended and committed before the next one is created. Only work on one redistribution order at a time.
Secondly, redistribution orders should be created in the host system and brought back into the app via a data refresh, to ensure that up to date DC distribution and supplier order recommendations are available.

Based on these rules, the recommended process is:

Create redistribution orders in the app
- Create, review, amend and commit each redistribution order
- Repeat as necessary, being sure to commit each order before creating the next one
Create the committed redistribution orders in host system
- If a two-way integration exists, this can be achieved by downloading redistribution orders from the app
Execute a Full Refresh of data (i.e. run a batch import) to bring the newly created redistribution orders back into the app
- If the app cannot be refreshed on demand or the batch runs for a long time, wait until the next scheduled refresh instead
Create DC distribution orders and/or supplier orders as necessary

FAQs

Overview

Question: What is a redistribution order?

Answer: A redistribution order is a collection of transfers that moves stock between a single source and many destinations, or between a single destination and many sources. Redistribution orders are created using the tabs “Order from locations” and “Distribute excess”.

Question: What does committing an order do?

Answer: When a redistribution order is committed, the app adjusts the stock available for redistribution and stock required for every item/location that appears on the order. This ensures that newly created redistribution orders will not attempt to supply the same stock or fulfill the same requirement again.

Note that committed orders are reset during the batch process, so only remain effective within a single refresh cycle.

How to

Question: How can I set the lead time for redistribution orders?

Answer: Use the Configuration parameter “Default lead time” to specify the lead time that will be automatically applied between each pair of locations in a redistribution order. For any pairs of locations that have a significantly different lead time, ensure the lead time is adjusted during the process of creating the redistribution order. Once an order has been created, lead times can be seen within the Summary page but cannot be amended.

Question: How do I prioritize locations with close proximity or for other reasons?

Answer: When selecting locations to pair with the destination location (“Order from locations”) or source location (“Distribute excess”), ensure the locations are sorted from most preferred at the top to least preferred at the bottom.

Question: How can I add extra items to a redistribution order?

Answer: It is not currently possible to add specific items to the order or include additional sources or destinations.

Calculations

Question: How do the minimum and multiple constraints work?

Answer: Redistribution orders can optionally have a Minimum order quantity and Order multiple constraint. Configuration parameters are available to select whether the app uses the standard minimum order quantity (MOQ) and/or order multiple (OM) from the source location. If redistribution orders do not need to adhere to a minimum or multiple constraint, both of these settings can be disabled.

Redistribution MOQs and OMs are applied from the source location rather than the destination location because they are supply based constraints and two source locations might have different constraints. This differs from how the standard MOQs and OMs are recorded against the destination location (which is only feasible if there is a single stated source of supply).

If an MOQ has not been specified, but an OM has, then the OM will also act as a MOQ.

A redistribution quantity will not be recommended if the source location does not have enough stock available (according to the redistribution calculation) to satisfy the MOQ or OM constraint. If the MOQ is not cleanly divisible by the OM, then the MOQ will effectively increase to the next highest multiple.

Assuming the MOQ constraint is satisfied, redistribution quantities will be rounded up to the nearest multiple, provided there is enough stock available. Otherwise, the redistribution quantity will be rounded down to the nearest multiple, provided it does not go below the MOQ.

Other

Question: What is the “potential saving” value?

Answer: The potential saving shown while a redistribution order is being created is based on the value of inventory that will be moved. It is termed "potential saving" because the redistribution will tend to decrease supplier order recommendations by a similar value, reducing purchasing spend. It is expressed as a range (when more than one location is selected) because there is usually overlap in terms of what each location can supply or take, and the final value cannot be determined until the order is actually created.

Question: Which items are included in a redistribution order?

Answer: To appear in a redistribution order, an item must have some stock available at the source location (according to the redistribution calculation) and stock required at the destination location. If there is no availability or no requirement, the item will not be included in the order.

To explain further, consider a redistribution order that distributes excess from one source location to three destination locations.

If an item has no stock available, it will not appear on the order.
If there is stock available, but none of the three locations requires stock, the item will also not appear.
If there is stock available and only one location requires stock, only that single destination will appear on the order.
Only if there is stock available and three destinations require stock, will the item appear with three potential destinations.

Redistribution orders are limited in this way to eliminate noise and make them faster and easier to review.

Question: Can I amend a committed order?

Answer: Yes, but be sure to commit the order again once complete.

Other redistribution orders that have already been created in the app will not be affected by this adjustment. It may be necessary to review and adjust them accordingly, or recreate them as new redistribution orders which will automatically take account of the updated commitments.

Question: Can I work on a redistribution order that was created before the last data refresh?

Answer: Yes, however redistribution orders created before the last refresh will remain with their previous quantities and may no longer be optimal based on the latest inventory position and predictions. Also, committed orders are reset during the refresh process, so you will need to commit the order again.

Question: How do I avoid distributing the same stock to multiple locations (or fulfilling the same requirement from multiple locations)?

Answer: Create, review and commit each redistribution order before creating the next one.

Question: How do I make sure that DC distribution and supplier order recommendations take redistribution into account?

Answer: Ensure the redistribution orders have been created in the host system and then refresh the app (or wait for the next refresh).

Question: How can I prevent redistribution from triggering a regular order at the source location?

Answer: The app will not recommend a redistribution that would result in an immediate supplier order recommendation at the source location. How long it takes until a new supplier order recommendation appears can be controlled with the Configuration parameter “Available stock buffer” which is specified in days. This setting, in conjunction with the replenishment cycle, can be interpreted as the minimum time until a new supplier order should be expected, under the assumption that all factors remain constant and sales follow the forecast.

Question: How can I prevent redistribution to locations that are going to be briefly out of stock?

Answer: Use the Configuration parameter “Minimum stockout duration” to prevent redistribution recommendations for out of stock periods that are short in relation to the transfer time. For example, if an item is predicted to be out of stock for 3 days and the transfer lead time is 7 days, a redistribution order would arrive too late to make a difference. In practice, the minimum stockout duration should be configured to exceed the typical transfer lead time by a comfortable margin.