{"id":4774,"date":"2022-03-24T17:50:05","date_gmt":"2022-03-24T12:20:05","guid":{"rendered":"https:\/\/factech.co.in\/blog\/?p=4774"},"modified":"2023-03-31T14:43:32","modified_gmt":"2023-03-31T09:13:32","slug":"hard-vs-soft-inventory-allocation","status":"publish","type":"post","link":"https:\/\/factech.ai\/blog\/hard-vs-soft-inventory-allocation\/","title":{"rendered":"Hard vs Soft Inventory Allocation"},"content":{"rendered":"

Hard vs Soft Inventory Allocation<\/span><\/h1>\n

Gaining control over your company\u2019s inventory allows you to meet customer demand and minimize supply chain challenges. The key to inventory control is inventory allocation, which is the process of tracking inventory across your network. Your network might include warehouses, distribution centers and brick-and-mortar stores. With the correct allocation of stock, you can avoid stockouts and keep products from languishing on shelves.<\/span><\/p>\n

Inventory allocation falls into two broad categories: soft and hard. Learn more about the difference between soft and hard allocation and when each might be appropriate.<\/span><\/p>\n

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Hard Inventory Allocation<\/strong><\/h2>\n

Hard inventory allocation is more rigid than soft allocation and has much less, if any, wiggle room.<\/span><\/p>\n

In the clothing example, as the spring season gets closer, you\u2019ll need to firm up your order numbers. Pre-orders might have started to come in from customers, and maybe the demand for plaid shirts is way less than you anticipated.<\/span><\/p>\n

You now know exactly how many shirts to order. There\u2019s no flexibility in your inventory at this stage. If you order too many shirts, you may not be able to sell them all. If you don\u2019t purchase enough, you can\u2019t fulfill customer orders.<\/span><\/p>\n

Soft Inventory Allocation<\/strong><\/h2>\n

Usually, soft inventory allocation occurs early on in the ordering or manufacturing process. It provides you with the flexibility you need to make changes as required.<\/span>
\nFor example, if you own a clothing company, you might start planning the spring season during the previous summer. <\/span><\/p>\n

Early in the planning stages, you have a general idea of what will be trendy in the spring. Plaid shirts and mini skirts might be predicted to be the big sellers next spring, so you start placing orders for both those items with that in mind.<\/span><\/p>\n

You\u2019re not sure what colors will be trendy or how the clothing will sell, so you make a guestimate. Since it\u2019s early in the process, you have the option of adjusting your order up or down as needed.<\/span><\/p>\n

Hard Inventory Allocation<\/strong><\/h2>\n

Hard inventory allocation is more rigid than soft allocation and has much less, if any, wiggle room.<\/span><\/p>\n

In the clothing example, as the spring season gets closer, you\u2019ll need to firm up your order numbers. Pre-orders might have started to come in from customers, and maybe the demand for plaid shirts is way less than you anticipated.<\/span><\/p>\n

You now know exactly how many shirts to order. There\u2019s no flexibility in your inventory at this stage. If you order too many shirts, you may not be able to sell them all. If you don\u2019t purchase enough, you can\u2019t fulfill customer orders.<\/span><\/p>\n

Critical Differences Between Soft and Hard Inventory Allocation<\/strong><\/h2>\n

Soft and hard allocations are more than just opposites of each other. Depending on your company\u2019s goals, they can be partners. You might need soft allocation for one area of your supply chain and hard allocation for another. In some cases, soft allocation can become hard as the due date or delivery date approaches.<\/span><\/p>\n

Here are some key differences between the two:<\/span><\/h5>\n