Allocation and order promising are critical areas for implementing policies that enable
segmented and profitable customer service strategies. Allocation is the process of reserving
inventory and/or capacity for certain customers or groups of customers, or for other entities, such
as sales groups or geographies. The intention is to provide preference for certain customers based
on objective criteria such as volume, profit, and service-level agreements. Order promising is the
process of providing a date by which a product will be delivered, with a high level of reliability.
With integrated allocation and order promising, companies can achieve many of the operational
goals of supply chain segmentation. Leading companies, in fact, have employed integrated
allocation and order-promising techniques to provide highly reliable and profit-driven customer
service. As shown in Figure 6, companies have employed a multidimensional approach to create
sophisticated, differentiated customer service strategies for individual customers. These leaders
are creating a specific approach for each product/customer intersection, and they have integrated
this with configurable search mechanisms that define how to examine the entire supply chain
network to determine the best fulfillment point.
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