The drivers to product allocation management: A managerial perspective to allocation decision-making

Abstract

Objective of the study

The research objective of this study is to determine what are the drivers of product allocation decision making among Multinational Corporations' (MNC) headquarters.

Academic background and methodology

The topic of product allocation management has multiple facets in extant academic literature, with the most directly related being supply chain management under order fulfillment and push & pull- based Available-To-Promise (ATP) methods. Due to the increasingly competitive and dynamic environment that organizations face today, supply chains require integration and coordination in order to meet dynamic customer demands - a top priority in business agendas today. Under a supply constrained mode, not all demand can be fulfilled and therefore an allocation process is triggered. This study's contention is that there are more factors at play in this decision making process than solely the documented push & pull-based ATP methods in the literature. The review of literature and the undertaken qualitative interview based methodology intends on pursuing this question in congruence with the research objective.

Findings and conclusions

Constrained supply is rarely allocated on a First-Come-First-Served (FCFS) basis or evenly distributed - because such even distributions assume all markets and final customers are equal. In general business practice, such is not the case. To elaborate on this further, the gathered findings suggest that profit maximization is the ultimate objective for allocations, but there are multiple instances where other dimensions such as a foothold strategy or customer reputability overrule short term profitability. This supports the contention that allocation decisions incorporate both technical factors and managerial factors. Additionally, the core driver of such decisions is the organizational strategic priorities at the time of the allocation.