If you work in manufacturing,
"This inventory is already allocated."
"Allocate stock to the order."
"There's no inventory available to allocate."
are phrases you'll sometimes hear.
If you've just started working in manufacturing,
"What's allocation?"
you might find yourself wondering.
This article explains "allocation", a term commonly used in manufacturing and inventory management, in a way that's easy for beginners to follow.
What Is Allocation?
Put simply, allocation means
reserving inventory for a specific order, production run, or similar purpose
.
For example, say there are 100 units of Product A in the warehouse.
製品Aの在庫：100個Then, a customer places an order for 80 units.
Against this order, 80 of the 100 units are reserved.
現在在庫：100個
注文A向け：80個を確保
残り：20個This — "reserving 80 units for Order A" — is what's called allocating inventory.
Allocation Is Similar to a "Reservation"
When trying to understand allocation, it's easiest to think of it as similar to a reservation.
Picture a hotel.
Even if a hotel has 100 rooms, if 90 of them are already reserved, it can't sell all 100 rooms to a new guest.
The rooms themselves still exist.
But 90 of them are already reserved for other guests.
Allocating inventory works in a similar way.
For example,
現在在庫：100個
引当済：80個in this case, there are actually 100 units in the warehouse.
But 80 of them are already reserved for an order.
So the inventory available for a new order is 20 units.
This "stock that's still freely available" is sometimes called allocatable inventory or available inventory.
The name varies depending on the company and system.
Why You Might Be Told "There's No Stock" Even Though There Is
One thing that often confuses people new to manufacturing is
the situation where "the stock exists, but it can't be used"
.
For example, say you check the system and see
現在在庫：100個displayed like this.
Which leads you to think,
"If there are 100 units, we should be able to ship 50, right?"
you might think.
But in reality, it might actually be:
現在在庫：100個
引当済：80個
引当可能：20個a state like this.
There are 100 units in the warehouse.
But 80 of them already have a designated use for a different order.
So only 20 are available for a new order.
In other words,
the inventory that physically exists and the inventory that's freely available are not necessarily the same.
This is an extremely important point for understanding allocation.
Why Is Allocation Necessary?
Without allocation, you risk planning to use the same inventory for multiple orders at once.
For example, say there are 100 units of Product A in stock.
Order A comes in.
注文A：80個Then Order B comes in as well.
注文B：50個If allocation isn't being tracked, each person in charge might look only at the 100 units in stock and think,
"There are 80 available."
"There are 50 available too."
and conclude that both orders can be fulfilled.
But the actual quantity needed is,
80個 + 50個 = 130個.
There are only 100 units in stock.
That's 30 units short.
Allocation exists to prevent this kind of situation — treating the same inventory as available for more than one order at the same time.
Allocation and Stock Release Are Different
Allocation and stock release are separate processes.
Allocation is
reserving inventory
.
Stock release is
actually taking the inventory out of the warehouse or wherever it's kept
.
For example,
現在在庫：100個say 80 units are allocated from this.
At this point,
現在在庫：100個
引当済：80個
引当可能：20個that's the state.
There are still 100 units in the warehouse.
After that, once 80 units are actually released from stock,
現在在庫：20個the count becomes this.
In other words,
引き当て
↓
在庫を確保する
出庫
↓
実際にモノを動かすthat's the difference between them.
Allocation alone doesn't actually move anything.
What Gets Allocated For?
The word "allocation" tends to bring to mind reserving inventory for a sales order, but that's not the only case.
For example, in manufacturing,
- A sales order
- A planned shipment
- A production instruction
- A production plan
- A manufacturing order
and other such things can all have inventory allocated against them.
For example, say material B, 100kg of it, is needed to make Product A.
If there are 500kg of material B in stock,
材料B現在在庫：500kg
製造予定向け引当：100kg
引当可能：400kgit can be managed like this.
In this case, 100kg of material B is reserved for a specific planned production run.
Allocation, in this sense, is about managing "what the inventory is being reserved for."
When Does Allocation Happen?
The timing of allocation varies depending on the company and system.
For example,
- When an order is registered
- When an order is confirmed
- When a planned shipment is created
- When a production plan is confirmed
- When a manufacturing instruction is issued
and so on.
Sometimes the system allocates automatically; other times, the person in charge allocates manually.
For example, when an order is registered,
受注登録
↓
在庫確認
↓
在庫があれば自動引当some systems carry out a process like this.
On the other hand, some companies have the person in charge check inventory levels and delivery dates before deciding which order to use the stock for.
So in actual practice,
"when does allocation happen?"
"is it automatic, or manual?"
are important questions to check.
What Happens If There Isn't Enough Stock?
For example,
現在在庫：100個
注文数量：150個let's consider a state like this.
The stock is 50 units short.
How this is handled also varies depending on the company and system.
Sometimes only 100 units are allocated.
注文数量：150個
引当済：100個
未引当：50個This is sometimes called partial allocation.
On the other hand, some companies don't allocate at all until all 150 units are ready.
注文数量：150個
引当済：0個Neither approach is inherently "correct."
It depends on the company's shipping rules and production methods.
Looking at Allocation Tells You the "Inventory You Can Actually Use"
In inventory management, looking only at the raw current stock count can lead you to the wrong conclusion.
For example,
現在在庫：1,000個looking only at this makes it seem like there's plenty of stock.
But if it's actually
現在在庫：1,000個
引当済：950個
引当可能：50個there's almost nothing left available for a new order.
So when you look at inventory, you shouldn't just check
"how many units there are"
— you also need to check
"how many of those units already have their use decided"
.
Allocation can be thought of as the mechanism for managing this "designated use of inventory."
Summary
In manufacturing, allocation refers to
reserving inventory for a specific order, production run, or similar purpose
.
For example:
現在在庫：100個
引当済：80個
引当可能：20個in this case, the warehouse has 100 units.
But 80 of them are already reserved for another order or similar purpose.
Only 20 are newly and freely available.
So,
current stock = the inventory that physically exists
allocated stock = inventory that already has its use decided
allocatable stock = inventory that's still freely available
— thinking of it that way should make it easy to grasp.
In a nutshell, allocation is "reserving inventory."
If you're new to manufacturing and come across the term "allocation,"
"what is being reserved, and what is it for?"
try asking yourself this question.
Doing so will make the meaning of allocation much easier to understand.