A popular line on allocation
A manufacturer has had a production problem, or a line has taken off in hot weather, and you are getting a fraction of what customers want. Orders keep coming in. The first customers to order get everything they asked for, including a new account that ordered ten times their normal amount. Your oldest customers, who order on the same day every week, get nothing.
The sales director starts taking calls. Some customers are promised stock off the next delivery. The same stock is promised twice. Reps make deals in the field that the warehouse cannot honour.
Why first come, first served goes wrong
Order systems allocate stock to orders in the order they are entered, which is fine when supply is plentiful. When it is short, that rule rewards whoever orders early and big, including customers stockpiling or reselling. Your actual priorities (keeping regular accounts supplied, honouring contracts, protecting certain customer groups) are not in the system, so people override it by hand.
- Allocation follows order time, not customer priority.
- Unusually large orders are not flagged against normal buying.
- Manual overrides happen through phone calls and are not recorded.
- Incoming deliveries are promised before they arrive, by more than one person.
- Customers are not told what they will receive until the van arrives.
What an unfair allocation costs
Regular customers who feel let down during a shortage remember it long after supply is back. Stock goes to customers who will not be there next month. The sales director spends days on the phone. And inconsistent promises lead to more back orders, more disappointed customers and a warehouse that does not know which orders to pick first.
Stockpiling makes it worse. When customers realise a line is short and allocation is first come, first served, they order more than they need to protect themselves. That drains stock faster, deepens the shortage for everyone else, and leaves surplus sitting in some customers' storerooms while others have none.
The allocation rules we build
- You set a line, or a group of lines, as on allocation when supply is tight.
- Allocation rules come from your priorities: for example, a share of each customer's normal weekly volume, contract customers first, new accounts capped, and orders far above normal flagged for review.
- Open orders and incoming stock are matched under those rules, and each order line gets an allocated quantity.
- The sales director or buyer reviews the proposed allocation, can change it, and every change is recorded with a reason.
- Customers are told what they will receive and what is on back order or cancelled, so nobody finds out from the delivery note.
- When the line comes off allocation, normal rules return.
| First come, first served | Allocation rules | |
|---|---|---|
| Regular weekly customer | May get nothing | Gets a fair share of normal volume |
| Unusually large order | Filled in full | Flagged and capped |
| Manual overrides | Phone calls, unrecorded | Changes logged with reasons |
| Customer knows | When the van arrives | When allocation is set |
What shortages feel like afterwards
Shortages still happen. But when they do, there is a clear, defendable basis for who gets what, and customers are told early. The sales director reviews an allocation instead of fielding every call. Reps can see the allocation for each of their accounts before promising anything. And after the shortage, you can look back at how stock was shared.
Does this happen to you?
- Short stock goes to whoever orders first.
- Regular customers miss out during shortages.
- The same incoming stock gets promised twice.
- Unusually large orders are filled without question.
- Allocation decisions are made on the phone and not recorded.