Managing inventory can be a constant balancing act. Companies must meet demand without overcommitting stock, especially when they have limited supply. In many businesses, orders compete for the same inventory, causing conflicts, customer dissatisfaction, and operational bottlenecks.
This is where the NetSuite Supply Allocation feature comes into play. Supply Allocation allows you to allocate available and expected inventory to specific sales and work orders in advance, so your team can control how you distribute your limited resources. By proactively assigning supply, you prioritize the most critical orders and your supply chain runs more smoothly.
In this post, we’ll explore what Supply Allocation does, how it benefits your business, and how you can set up and use this feature in NetSuite.
What Is Supply Allocation in NetSuite?
Supply Allocation is a NetSuite feature that helps businesses proactively assign inventory supply to transactions. Instead of letting the system automatically fulfill orders in sequence (or based on general rules), you can control which demand is tied to which supply.
Here are some key concepts to be aware of:
- Supply: Inventory available for allocation, including what you have on-hand and what you will receive via purchase orders, transfer orders, and work orders.
- Demand: Transactions requiring inventory (i.e., sales orders, work orders, and transfer orders).
- Allocation Strategies: The method NetSuite uses to assign inventory.
With Supply Allocation, you no longer need to rely on manual monitoring or blanket rules. You can use things like customer priority, order size, expected supply dates, and other criteria to decide which orders should receive inventory first.
Why Use NetSuite Supply Allocation?
Without allocation, NetSuite fulfills inventory based on availability at the time of fulfillment. But what if demand exceeds supply? Supply Allocation provides for the following:
- Customer Prioritization: Ensure strategic or high-value customers get supply first.
- Transparency: Sales teams can see which orders are covered and which are waiting.
- Efficiency: Prevent overpromising stock and reduce fulfillment conflicts.
- Flexibility: Align supply to demand across multiple locations and transaction types.
With Supply Allocation, you can make intentional, proactive decisions with your inventory rather than leaving it up to chance.
How Supply Allocation Works
When you use Supply Allocation, NetSuite ties demand transactions to supply in real time. Consider the following scenario:
- A sales order enters the system.
- NetSuite evaluates available and incoming supply (using on-hand, POs, transfers, WOs).
- Based on the allocation strategy, NetSuite either assigns the supply to the order or flags it for manual allocation.
Allocation status can then be tracked within the order record. If incoming supply changes (e.g., a PO is delayed), NetSuite automatically updates allocations, ensuring accurate visibility.
Step 1: Enable Supply Allocation in NetSuite
To use this feature, turn it on in Enable Features.
- Navigate to Setup > Company > Enable Features.
- Under the Items & Inventory subtab, check the box for Supply Allocation.
- Save your changes.
This adds allocation functionality across your inventory-related transactions.
Step 2: Create a Supply Allocation Strategy
You’ll need to create a supply allocation strategy. You can create as many of these as your processes require. Supply allocation strategies are assigned on sales order lines to communicate with the system how that sales order should be fulfilled.
Existing Supply Allocation Strategies
There are two existing supply allocation strategies that come with the supply allocation feature. Neither of these evaluates future inventory, only what you already have on hand.
- Predefined Available Allocation Strategy: This strategy allocates inventory to orders as the inventory becomes available. This allows you to make partial fulfillments on large orders.
- Predefined Complete Allocation Strategy: This strategy requires the system to fulfill complete orders rather than partials. If you use the complete allocation strategy, large orders will not be fulfilled until the entire order is available in inventory.
Creating New Supply Allocation Strategies
Navigate to Setup > Order Management > Order Allocation Strategies > New. Here, name your allocation strategy and complete the following sections to define it.
Inventory Options:
If you want NetSuite to consider future inventory in allocations, select the Future Inventory checkbox. Then, select from the list the order types you want to be included.
Allocation Period
Is there a specific time period you want NetSuite to use when considering which inventory can be allocated to which orders? Enter the desired number of days before and after the “Supply Required By” date on an order to establish an allocation window.
Allocation Method
You can then decide whether you’ll allocate inventory to orders as soon as the inventory is available (even if it’s available long before the “Supply Required By” date) or if you’ll wait to allocate inventory as close to the deadline as possible.
Allocation Quantities
Choose between available quantity (allowing for partial fulfillments based on availability) or complete quantity (requiring the entirety of the order to be available before it can be fulfilled).
Available Date Calculation
Decide whether or not you want to calculate the available date using Available to Promise lead time.
Allocation Type
Choose between reserved or firm allocation. Reserved allocation designates inventory for an order but allows reallocation if needed. Firm allocation locks in items for an order. When using firm allocation, inventory can only be reallocated manually.
Using Supply Allocation Strategies
How do you use the supply allocation strategies you create? These strategies tell NetSuite how to allocate specific inventory items. But in order for NetSuite to know which strategies to apply to which items, you’ll need to select the necessary supply allocation strategy on each line item of an order. To do this, open a sales order, transfer order, or work order, locate the line items under the Items tab, and find the dropdown next to each item for Allocation Strategy. After assigning strategies, save the order record.
Step 3: Create Supply Allocation Schedules
How often do you want NetSuite to run allocation calculations? You can automate that process by setting up a supply allocation schedule. Start by navigating to Transactions > Order Management > Allocate Orders > Schedule, and select New Order Allocation Schedule.
Create and Schedule
On this page, name the schedule and set the recurrence frequency (daily, weekly, bi-weekly, monthly, etc.). You can also set the next date and time when you want the schedule to start running.
Order Options
Select the subsidiary this schedule will apply to. Then, choose an allocation processing option. This tells NetSuite how to prioritize allocation processing. The options include things like prioritizing by the highest number of orders you can fulfill or by the highest revenue you can receive from the fulfilled orders.
Select and Sort Orders
You can select and sort orders either manually by setting parameters on this page, by selecting an existing saved search, or by creating a new search.
Search Criteria
If you chose the manual option for selecting orders, you’ll have the following Search Criteria section to fill out. When you’re finished, save the page.
Conclusion
NetSuite Supply Allocation gives businesses the tools to control inventory distribution proactively rather than reactively. By enabling the feature, setting up allocation strategies, and establishing an allocation schedule, you can ensure supply is allocated strategically across demand transactions.
If your company struggles with inventory competition between orders, it may be time to explore this feature more deeply. Reach out to SuiteRep for help configuring Supply Allocation to match your unique business rules.