Contract manufacturers often carry inventory that is tied to a specific customer, program, or purchase order. That material might be supplied by the customer, purchased for a specific build, or contractually restricted so it cannot be consumed by other work.

If your system treats all on-hand quantity as a shared pool, you end up fighting allocation, picking, and MRP signals. Cetec ERP supports this through Inventory Pre-Allocation, which lets you reserve inventory and incoming purchase order quantity to a customer or a specific order line (work order).

What Inventory Pre-Allocation Does

In many warehouses, the most efficient approach is to stock and purchase by manufacturer part number and buy in bulk where it makes sense. Contract manufacturing adds a constraint: some inventory must be kept separate by customer or program, even if the part number is the same.

Inventory Pre-Allocation in Cetec ERP addresses that constraint by marking specific quantities as reserved, so they can only be allocated and picked to the intended customer or order.

How to Turn It On and Where You Allocate

A configuration setting called "Allow Inventory Preallocation" enables the workflow. Once it is on, your team can pre-allocate quantity in two main places:

• On a purchasing quote (PQuote) or purchase order line, reserve incoming quantity to a specific customer or order line (work order).
• On existing on-hand inventory, reserve quantity in a specific bin.

When quantity is pre-allocated, Cetec ERP treats that quantity as restricted. Allocation and picking can only consume it for the intended order or for that customer’s set of orders. If the reserved quantity is fully consumed and additional demand remains, normal allocation rules apply to future-dated customer orders.

How It Shows Up in Allocation and MRP

Because pre-allocation affects what is available to fulfill demand, it impacts allocation behavior and MRP. It is also visible on the Part Waterfall (standard and allocation views), so planning and purchasing can see what is truly free versus what is reserved.

• For on-hand inventory, the pre-allocated quantity shows under the starting quantity on hand (QOH), and an "Available" value represents the portion not pre-allocated and available to any demand.
• For orders with pre-allocated inventory or pre-allocated PO quantity, the reserved amount appears in parentheses and is highlighted to distinguish it from normal demand and supply.
• If the reserved quantity does not fully cover an order, the uncovered portion still shows next to the pre-allocated quantity so you can see the remaining exposure.
• Orders after the reserved quantity is exhausted display normally, since the pre-allocated quantities are no longer available and standard allocation rules apply.

How Pre-Allocated PO Quantity Behaves

Pre-allocation can be applied to incoming purchase order quantity as well. When a PO line quantity is reserved, the PO line displays as pre-allocated, and the intended order or customer can be reviewed from the record.

• If the PO is not late for the allocated order(s), the order demand remains tied to that reserved incoming quantity.
• If the PO becomes late for the allocated order, Cetec ERP still treats the PO line as reserved, so it is not usable for other orders even if other allocation rules attempt to find coverage.
• When the PO line is received, the allocated quantity transfers to the receiving bin.
• If inventory is reserved to an order and that order ships without consuming the reserved quantity, the remaining reserved quantity is moved to the customer. For PO-reserved quantity, the allocation shifts upon receipt.

Key Takeaways

• Pre-allocation reserves on-hand or incoming material to a specific customer or work order, preventing accidental cross-customer consumption.
• Reserved quantities affect allocation and picking, and they flow through to MRP so planning reflects what is actually available.
• The Part Waterfall shows both available quantity and reserved quantities, helping purchasing and scheduling see true exposure.
• PO-reserved quantity stays reserved even if the PO becomes late, and it transfers to the bin on receipt.
• If an order ships without consuming reserved inventory, Cetec ERP moves the remaining reserved quantity to the customer.

Conclusion

When customer-specific inventory rules are part of your contracts, you need allocation and MRP to respect those boundaries without forcing your warehouse into a separate system. Inventory Pre-Allocation in Cetec ERP gives your team a direct way to reserve material to customers and work orders, while keeping planning and execution consistent.

For setup and usage details, see the how-to video: https://cetecerp.com/support/how-to/how-to-use-pre-allocation.html