Reserved vs available stock: stop selling what you do not have
The most expensive stock error is not a wrong count. It is selling the same pallet twice because two people looked at the same on-hand number. Separating reserved from available stock is how you stop that.
Three numbers, not one
Every stock position has at least three quantities, and confusing them is where overselling starts:
- On hand: what is physically in the warehouse and recorded in the system.
- Reserved, also called allocated or committed: the part of on-hand stock set aside for confirmed orders that have not shipped yet.
- Available: what can still be promised to a new customer.
The basic formula is available = on hand − reserved − blocked. Blocked stock is anything you should not sell right now: damaged goods, items in quarantine or waiting for a quality check, returns not yet inspected. Some companies also look at available to promise, which adds confirmed incoming purchase orders by their expected date. That is useful for quoting delivery dates, but it is a forecast, not stock on the shelf.
When to reserve, and when to release
A reservation is a promise, so it should follow the moment you actually commit to the customer. Reserving at the quote stage looks safe but quietly locks stock for deals that may never close. Most businesses reserve when an order is confirmed or paid, and reserve in the warehouse the goods will leave from, not in a company-wide total.
Releasing matters just as much. A reservation should end in one of two ways: the goods ship and leave on-hand stock, or the order is cancelled or reduced and the quantity returns to available. Reservations that simply stay forever are the most common reason a warehouse full of goods reports nothing to sell.
Worked example (illustrative numbers)
A distributor holds 120 units of one item in warehouse A. Three confirmed orders have reserved 40, 20 and 10 units, so 70 are reserved. Five units came back damaged and are blocked. Available in warehouse A is 120 − 70 − 5 = 45.
A new customer asks for 60 units. The on-hand figure of 120 suggests yes; the correct answer is that 45 can ship now. Warehouse B has 30 available, so the order could be covered by a transfer or a split shipment, and a purchase order for 50 units is due next week. The salesperson can offer 45 now and 15 later, or 60 after the transfer, and give a date that holds.
Now suppose the 20-unit order was cancelled last month and its reservation was never released. The system shows only 45 available when the real figure is 65, so the company turns down business it could have taken. Wrong reservations hurt in both directions.
Step by step: setting up reservation rules
- Agree on the formula for available stock and which statuses count as blocked, and write it down for sales and the warehouse.
- Decide the moment of reservation, for example order confirmation or payment, and do not reserve for quotes.
- Reserve per order line in the warehouse the goods will ship from.
- Make every sales channel, including the online shop and phone orders, sell from the same available figure.
- Ship only from reserved stock, so a shipment never takes goods promised to someone else.
- Release reservations immediately when an order is cancelled or reduced, and when a shipment is cancelled, return the lines to the order's reservation.
- Review reservations older than your normal delivery time every week and either ship, reschedule or release them.
- Count stock regularly, because a reservation on goods that are not actually there is still overselling.
How it works in OrgLines
In OrgLines ERP, availability is checked per order line, and stock is reserved in the warehouse it will leave from. When you ask for more than you have, the order line says so plainly, for example «ordered 10, only 6 available». If no warehouse has free stock for a line, the system says so before anyone promises a delivery date.
Shipping follows the reservation. You cannot ship what has not been reserved, and the shipment dialog shows what is available. Shipments are created from reserved stock, and a cancelled shipment returns its lines to the order's reservation. An invoice is blocked when there is not enough stock for some lines, and a transfer cannot exceed the available stock in the source warehouse.
Stock is built from documents: receipts, transfers, shipments and stocktakes, so the on-hand figure behind the calculation is not a number someone typed over. A stocktake reconciles the system with the shelf, and adjusting stock requires a permission. If you sell online through the OrgLines website builder, paid online orders arrive as sales orders in the same system.
Common mistakes
- Quoting from on-hand stock instead of available stock.
- Reserving for quotes and forgetting to release them.
- Cancelled orders that keep their reservations.
- One company-wide total, so stock is promised from a warehouse that cannot ship it.
- Counting damaged or returned goods as available.
- An online shop that reads a different stock figure from the rest of the business.
- Editing stock numbers by hand instead of through receipts, transfers and counts.
Checklist
- Everyone uses the same formula: on hand − reserved − blocked.
- Reservations start at order confirmation, not at the quote.
- Each reservation belongs to a warehouse and an order line.
- All sales channels sell from the same available figure.
- Cancellations release their reservations the same day.
- Old reservations are reviewed weekly.
- Regular counts keep on-hand stock true.