What is Reservation in Warehouse Logistics?
In warehouse logistics, the concepts of reservation, reservation window, and reservation strategy play a crucial role in inventory control and material flow planning.
Reservation
A reservation refers to the allocation of inventory for a specific purpose or a planned order. This means the reserved stock is no longer available for general use. For example, when a customer order is received, the corresponding items in the warehouse can be reserved to ensure they are available for picking at the required time.
By reserving inventory, companies ensure availability, meet delivery commitments, and prevent stockouts.
The more time passes between the reservation and the actual withdrawal, the longer the reservation window.
Reservation Window
The reservation window (or reservation span) describes the time gap between the moment of reservation and the actual withdrawal from stock — typically the shipping date in retail or the production date in manufacturing.
A long reservation window may block items for too long, leading to lower warehouse utilization and potential bottlenecks. Therefore, reservation windows should be optimized to strike a balance between availability and efficiency.
Reservation Strategy
To manage this balance effectively, companies implement a reservation strategy. This defines the rules and conditions under which reservations are made and helps align stock availability with warehouse efficiency.
Three Common Reservation Strategies:
- Dynamic Reservation
The most sophisticated method: reservation depends on stock levels, lead times, and order priority. - Early Reservation
Inventory is reserved immediately upon order entry. This ensures high delivery reliability but may reduce overall warehouse utilization. - Late Reservation
Also known as just-in-time reservation. Items are only reserved shortly before withdrawal, which increases flexibility and efficiency, but also carries a higher risk of unavailability.
Images:
Image: pluie_r / Shutterstock