Supply Chain Glossary
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Glossary
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Allocation
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Allocation
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The practice of rationing customer orders at times of supply shortage. For example, all customers may have only part, say 50%, of their original orders delivered so that only, for example, 50% of the original order volume is delivered. To be placed ‘on allocation’ may cause buyers concern about continuity of supply and many buyers seek to position themselves as ‘preferred customers’ so that in times of shortage they get preferential access to scarce resources. See also Customer, Preferred.
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Last update 5 Nov 2019
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