Inventory management: 5 rules to allocate stock across channels 

Inventory management gets harder once the same stock supports more than one sales channel. What used to be mostly about reordering turns into a prioritization task, because every unit you make available in one channel is a unit you can’t sell somewhere else. 

Recent 2025 consumer research shows product availability strongly affects where people buy, and stockouts still cause shoppers to switch brands rather than wait. Allocation decisions, even small ones, can change the outcome. 

More than half of growing product businesses now operate across two or more sales channels. Good inventory management in that setup comes down to two things: keeping a reliable view of free-to-sell stock, and setting clear internal rules for how much inventory you expose to each channel.

1. Start with free-to-sell inventory, not total on-hand 

Inventory allocation works best when you separate what is in stock from what is already promised. 

Before you adjust channel limits, review what is committed. That typically includes: 

• Confirmed sales orders 
• Wholesale commitments 
• Production allocations 
• Stock reserved for quality checks or returns 

After removing those quantities, the remainder is your free-to-sell stock. That is the pool you can allocate. 

Before adjusting how much inventory each channel can sell, check committed quantities and make sure recent updates are recorded. Confirm purchase orders marked as received are fully received in the system. Confirm production allocations are recorded. Then use free-to-sell stock (by location, if you run more than one) as the number you allocate from. 

This is easier when purchasing, production, and sales orders live in one system, because you can see on-hand and committed stock in the same place before you change exposure. 

2. Align total demand before splitting supply 

Channel allocation often becomes reactive. Stock is redistributed based on short-term performance instead of a defined demand window. Over time, that approach creates uneven availability and missed sales. 

A steadier method starts with total expected demand for a set time window. Pick a period that matches how often you review purchasing and channel limits, then estimate demand across all channels for that same period. After that, divide supply. 

A practical way to do it: 

1. Pull recent sales by product across channels. 
2. Adjust for anything you already know about the next period (promo, wholesale order cycle, planned launch). 
3. Add those up into a total demand estimate for the product. 
4. Compare demand to free-to-sell stock. 
5. Set channel caps from that comparison. 

This keeps decisions tied to overall demand rather than whichever channel is moving fastest right now. It also reduces distortions when one channel updates faster than another. 

Tools that support demand forecasting and replenishment planning can help here. For example, Katana’s planning features use historical sales, lead times, and order quantities to suggest restock levels, which makes it easier to compare expected demand against available stock before adjusting channel exposure.

3. Set channel buffers with a defined method 

Buffers help you avoid stockouts when demand jumps or supply arrives later than planned. The important part is to pick a method, apply it consistently, and review it on a schedule. 

Common buffer methods include: 

• Holding back a percentage of free-to-sell stock 
• Holding back a fixed number of units based on average sales 
• Holding back enough stock to cover supplier lead time 

Buffers can live either as a held-back pool that is not exposed to any channel, or as reduced caps per channel. What matters is that the reserved quantity is clearly defined and visible during allocation reviews.  In practice, this is usually managed through internal allocation rules rather than a system-enforced block on specific units.

Pick one method per product group and document it. Then review buffers on a cadence that matches how quickly the item moves. Weekly reviews work for fast sellers. Monthly reviews are often enough for slower movers. 

A practical starting point is to begin with a small buffer, then adjust based on the outcomes you see. If you keep hitting stockouts during normal demand, increase the buffer slightly. If you regularly finish the period with unused reserve stock, reduce it. 

Distributed inventory adds another reason to keep buffers. Internal research highlights that teams often rely on scattered reports from 3PLs, suppliers, co-manufacturers, and marketplaces, which makes it harder to see inventory across locations at once. Buffers buy you time when updates arrive late or receiving happens in stages. 

4. Tighten exposure when visibility drops 

Allocation decisions rely on confidence in your stock numbers. When confidence drops, tighten exposure until you reconcile. 

Confidence checks can include: 

• Confirming recent stock adjustments are entered 
• Confirming inbound shipments are received and recorded 
• Checking for mismatches between physical counts and system quantities 

Keep the process straightforward: define a visibility check and a predefined response.  

Set a tolerance you can live with. If discrepancies go beyond it, temporarily lower how much inventory you make available in your fastest-moving channel until inventory is reconciled.

Lower caps stay in place until stock adjustments are recorded and inbound receipts are confirmed. Once those updates are reflected in the system, exposure can expand again. 

This is where a central inventory record makes a difference. When committed orders, stock adjustments, and inbound purchase orders are tracked in one place, the team can see whether the numbers support higher exposure or not. Katana keeps those movements tied to the same inventory record, so allocation decisions are based on recorded stock levels.

5. Release reserved inventory using clear triggers 

Holding stock back during uncertainty protects availability. Releasing it should follow rules just as clearly defined. 

Start with quantity. Do not release the full reserve automatically. Instead: 

• Calculate how much stock sits above your defined buffer. 
• Release only the excess. 
• If volatility is still high, release in stages rather than all at once. 

This keeps protection in place while letting idle stock work. 

Next, decide where the released stock should go. Avoid splitting it evenly by default. Use the same demand window you defined earlier and check: 

• Which channel has the strongest recent sell-through 
• Which channel delivers the healthiest margin 
• Which channel has the lowest cancellation or return risk 

Release into the channel that best converts inventory into stable revenue, then review performance at the next allocation cycle. 

Tie release decisions to your review cadence. If you run weekly allocation reviews, release in weekly increments. If you review monthly, match the release rhythm to that window. That prevents large swings in exposure. 

When on-hand, committed, and inbound quantities are visible in one place, these release decisions become grounded in recorded inventory rather than pressure from a single channel. Katana keeps those quantities aligned across purchasing and stock movements, which helps teams review and adjust allocation decisions with clearer numbers.

Keep allocation tied to one inventory record 

Allocation decisions depend on consistent stock numbers. When purchasing and sales are tracked in separate tools, teams spend time reconciling data before they can adjust channel limits. Reviews slow down, and allocation becomes harder to manage. 

Keeping inventory movement in one system shortens that review cycle. Allocation decisions can be adjusted using the current recorded stock levels.

That’s what Katana helps you do. It tracks stock by location and connects purchasing, production, and sales orders to the same inventory record. Inventory levels can sync to connected tools such as Shopify based on that record. 

Learn more about how Katana supports multi-channel inventory management. 

FAQ: Inventory allocation for multi-channel SMBs

Andreia Mendes

Andreia’s career has revolved around words, ideas, and people. Now she’s added cloud inventory management and SMB operations to that list. At Katana, she brings her creative copywriting background to business tech, proving that even the most technical topics can (and should) be interesting.