There are multiple ways that business leaders use anticipation inventory. This helps manufacturers to keep production at a steady pace. Anticipation inventory hedges against all of these issues.Īdditionally, companies that purchase extra supplies as anticipation inventory can guard against price hikes or material shortages in the future. In many ways, not having a product available costs you more than just that one sale.
Not having a product in stock when people want to buy it affects your sales volume and customer loyalty. Research shows that running out of product (out-of-stocks) causes multiple problems that lead to margin erosion.
The difference is that safety stock is held for unexpected events, and anticipation inventory – as the name entails – is held because you expect a run on your product at certain times. Anticipation inventory is another speculative strategy, but it’s based on things that you expect to happen (rather than unexpected changes). Safety stock is held in warehousing and is particularly helpful when facing uncertainty in supply. You might have heard of safety stock or buffer inventory, where companies keep the extra products on hand in case they run into delays with shippers or other problems. Also known as smoothing inventory, this strategy ensures that your customers are satisfied when there is a surge in demand. This strategy can ultimately help businesses to weather expected spikes in demand.Ĭompanies who use this inventory strategy take advantage of historical data by understanding seasonality, holidays, current events, common trends, and other factors to determine how much demand will increase and when. An obvious example is a drink retailer stocking more cold drinks in hot summer months. Simply put, anticipation inventory is the stock that a company keeps in order to accommodate increased demand in the future. In this article, we’ll cover everything you need to know to decide if anticipation inventory is right for your business. More modern and successful companies keep anticipation inventory so that they can accommodate changes in customer demand in the future. Most companies keep inventory in relation to their customers’ demands. One of the most simple – but important – concepts in the business world is supply and demand.
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