Forward Buying
Another way of doing this uses forward buying.
•In its simplest form, this happens when an organisation orders more materials than it currently needs and keeps the excess in stock.
•Another form uses contracts to deliver materials at specific points in the future.
•Both of these bring two benefits:
–First, they guarantee supplies for some period in the future and minimise the effect of possible disruptions.
–Second, the price of materials is fixed, avoiding the effects of future price rises or uncertainty.