Forward buying

Posted in Operations and Supply Chain Terms, Total Reads: 14741

Definition: Forward buying

Forward buying is a process related to retail inventories, financial instruments, assets etc, wherein they are purchased in quantity excess to demand to counter future price rise. This is practised by retailer when they find manufacturers selling the product at a discounted price and purchase the items bulk. Now when the price of the product is set to original price by the manufacturer, retailer can make profit by selling the item purchased at low price earlier.

This is used when manufactures are overstocked and they want to clear the inventory. They give the discounts to the retailer and retailer also get benefited by getting better profit margins.

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