#Stock inventory meaning how to#

Related: What Is Inventory Management? Definition and Example Techniques Speculative inventory uses This saves your company money while also maintaining sales and customer satisfaction. You might use your speculative inventory to cover the time until prices decrease again, or until you find a less expensive supply source. For example, increases in the cost of raw materials, transportation or production can raise your expenses, so having an existing inventory stock purchased at a lower price means avoiding some of these expenses. Having speculative inventory means you're well-supplied, even if there are materials shortages or slow manufacturing periods.Īdditionally, speculative inventory is important for protecting your business against any sudden increases in the cost of manufacturing. Ensuring that your business is fully stocked to handle future supply chain issues can reduce the potential for lost sales, stockout or customer dissatisfaction, meaning you can keep your customers happy by having the needed supplies to meet their expectations. Speculative inventory is important because it provides a protective measure for businesses against changes in the supply chain. Related: Inventory: Definition and Methods for Management Why is speculative inventory important? To determine their speculative inventory needs, companies study their inventory control system and measure the cost of supplies against the risk of price increases or supply shortages.

By overstocking inventory, companies may save money and ensure they have the supplies they need to meet customer demand. This practice helps them defend against supply chain issues and price increases that could cause stock shortages or additional expenses. Businesses may stock more inventory than they expect to sell within a sales period in case of future need. Speculative inventory is stock that a company purchases in anticipation of future demand.

#Stock inventory meaning how to#

In this article, we define what speculative inventory is, explain why it's important and provide considerations for its uses, with tips for how to apply it to your business. Learning about this type of inventory can help you understand its benefits and decide if integrating it into your inventory management system is the right decision for your business. Speculative inventory can benefit businesses by protecting them against changes in their supply access or increasing production expenses. Companies may build a supply of stock called speculative inventory in anticipation of changes in the manufacturing process.