Forward procurements stand for buying the feedstock, materials, components, and equipment in the amounts which are bigger than the demand, with essential advancing in time when there is no necessity in these product categories.
This kind of procurements lets reduce the negative impact of rising prices on different product categories, also providing protection from the problems rising in future periods gaining the necessary resources.
That is why, under conditions of uncertainty, the companies fall back on forward procurements. It deals with retail trade most of all, when some suppliers propose special prices to their most important customers in the end of quarter, in order to reach the objective KPI of sales.
The example of alternative cost analysis (inventory costs VS savings from forward procurement) is given.
