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Forward Buying
 

 

Forward Buying : Forward Buying as the name suggests is the system under which buying is done with longer term in perspective.

It is not meant for meeting the present consumption requirement. It is rather a commitment on part of both the buyer and the seller , normally for a period of one year.

Depending upon the availability of the item, the financial policies, the economic order quantity, the quantitative discounts, and the

staggered delivery, the future commitment is decided.

A few organisations do “hedge”, particularly in the commodity market by selling or buying contracts.

Forward buying helps a firm in booking capacity of a supplier and thus often results into a safeguard against a competitor acquiring his capacity. It is usually done for Raw materials but is not limited to it. Now a days , with competition becoming globalised such an arrangement is a win-win situation for both , the buyer and the supplier.

   
 
 
   
 
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