What is one of the primary functions of inventory?

One of the primary functions of inventory is to buffer uncertainty in the marketplace. In supply chain management, businesses face various uncertainties such as fluctuating demand, unpredictable supplier lead times, and changes in production schedules. By maintaining an inventory, organizations can ensure that they have sufficient stock on hand to meet customer demand even when these uncertainties occur. This not only helps in maintaining customer satisfaction through timely delivery but also protects against stockouts that could negatively impact sales and operational efficiency.

Having inventory acts as a safety net, allowing companies to respond quickly to changes in demand or supply disruptions. This function is critical in a competitive market where customer expectations for availability and rapid fulfillment are high. Thus, the ability of inventory to act as a buffer against uncertainty plays a vital role in the stability and reliability of supply chains.