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How much inventory should you push close to consumers?
Strategic inventory buffers work as shock absorbers in the supply chain and help companies meet the ongoing demand fluctuations on time. As such, companies should carry only the amount of inventory required for various buffers in the supply chain.
If the actual inventory exceeds the requisite buffer amount due to production batching, many companies tend to push the extra stock close to the consumers. This actually leads to inventory imbalance and potential future stockouts.
We should keep the extra inventory as upstream as possible, so that it can be allocated dynamically to the node which requires it in future. This is akin to the concept of late differentiation, where the differentiating dimension here is inventory location.
Companies which keep extra inventory upstream end up performing better on both product availability as well as product freshness.