What is forward integration in the context of inventory management?

Forward integration in the context of inventory management refers to a strategy where a company expands its operations by gaining control over the distribution of its products directly to customers. This can involve acquiring distribution channels, such as retail outlets or e-commerce platforms, which allows the company to manage the flow of goods from production to the end consumer more effectively.

This strategy helps to enhance customer reach and decrease reliance on third-party distributors, ultimately giving the company greater control over its inventory levels, pricing, and customer service. By moving closer to the consumer, a business can better align its inventory with actual market demand, which can reduce excess stock and improve overall efficiency in operations.