Build to Stock
Get Ahead in Business with a Build-to-Stock Strategy
One of the Most Reliable Inventory Planning Models
The idea of a build-to-stock strategy is simple: Staying proactive and one step ahead is the goal – Not just meeting the demand.
Want to say “yes” to every customer order without worrying about the raw material in inventory? That’s exactly what a build-to-stock strategy can help you do.
Simple but powerful, this build-to-stock inventory strategy lets you enjoy the following:
An Efficient Business | Smoother Operations | Happy Customers |
What is a Build-to-Stock Strategy?
Build-to-stock (BTS) is a strategy businesses use to make and store products in advance based on the expected demand. It’s like preparing for an event beforehand: You make sure everything is ready so guests don’t have to wait.
This approach ensures products are available for customers whenever they need them. For this reason, it’s popular in industries, like consumer goods, eCommerce, food and beverages, manufacturing, non-profits, and wholesale.
Example
A toy company reported a 40% increase in sales after employing build-to-stock. It was preparing for the upcoming holiday season. By analyzing last year’s sales and accurate demand forecasting, they begin producing toys in the early months of the year.
When the holiday rush hits, they have an inventory of toys ready to ship instantly. Meanwhile, their competitors? They’re all scrambling to catch up.
Why Your Business Needs a Build-to-Stock Strategy?
In your case, where running out of products is the main issue, BTS acts as a key to unlocking success. With a solid strategy like this in action, no matter when your customer comes calling, the order is fulfilled.
Here’s why build-to-stock should be a part of your strategy:
1. Product Availability
With BTS, product availability is guaranteed. Your business can meet customer demands without delay because BTS enables you to produce goods in advance besides sorting inventory.
No backorders, no delays – just fast and reliable delivery.
2. Rapid Order Fulfillment
This strategy enables rapid order fulfillment. When an order comes in, the product is ready to ship from the inventory. The result is a dramatic reduction in lead times and enhanced customer satisfaction.
3. Ideal for Predictable Consumer Demand
Do you deal in products that have predictable, steady demand? If yes, this strategy works ideally for such products. Also, if your product has consistent sales patterns or seasonal peaks, BTS becomes your go-to because it ensures you’re always stocked up and ready to fulfill orders.
4. Competitive Edge
Staying ahead of the competition is the key to staying in the business game. By employing BTS, you ensure that your products are available when your customers need them. This situation gives you a competitive edge over businesses that struggle with inventory shortages.
Build-to-Stock’s Quick Wins for Your Business
Here’s what your business gets with BTS.
Ship Orders InstantlyNo more waiting for products to be made—ship right from the stockpile. | Keep Perfect Inventory LevelsWith careful planning, you can maintain:
|
Stability Amid Demand FluctuationsEven in the middle of a demand spike, BTS keeps you always ready to respond and accommodate. | Meet Customer Demands InstantlyNo delays in product availability mean you can consistently meet demand and fulfill customer needs. |
How Does Build-to-Stock Work?
Making things simple and smooth is the heart of Build-to-Stock (BTS). Here’s how it rolls:
1. Demand Forecasting
The first step is to estimate customer demand accurately. Businesses analyze historical data, seasonal trends, and market patterns to predict their future needs. With the help of advanced AI and analytic tools, businesses make improved forecasts and plan production with precision
2. Inventory Management
Once the goods are made, they’re stored safely in warehouses, ready to roll when customers place orders. Smart inventory systems keep tabs on stock levels and shout out when it’s time to restock—no mess, no fuss.
3. Order Fulfillment
When an order comes in, the product is picked from inventory and shipped to the customer. The beauty of BTS is in the speed of this process.
Since the product line is already manufactured they can be shipped immediately. This, in turn, minimizes the lead time and enhances customer satisfaction.
4. Production Planning
Once demand is forecasted, Businesses can confidently plan their production schedules accordingly. The goal is to align production plans with anticipated demand and leverage economies of scale for bulk production.
Remember! Smart scheduling ensures that goods are manufactured efficiently to meet forecasted demand.
If you’re dealing with multiple products and are unclear about which product to stock on a priority basis, here’s a roadmap.
Analyze Past Sales
Look at your historical sales data to see which products sell the most and when.
Spot Demand Patterns
Identify patterns and trends in customer demand to inform your production process schedules.
Smart Production Scheduling
Plan production based on demand and create efficient workflows to keep things moving.
Monitor Sales Trends
Continuously track what’s selling well now to adjust future production and stock levels.
Not Sure About Your Supply Chain?
Learn to Manage Your Stock
Smart ways to manage your stock with build-to-stock inventory and build-to-stock Supply Chain include:
Bulk Purchasing | Purchase material in bulk to save costs and prepare for future production. |
Efficient Production | Produce in large batches to keep unit costs low. |
Organized Storage | Store finished products smartly to keep inventory levels balanced. |
Fast Shipping | Get products out the door as soon as an order is placed. |
Common Mistakes You Must Avoid While Adopting BTS
Learn about the common pitfalls businesses often face when adopting BTS
❌Excess inventory
Too much stock ties up money in storage costs.
❌Stockouts
Not having enough products on hand leads to customer disappointment.
❌Old products
Unsold stock can become obsolete, especially in fast-moving industries.
❌Timing issues
Buying materials too early or too late can mess up your production schedules.
Build-to-Stock & Modern Tools
With today’s technology, managing BTS is easier than ever.
Get a competitive edge over your competitors by streamlining processes with BTS and these tools.
Inventory Management Software | Track stock in real-time and optimize reorder points. |
Demand Forecasting Tools | Use predictive models to forecast future sales with greater accuracy. |
Real-Time Sales Tracking | Monitor customer behavior and adjust stock levels quickly. |
Challenges of Build-to-Stock
While BTS offers significant advantages, there are also some challenges, such as:
- High Inventory Costs
Storing large quantities of inventory can be expensive, especially if stock becomes obsolete.
Demand Uncertainty
Poor forecasting can lead to overstocking or understocking. Both these factors can impact profitability. Don’t mistake customer demand for mass production.
Obsolescence
Unsold inventory risks becoming outdated, particularly in industries with fast-changing trends. This can lead to financial losses.
Note: The goal isn’t just to fill your warehouse! It’s more about having the right amount of stock to meet demand while keeping costs in check.
Future Trends in Build-to-Stock
The world of BTS is evolving fast. Here’s what you can expect:
Industry 4.0Automation tools, IoT, and AI will refine BTS processes. Expected results? Improved efficiency and accuracy. | PersonalizationMore businesses are blending build-to-stock and build-order (BTO) strategies to offer customized products. |
Real-Time Inventory ManagementAdvanced systems will provide instantaneous insights into stock levels, resulting in agile businesses. | SustainabilityThere will be an increased focus on reducing the environmental impact of production and storage processes. |
FAQs on Build-to-Stock
- What businesses benefit most from BTS?
Industries with consistent demand, such as consumer goods, food, and beverages, benefit the most. - Can build-to-stock be combined with other strategies?
Yes! Many businesses combine a build-to-stock strategy with Just in Time (JIT) manufacturing to balance inventory costs and responsivenes - How to manage excess stock in BTS?
You can run promotional campaigns, repurpose stock, or sell it at discounted rates. - Does SAP Business One support BTS?
Yes, SAP Business One offers tools for demand forecasting, production scheduling, and real-time inventory tracking.
Ready to Scale, Streamline, & Improve Inventory Management & Processes Start with Build-to-Stock Today
- build-to-stock isn’t your ordinary inventory modeling tool! Besides learning how to build inventory and how to manage it, it’s also a great strategy that brings in for you:
- Happy customers (quick orders!)
- More cash in hand (less waste)
- No more stock worries
- Smarter planning for busy periods
- Smoother day-to-day operations
Have More to Share on Build-to-Stock? Let’s Connect!
What’s up your sleeves about BTS? First-hand experiences? Case studies? Or proven stats and figures? We’d love to add your expertise to our blog. Get in touch today to write to us about your take on build-to-stock(BTS).
Let’s help businesses choose the best options by providing them with authentic, expert opinions on build-to-stock!
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