Overpurchasing

Overpurchasing refers to the acquisition of more goods or materials than are needed for current or near-term use, resulting in excess inventory. It can occur in businesses and households and is often driven by demand forecasting errors, bulk purchase incentives, generous supplier terms, promotions, long lead times, or misaligned budgeting.

Consequences include tied-up capital, higher carrying costs, storage and handling expenses, increased risk of obsolescence or spoilage, write-offs, and potential declines in liquidity and profitability. Excess inventory can also lead to markdowns and waste, and in worst cases regulatory or insurance issues if items become unsafe or noncompliant.

Prevention and management involve improving forecast accuracy, implementing inventory optimization techniques (economic order quantity, safety-stock optimization, ABC analysis), adopting just-in-time or vendor-managed inventory arrangements, and applying spend controls, approvals for large orders, and regular stock reviews. Data analytics, scenario planning, and cross-functional governance help align procurement with actual demand. Perishable goods especially require rotations and shelf-life monitoring; durable goods require obsolescence risk management.

Related concepts include stockpiling, hoarding, and supply chain risk management.