Capacity hedging

{
  "id": "MLC-T-LOG-000039",
  "term": "Capacity hedging",
  "field": "Logistics and supply chain",
  "definition": "A strategy of securing access to more production or logistics capacity than is required by a baseline forecast to guard against demand uncertainty or supply disruptions. This involves using a portfolio of flexible and committed contracts, holding inventory, or maintaining redundant suppliers to create a buffer. A common form is a dual-sourcing strategy where a reliable but expensive supplier is combined with a low-cost but less reliable one.",
  "url": "https://mlchart.com/terminology/logistics/capacity-hedging/"
}