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Efficiency Over Inventory: Lessons from Industry Behavior
The industry historically favored efficiency over building inventory, leading to delays in matching demand with supply. Attempts to build inventory in the past resulted in market volatility due to a rush to purchase, mimicking a pull-forward demand scenario. Presently, industry participants maintain lean, just-in-time inventories due to the high cost of storage compounded by current interest rates. There has not been a significant shift towards building additional inventory as many remain uncomfortable with low inventory terms and the financial implications.