Some businesses order more than they need. They’re then left with stock that they don’t need and can’t sell. The inventory that’s there that you can’t sell costs you money if it’s just sitting there. It may be cheaper, per unit, to buy 4000 tonnes of coal but if you’re going to waste 1000 tonnes of it then this is extra cost that you don’t need. To get economies in the supply chain, businesses used to buy much more than they required. The retail trade was particularly notable for it. Retailers used to buy much more than they needed. This is where the concept of the retail sales season came from to get rid of excess stock. With modern software packages and software tools to manage the supply chain, this situation has improved and businesses have “got smarter”.
If you want to introduce scarcity and prestige, you can size your supply chain to keep limits on manufacturing so that you have more customer demand than you can supply. In times of surplus it creates artificial scarcity and the rules of supply and demand can raise prices. In times where the whole industry is having problems with excess capacity (as the motor industry is at the moment), it’s only necessary to relax the supply chain rather than dispensing with whole sections of it since you were making the product artificially scarce to begin with. If you can still sell all that you’re producing (but now without the same scarcity) then it’s situation normal.
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