4 reasons for carrying safety stock

You might be a manufacturer working on an order when you realize you’re out of a necessary component due to a sudden increase in demand. You can’t finish the order until you’ve placed the order and received that part, which delays customer delivery.

Maybe you’re a distributor who received a regular order from a customer, only to find that your supplier is experiencing unexpected, longer-than-usual lead times. This means you can’t fulfill your customer orders on time.

In both cases, customer service levels are negatively impacted by a challenge that could have been prevented by carrying safety stock.

Safety stock, sometimes called buffer stock, is the extra level of stock carried to mitigate the risk of run-out for raw materials or finished goods due to uncertainties in supply or demand. Safety stock ensures that, once you’ve run through your cycle stock (what you expect to sell during a specific period), you can fulfil orders, even if there is an unexpected change in demand or supply.

To maintain high customer service levels, it’s essential to calculate and use accurate safety stock requirements. Using a trial-and-error strategy or a rule-based approach to cycle stock and safety stock results in stock imbalances.

Unfortunately, rules-based approaches tend to be a “one-size-fits-all” approach to inventory management, for example, holding a certain number of weeks of historical average demand, such as four weeks of cycle stock and two weeks of safety stock.

While the “one-size-fits-all” rule will deliver the right amount of inventory for some items, it will deliver too much or too little to meet service levels for others. These inventory imbalances simultaneously result in excessive inventory costs, impeded cash flow, and poor or inconsistent service levels. They are also only sensitive to demand changes, not supply disruption.

4 primary reasons for carrying safety stock

Safety stock is more than just a nice-to-have; it’s a necessity. Here are four key reasons why even small- and mid-sized businesses should carry safety stock.

1. Safety stock protects against unforeseen supply chain disruption

Supply chains are longer and more globalized, with more forces causing disruptions than ever before. If your supplier unexpectedly closes for a week or there is a disruption to delivery, safety stock allows you to continue to fulfil orders.

2. Safety stock compensates for forecast inaccuracies (when demand exceeds the forecast)

If you have consistent demand for a certain item, but in one month you experience a surge in demand and sell more than your forecast, safety stock will cover this without sacrificing your customer service level during replenishment.

3. Safety stock prevents disruptions in manufacturing or deliveries

Safety stock helps maintain high customer service levels and a smooth supply chain. It reduces stress and administrative time for your teams. Instead of running around trying to locate and reorder parts, they can focus on fulfilling customer orders.

4. Safety stock helps avoid stockouts to maintain high customer service and satisfaction levels

Safety stock’s real goal is to keep customers happy. While safety stock helps with the smooth running of your warehouse and supply chain, the end goal is to ensure customer satisfaction and keep them coming back.

However, since each SKU in your inventory has a unique demand pattern, you need to adjust your safety stock levels accordingly. Safety stock requires a tailored approach that considers more factors than. rule-based approaches offer. For example, accurate safety stock levels include service levels, forecast accuracy, and lead time variability.

A sound, mathematical approach to safety stock calculations not only justifies the required inventory levels to business leaders, but also balances the conflicting goals of maximizing customer service and minimizing inventory costs.

Learn more

To understand best practices for calculating safety stock for your business, download our free eGuide “How to calculate safety stock for inventory management”.

If you’d like to discuss how EazyStock can support your business with automated safety stock calculations, contact our expert team or request a demo.

This post was first published in March 2022 and updated in January 2026