Safety stock - what is it and how to calculate it-ppc - EazyStock

Safety stock – what is it and how to calculate it?

A free resource from EazyStock ‘How to Calculate Safety Stock for Inventory Management’ will show you tried and tested methods for calculating safety stock and improving stock availability.

About your free safety stock eBook

In this eBook we show you how to calculate safety stock – from the most basic, easy-to-use examples, to more sophisticated, statistical formulas.

We also provide strategies to ensure you hit fulfilment targets whilst reducing your inventory costs.

Get our eBook now!

Download this eBook and discover:

  • The importance of accurate safety stock levels
  • The basics of safety stock management
  • Methods and formulas for calculating safety stock & examples

What is safety stock?

Safety stock, also called buffer stock, is the layer of inventory carried by businesses to help prevent stock shortages that occur due to unforeseen events.

Safety stock is used to manage supply and demand uncertainty, such as unexpected surges in sales or delays to lead times (supplier deliveries or production delays). Safety stock helps cover such eventualities and helps prevent stock-outs.

Inventory management teams are constantly looking to achieve high service levels (a measure of product availability) without tying-up too much capital in stock. An important piece of this puzzle is correctly calculating safety stock.

Tips for using safety stock calculations

When using safety stock formulas here are some key things to remember:

Choose your safety stock calculation wisely!

Buying inventory involves tying-up capital, so it’s important to calculate safety stock as accurately as possible.

Check your calculations regularly

Manual, static safety stock calculations can result in excess stock or the risk of run-outs.

Use a safety stock calculation that incorporates service levels and combine it with an inventory classification model

You can then have different safety stock levels based on the importance of your stock item.

Don’t focus too much on safety stock

Try to improve the accuracy of demand forecasts and work with suppliers to improve lead time reliability.

Want to learn more? Get our free eBook on safety stock now!

Safety stock is sorted with EazyStock

The simplest safety stock formulas are easy to calculate, but often inaccurate. This is because they assume that forecasted demand will be accurate and lead times will be consistent. On the other hand, more complex calculations can be very time-consuming to manage and open to human error.

Many companies are therefore turning to inventory optimisation tools, such as

EazyStock connects to your current stock system and uses advanced algorithms to automatically calculate safety stock quantities at SKU level.

EazyStock’s safety stock calculations consider dynamic demand forecasts, changes to lead times and your required order fullfilment targets.

The final safety stock quantities are then used to produce optimised reorder recommendations – speeding up purchasing tasks and reducing the risk of stock-outs.

Why EazyStock?

Ensure stock availability

Ensure stock availability

Make sure you always have the right products on the shelf to prevent stock-outs and delight your customers.

Optimise demand forecasts

Optimise demand forecasts

Utilise advanced algorithms to track product demand, accounting for life cycle stages, trends and seasonality variances.

Lower inventory levels

Lower inventory levels

Get rid of excess and obsolete stock, freeing-up working capital for investment elsewhere in your business.

Automate re-ordering

Automate re-ordering

Produce automated order proposals to process in EazyStock or send back to your ERP.

Accurate replenishment

Accurate replenishment

Automatically calculate safety stock levels, re-ordering points and order quantities to ensure optimised inventory levels.

Be smarter with suppliers

Be smarter with suppliers

Place orders more cost-effectively by considering suppliers’ delivery schedules, lead times, discounts and costs.

Improve efficiency & save time

Improve efficiency & save time

Ditch the manual spreadsheets and save time that can be spent on strategy and innovation.

Get a fast ROI

Get a fast ROI

Benefit from rapid ERP integration and get up and running fast with a system that’s easy to deploy.

Trusted by growth-driven companies

Get our free eBook on safety stock

Calculating appropriate inventory levels is challenging. If you carry too much stock, you tie up working capital. Too little, and you face potential stock-outs and unhappy customers.

When demand for inventory items is consistent and lead times are reliable, it’s fairly easy to calculate your safety stock. But, when demand and supply fluctuate, the job becomes much tougher.

In this eBook we investigate how to overcome these challenges.



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