UNDERSTAND THE CONCEPT
Safety stock is a buffer for uncertainty in demand or replenishment. It is different from the stock expected to be consumed during normal lead time. A useful review begins with the consequence of a shortage, the reliability of supply and the pattern of consumption. Common statistical approaches work best when their assumptions resemble the data; intermittent maintenance demand may need scenario analysis and engineering judgment instead of an average-demand formula alone.
Treat a buffer as a decision with an owner and a review date. More stock consumes cash and can create preservation, expiry and obsolescence exposure. Too little can leave a critical job waiting. Track actual shortage events and the reasons for buffer consumption, rather than judging the policy only by stock value. Repeated late deliveries may justify temporary protection, but also require a supplier action plan. Safety stock should not silently become the permanent substitute for fixing unreliable supply.
Questions to take back to your team
- Which demand or supply uncertainty is this buffer covering?
- Do the calculation assumptions fit intermittent spare-parts demand?
- What evidence will trigger the next buffer review?
Further reading
Explore the primary references below. Requirements and applicability depend on your organization and jurisdiction.
