Supply ChainFlow

Safety StockBuffer Stock

Extra inventory held as a buffer against demand and supply variability to protect service level.

Safety stock is the cushion of inventory held above expected demand to absorb variability in demand and supply lead time, protecting a target service level (the probability of not stocking out).

It is sized statistically from demand variation, lead-time variation, and the desired service level. Reducing the underlying variability — not just adding stock — is the lean way to shrink it. Safety stock combines with the reorder point to set replenishment policy.

Go Deeper
Safety Stock Calculator→Inventory Management guide→
Related Terms
Reorder Point
The inventory level at which a replenishment order should be placed to avoid a stockout during the lead time.
Economic Order Quantity
The order quantity that minimizes the combined cost of ordering and holding inventory.
Inventory
Raw materials, work-in-process, and finished goods held in the system — one of the eight wastes when excessive.
Lead Time
The total elapsed time from order (or raw material) to delivery (or finished product), including all waiting.
ABC Analysis
An inventory categorization that ranks items into A, B, and C classes by value so control effort is focused where it matters.

Put Safety Stock into practice

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