Why do I need Safety Stock?
Modern commerce is based on one very simple premise: supply and demand. Unfortunately, while it may be simple to understand, it is anything but simple to manage.
Over time, demand for your stock and your ability to service that demand both vary, making forecasting uncertain and leading to poor customer service, high distribution costs, slow deliveries, high stock levels, high inventory carrying costs and high back orders, often all at the same time.
In order to resolve these costly issues, you need some stock on hand – safety stock – to reduce inventory shortages (stock-outs).
The trick is to figure out exactly what stock to store and how much of it, then to refine your safety stock calculation processes.