Safety stock
Safety stock is used to safeguard stock in the supply chain against uncertain influencing factors. It is an extra quantity of an item that is held at a location to reduce the risk that an item is going to be out of stock. Maintaining enough safety stock enables businesses to deal with demand or supply uncertainty.
The safety stock is the inventory present in a specific location that is hidden from the
available to promising quantity and therefore is not exposed to other channels of sales like
e-commerce.
Note: Setting explicit safety stock in the legacy item-based safety stock approach causes
a separate availability change event to be raised, whereas setting a rules-based safety stock does
not raise a separate availability change immediately. In addition, it also reflects the updated
safety stock value in the next availability change, which is raised by the system when the safety
stock rules get evaluated. The rule evaluation happens as part of availability checks, reservations,
demand, and supply updates.
It is important to maintain some buffer inventory so that channels
do not over-promise their consumers. Safety stock is derived by the systems that predict the number
of units that are sold to walk-in consumers. This prediction can be used as safety stock so that the
availability calculation does not consider the stock that is reserved for walk-in customers. The
prediction of grocery items shrinkage due to events such as expiring or damaged products, is another
example. However, this prediction is considered for availability calculation.The available to sell quantity is determined by the available quantity minus the safety stock that is withheld.