Safety stock

Concept

Extra inventory held to cover uncertainty in demand or supply, so that a delay or a spike does not stop production or delivery. It costs money, so its size is a balance.

Description

Safety stock is inventory kept on top of the expected need, to cover surprises such as a late delivery, a quality problem or a jump in demand. Without it, a small disturbance can stop a line or leave an order unfilled.

The cost is capital tied up in stock, storage space and the risk that parts become obsolete. The right size depends on how much demand and supply vary and on the service level the company wants to reach. A common planning formula uses the variation of demand during the replenishment time, but the result is only as good as the data behind it. Lean thinking treats stock as a way of hiding problems, so lean plants try to reduce the variation itself before they cut the stock.

Glossary

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Maintained by Mirko Peters (Microsoft MVP) · Last updated: 2026-11-11