Safety stock is the number of products a business keeps on hand as a buffer to prevent stockouts. At least, that is the basic definition. But we can better illustrate what it means by using an analogy.
It’s like how your body keeps a little bit of fat on hand to burn off when food becomes scarce. A business, just like a body, shouldn’t accumulate too much fat because that can lead to all sorts of health problems. You need to find a healthy balance between gorging and starving. That is just common sense.
(more…)
Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks, and small business. Fishbowl is the #1-requested manufacturing and warehouse management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies.
