How much Safety Stock should you hold?
How do you determine how much safety stock to hold in a time-phased planning environment? Do you make arbitrary decisions, for instance; we never want to run out of stock of X products so let’s hold x weeks of forward sales OR some complicated method that’s onerous to use. Or Excel?
How we Calculate Safety Stock?
Safety Stock or Safety Time is based on customer service level requirements, forecast accuracy as well as lead time.
Our Forecasting application automatically chooses the best forecast outcomes between Machine Learning and Classic Forecasting.
At the same time, it calculates a multi-dimensional classification of products by frequency of sales and relative importance to the bottom line.
Our Machine Learning also provides Demand Sensing for the recent past so it identifies new sales trends early in the product life cycle.
Calculating Safety Stock is not only about the number of units. You also need to know what the associated costs will be. You can’t spend weeks to come up with the right numbers.
Strategize is a simulation tool, built into our planning application that allows you to review alternatives in seconds and you choose which results you want to update into your planning system.