Too Much Safety Stock?

Excess Safety Stock – How Much?

“Guaranteed” – If you’re not delighted with the results, get a full refund!

Many Business have way too much safety stock.

And many don’t realise!

Safety stock to mitigate the risk of stocking out, sometimes equates to upwards of 40% of an organisation’s total inventory holding. 

Using your purchase and sales data, our proprietary analytics software will;

• Determine the ‘right’ safety stock level for your network considering observed demand and supply variability, target service levels and lead times.
• Conduct detailed scenario modelling based on alternate demand, supply and service inputs.
• Quantify the impact to your bottom line should you realise the benefits of reducing supply chain variability.
• Tell you exactly what you need to do to achieve those improvements.

Typical Benefit: 5% safety stock reduction opportunity

Who is it for? Supply Chain Managers looking to delve further into optimizing their inventory.

What you get? A customized report quantifying the potential inventory reduction to be gained from reducing supply and/or demand variability.

Did you know that to cover demand and supply variability, typically ~50% of inventory is needed just as safety stock?

Even though it’s a significant investment, safety stock optimisation is overlooked.

How much inventory could be taken out of your supply chain if you reduced supply and demand variability?

Our safety stock optimisation report answers this question. We take a deep dive into your supply and demand order history to determine just how much inventory you could save by focusing on reducing variability.

Maybe contact us today to find out more? 

“Guaranteed” – If you’re not delighted with the results, get a full refund!

Safety Stock Diagnostic: Balance Service & Working Capital

The Safety Stock Dilemma

Too much safety stock ties up valuable working capital and warehouse space. Too little leads to stockouts, expedited shipping costs, and damaged customer relationships. Finding the optimal balance is one of supply chain’s most persistent challenges.

Our Safety Stock Diagnostic provides a systematic assessment of your current buffer inventory practices, identifies improvement opportunities, and delivers a tailored optimisation plan to simultaneously reduce inventory investment and enhance service levels.

Beyond Simple Safety Stock Formulas

Most companies use simplistic methods to calculate safety stock, resulting in either excessive inventory or service failures. Our diagnostic goes deeper by:

🔍 Evaluating Your Current Approach

• Safety stock calculation methodology assessment
• Parameter accuracy verification
• Variability source identification
• Policy appropriateness review
• Seasonal adjustment effectiveness

📊 Analysing Actual Performance

• Buffer utilisation patterns
• Stockout correlation analysis
• Excess buffer identification
• Service level achievement
• Working capital impact quantification

📈 Examining Variability Drivers

• Demand volatility patterns
• Forecast error impact
• Lead time reliability
• Supply consistency
• Production stability

🧩 Assessing Segmentation Strategy

• Product segmentation appropriateness
• Service level differentiation
• Location-based adjustments
• Lifecycle stage considerations
• Channel-specific requirements

Our Proven Diagnostic Methodology

Our consultants apply a structured four-phase approach:

1. Data Collection & Validation
   We gather historical inventory, demand, and service data across a representative sample of your product range.
2. Current State Analysis
   We assess your existing safety stock methodology, parameters, and performance outcomes.
3. Opportunity Identification
   We identify specific product groups, locations, and policies where optimisation will deliver the greatest benefits.
4. Optimisation & Implementation Planning
   We develop tailored recommendations with implementation guidance and projected benefits.

Practical Solutions, Not Just Theory

“Logistics Bureau’s Safety Stock Diagnostic identified that our one-size-fits-all approach was causing both excess inventory and service failures. Their segmented model reduced safety stock by 27% while improving service levels by 1.5 percentage points.”
— Inventory Control Manager, Wholesale Distribution Company

Deliverables That Drive Action

Our Safety Stock Diagnostic delivers:

• Comprehensive Assessment Report documenting current state findings and opportunities
• Optimised Safety Stock Models tailored to your specific business requirements
• Segmentation Framework for differentiated safety stock strategies
• Parameter Setting Guidelines for ongoing maintenance
• Implementation Roadmap with prioritised actions and timeframes
• Financial Impact Analysis quantifying working capital and service benefits
• Monitoring Framework to ensure sustainable results

Common Improvement Opportunities

Our diagnostic typically identifies:

• Products with excessive safety stock relative to variability
• Categories with insufficient buffers despite high service requirements
• Opportunities to reduce safety stock through lead time stabilisation
• Alternative buffering strategies for specific product segments
• System parameter adjustments for more accurate calculations
• Process improvements to reduce underlying variability

Typical Client Results

Our clients consistently achieve:

• 15-30% reduction in safety stock inventory
• 1-3 percentage point improvement in service levels
• Enhanced inventory visibility and control
• More responsive adjustment to changing conditions
• Better alignment of inventory investment with business priorities

Begin Your Safety Stock Optimisation Journey

The Safety Stock Diagnostic typically requires 3-4 weeks and delivers both immediate working capital improvements and a sustainable framework for ongoing optimisation.