Safety Stock Training


This module is a complete examination of a company’s safety stock levels. It starts with the reasons to keep safety stock levels, reviews how a company inventory levels match the safety stock levels set, looks at how safety stock should be calculated based on demand, supply, and process input, and reviews how safety stock should be used in both an MRP and independent demand re-order point systems.

Based on past experience with the understanding contained in this module, a company should be able to significantly reduce their inventory levels while maintaining, or improving, their customer service and operational process service levels.

Recommended For:

Those people responsible for setting safety stock or those that are most directly affected. Attendees would need to bring safety stock level data for at least one SKU, and the class would need access to an ERP system (either online or reports).

Time: 3 hours

Topics Covered

  • Definition of Safety Stock
  • Reasons for safety stock
    • Variability in demand, supply, and process
  • The relationship between safety stock and service levels
    • Management accepted levels of service
    • Safety factors
  • Safety stock approaches
    • Statistical
    • Time period
    • Fixed
  • The relationship between safety stock and order quantities
  • Setting safety stock levels in an ERP system
  • Use of safety stock in an MRP and in an independent demand re-ordering system
    • Setting safety stock at appropriate levels in the Bill of Materials
    • Safety stock in reordering and periodic review systems
  • Review and sustainability of safety stock levels
  • Practical exercises using actual company’s demand and supply data
    • Re-calculation of safety stock levels
    • Review of historical levels of inventory, using ERP transaction data
    • Comparison of historical inventory levels versus safety stock