This is a common discussion for me. People are convinced that safety stock will help them to achieve inventory management goals. But when I ask questions, it’s not always clear what they are trying to achieve or how they are using safety stock.
Easiest for me is to think in analogy. And to think in subjects outside of our normal purview. Where we don’t already have a preformed opinion.
Potatoes. I like ‘em. I eat them all the time. So I want to keep a stock of them.
I can set a safety stock (who does this) of 2 potatoes. This is a warning that I’ve gotten to a dangerously low level and I should react right away.
I can set a safety stock of 10 potatoes, because that’s how many I will likely use between now and when I’ll next get to the store. This is more of an order point than a safety stock.
I can set a goal of always having about 15 potatoes in stock, which would mean I should pick some up in the next couple days when I get down to 20 potatoes. Is this something that can be achieved through safety stock? Also requires a first-in, first-out strategy.
If you’re getting your potatoes from a store, you’re facing a different decision than if you’re planting potatoes for a harvest once a year. Then your potato decisions must last you until the next harvest.
The complexities of sole sourcing, replenishment methods, safety stock, and other supply chain topics can all be explored through the items in your pantry. Just change a variable or two, and you’ll have a spirited discussion about how the supply chain topics are really applied. And, if you’re like me, the discussion may also make you hungry.
