Accurate Safety Stock Calculations Lower Inventory Investment

Calculated by factoring in total lead times, service level targets, forecast demand, and service times, among other inputs, safety stock is, at its core, a buffer against demand variability and uncertainty in the supply chain.  Because safety stock ties up cash by simply sitting on the shelves of plants or distribution centers, companies must identify the minimum safety stock required to meet service levels and avoid excess inventory. 

Safety stock is necessary, but can often be significantly lower than what is currently calculated by rules-of-thumb, single-stage spreadsheet work, or making decisions based on "collective wisdom."  These manually intensive efforts routinely fall short, leaving you over-buffering inventory levels or scrambling to meet demand.

SmartOps MIPO^TM helps you to account for and manage the uncertainties and complexities of your multistage supply chain to improve your safety stock calculations and enable you to accurately set ongoing safety stock levels that vary over time, significantly reducing your overall inventory investment without affecting service levels.

Key Capabilities

• Calculate accurate safety stock targets for all items, all locations, for all time periods simultaneously
• Comprehensive data model with easy-to-use tools that streamline information gathering and validation to ensure rapid processing of supply chain data and trustworthy output
• Considers millions of variables and calculate optimal values at the most granular levels of detail in a multi-tiered supply chain
• Overlays existing systems, continuously synchronizing to provide optimal targets as inputs to existing systems
• Direct visibility into the drivers of supply chain performance to pinpoint opportunities for better managing uncertainty and creating value in the supply chain

Benefits

• More accurate safety stock targets reduce inventory and operating costs with the lowest-cost, lowest-risk inventory positioning plans
• Increased service levels, product availability, and customer satisfaction
• Improved asset utilization and total inventory turns
• Visibility into drivers of safety stock inventory and supply chain performance
• Increased planner productivity