Safety stock is a term used in inventory management to describe a level of extra stock that is maintained to mitigate the risk of stockouts (shortages) caused by uncertainties in supply (e.g., delayed shipments from suppliers) and demand (e.g., sudden spikes in customer orders). It acts as a buffer between the regular inventory and potential unexpected events.
Recurrency makes the process of managing Safety Stock a straightforward task, by providing you with a baseline, and allowing you to set a Safety Stock that best aligns with your business needs.
The Purpose of Safety Stock
Safety Stock plays a role in helping with:
Demand Fluctuations: To account for unexpected surges in demand that aren't captured by regular demand forecasts.
Supply Chain Disruptions: To mitigate the impact of unpredictable supply chain interruptions, like transportation delays, supplier shortages, or natural disasters.
Lead Time Variability: If the time it takes for stock to be replenished (lead time) is inconsistent, safety stock can help ensure product availability during longer-than-expected lead times.
How Recurrency Calculates Safety Stock
The ideal way to calculate Safety Stock is to automatically generate it based on the goals of the business. In its current form, Recurrency calculates Safety Stock through a set of rules as follows:
If you have overridden Safety Stock in Recurrency to a certain amount of days exists, we will use that value.
If a value exists in your ERP, we will use that value.
If no value exists in your in ERP and you haven't overridden the value in Recurrency, we will then use the Recurrency default.
Understanding Default Safety Stock
In the Settings panel, Admins can choose to enable the "Use Half of Lead Time Demand to Calculate Safety Stock" option. This setting modifies how Safety Stock Default is determined:
When Disabled: The Default Safety Stock is based on the safety stock value set in your ERP. It’s important to note that this value must be a number (including 0). Null values are not considered; in such cases, Recurrency will automatically calculate a default safety stock.
When Enabled: Recurrency disregards any safety stock values in your ERP and calculates Safety Stock based on half of an item's demand over its lead time. This calculation dynamically adjusts as lead times change, allowing for more responsive inventory management.
Adjusting Your Safety Stock in Recurrency
You can override Safety Stock from multiple places in the Recurrency platform:
From the Planning Tab, by navigating to the Actions icon.
From the Planning Tab, by performing a bulk update.
From the Planning and Purchasing tabs, directly in the Context Panel
If you want to override an item's Safety Stock, you can easily do so by following this step-by-step guide:
Access the Context Panel: Start by navigating to the Context Panel which appears when you click on an item, both in the Planning tab in the Planning module, and the Line Item details in the Purchasing module.
Select the Relevant Item: Click on the specific item you wish to modify the Safety Stock for. This will open the item context panel on the right side of the screen.
View the Safety Stock: In the top section of the item context panel, you will find the current Safety Stock for the selected item.
Updating Safety Stock: When you click the "Edit" button, a pop-up window will appear, enabling you to modify the Safety Stock value.
Apply the Override: After making the necessary adjustments, click the "Override" button to confirm your changes.
If you prefer to make updates in bulk, you can:
Navigate to the Planning tab.
Select all the items you want to bulk update.
Click on the Actions button on the top-right-hand side of your screen (see #3 in image above).
Follow steps 4-6 above. Note that this will override all the selected items with the same Safety Stock.
Once you've updated the Safety Stock value, it's important to note that any recommendations or calculations involving Safety Stock will also be automatically updated to reflect the newly adjusted value.
You can revert back to Default Safety Stock at any point using the same edit process. Instead of clicking on Override, select Default and then Update.