How can you use inventory data trends to improve safety stock levels?

Besides the historical data it is also highly relevant to use internal data, like the financial plan or production capabilities. One of my client grew from 6 Million € Revenue to above 80 Million € Revenue in just one year; something like this is simply not possible to forecast without internal data. We have achieved a Forecast Accuracy of above 90% because we leveraged the existing Financial Plan and combined it with Historical Data to create a Forecast Model that fits the customers growth anticipation. It is also important to consider facts like your production capabilities; your demand might be high, but the factories output is low. Time to take a look for a backup supplier.

Looking at demand retroactively thru analysis of previous seasonal data and combining that with proactive forecasting of marketing and merchandising data can create a skilled supply chain model that balances both the cost of inventory and prevention of zero stock scenarios.

You can use Maximum . Minimum and Re-order level for safety stock . Stock level should be maintain as per consumption/market demand of the product.

Min-max reporting with forecasting historic data is a good way to manage inventory levels and communicate with sales and Customer Service to watch trends.

You can do this by; Analyze historical demand patterns: Examine historical sales data to identify any seasonality, trends, or patterns in demand for your products. This analysis helps you understand the fluctuations in demand and enables you to forecast future demand more accurately. Integrate technology and automation: Utilize inventory management systems and software that can automatically generate safety stock recommendations based on inventory data trends

When talking about re-order points it is crucial to include external factors like national holidays (e.g. Chinese New Year, Golden Week). Knowing when to order is good, but if your factory is off for one month, you have to adjust your re-order-date.

Reorder level is data pointer which leads towards issue new order. Depending on senarios data pointer varries. Example for Food supplies from oversease purchase. Min Stock levels,Order Approval Days, Material Product time, Document attestation, Quality inspection,Transit Time, Custom clearance, Local Transportation, origion and destination holidays estimating all days will leads to us on re-order levels

This is something that isn’t constant but always changing and evolving with every purchase. One of the main reasons why this should be frequently looked at and analyzed. My suggestion would be weekly but I understand that might not be enough time to visualize the bigger picture or maybe you’re too busy with other issues but over all this really does help minimize the cost and increase profit. Take the time you will that me later.

To use inventory data trends to improve safety stock levels: Analyze historical demand and lead time variability. Identify seasonal or cyclical patterns. Consider supplier reliability and lead time fluctuations. Calculate safety stock based on desired service levels. Regularly review and adjust safety stock levels.

-Demand forecasting -Lead time variability -Service level targets -Inventory turnover rate -Seasonality and trends -Supplier performance -Risk assessment

Deviations in deadlines must be absolutely included in the safety stock calculations. Therefore, it will be decided how much extra stock to keep depending on supplier deviations. However, there is an alternative cure; reducing risk by increasing frequency. For example, imagine a deadline of 4 weeks and our weekly needs is 1 container of goods. If we order all at one time and the vessel is delayed, there happens a huge deviation. Instead, if we order each week, we will reduce the deviation caused by logistics. On the other hand, we will ensure our supplier to carry out the production periodically by placing regular orders. Therefore, they will be more proactive towards quality problems related to product in and out or unexpected scrap.

Tracking the suppliers performance is an important part in monitoring (and optimizing) lead times. If the supplier constantly delivers with a delay of two weeks, you might want to adjust your internal calculation. You either increase the lead time to the actual lead time (assumption) or the safety stock; I'd recommend adjusting the actual lead time or add a buffer into the lead time for uncertainties that can happen all the time.

Yes, monitoring the lead times and reliability of your suppliers can definitely help you estimate the time it takes to replenish your inventory and reduce the risk of stockouts.?For example, if your supplier is experiencing delays or disruptions, you may need to increase your safety stock to cover the longer lead times.

There are several ways to calculate the safety stock. A way I am using with my clients is based on the ABC analysis; based on the outcome we fix a certain amount of days for each of the categories (A, B & C) to make sure, that the items we rely on the most are having a longer lasting safety stock. If the financials are good, then we usually go with the full lead time of safety stock for the A products, but this is still depending on a lot of other factors (is it a bundle? do we have production output limits?). B products usually get around 30 days, while C products are set with a maximum of two weeks of safety stock. These numbers are not set on stone and subject to a discussion internally, based on a risk analysis and other factors.

What a great topic. If you don’t pay attention to your inventory fluctuations, it’s like running blind with scissors. Every market is different. Adapting to incoming and outbound inventory not only prevents massive waste in overhead and loss, it manages loss prevention and creates a staff who truly pays attention to the needs of their individual market.

There are rare companies with static demand structure. Their sales order deadlines are longer than supply deadlines. What to consider is just the supplier and production deviation. They are relatively under control. In those systems, it will be enought to update the safety stock’s deadline at certain levels. However, if we talk about the variable demand structure as in many companies, safety stocks must be re-calculated at each supply period. Safety stock absorbed by the deviation arising from the demand forecast variance, will never be fix. It varies according to the market and company dynamics. It should be well managed within the deadline.

There are a lot of different ways to improve your safety stock levels and it is not an easy task to consider all the factors that can have an impact on the safety stock. Safety stock is nice, but many startups simply don't have the capacity to pay for stock that doesn't sell right now. They rather get another product, gain more customers and then step by step start adding some safety stock. As a rule of thumb, the ABC analysis is a great start to set your basic safety stock goals, and due to automation and other tools, this information can be updated automatically. In combination with the ABC/XYZ analysis it will help to make perfectly informed decisions.

To use inventory data trends to improve safety stock levels:?Analyze historical demand and lead time variability. Identify seasonal or cyclical patterns. Consider supplier reliability and lead time fluctuations. Calculate safety stock based on desired service?levels.

Above mentioned structural recommendations cannot be expected to be managed manually. Supply chain digitalization is an absolute necessity. A reliable ERP-WMS-APS structure must be formed. A unified supply model must be placed for safety stock calculations. Unless the above mentioned are placed, stream and wind will drag the ship into the unknown. But once they are put into action, then the supply chain will write the story of ice and salt.

In my experience proper communication with sales / marketing to anticipate an increase in sales can be vital. Historical references can assist in this as well.

One thing to consider is evaluating the costs and benefits of holding safety stock. This can help you balance the trade-off between inventory carrying costs and customer service levels. For example, if your product has a high profit margin and a low holding cost, you may want to keep more safety stock to avoid losing sales.?On the other hand, if your product has a low profit margin and a high holding cost, you may want to keep less safety stock to save on storage expenses.