Configuring Safety Stock and Target Inventory Levels
Aaron Ethridge
Last Update 9 gün önce
Setting appropriate safety stock and target inventory levels is essential to balance product availability with cash flow management.
Follow these practical guidelines to configure your inventory settings in Planster effectively.
Safety Stock: A minimum inventory buffer designed to protect against unexpected demand spikes or supply delays.
Target Inventory: The ideal maximum inventory level to maintain, including your safety stock and expected consumption between order cycles.
Assess each product based on its demand stability:
Low Volatility Products (stable sales): Safety stock of approximately 7-14 days.
Medium Volatility Products (moderate variability): Safety stock of approximately 14-30 days.
High Volatility Products (unpredictable demand): Safety stock of 30+ days.
Adjust safety stock based on:
Supplier Reliability: Increase safety stock if suppliers frequently experience delays.
Forecast Accuracy: More uncertainty in forecasts warrants higher safety stock.
Product Importance: Critical products should have higher safety stock to prevent stockouts.
Storage Costs: Lower safety stock for expensive or perishable items.
To set safety stock in Planster:
Navigate to the Warehouses tab.
Select the warehouse and the product SKU.
Enter the appropriate number of safety stock days.
Your target inventory combines safety stock and expected inventory usage between order cycles (cycle stock):
For fast-moving items, target 15-30 days total inventory.
For medium-moving items, target 30-60 days total inventory.
For slow-moving items, target lower inventory, potentially using just-in-time ordering strategies.
To set target inventory in Planster:
In the Warehouses tab, select the warehouse and product SKU.
Enter the appropriate target inventory days to align with your operational and financial goals.
Review your proposed safety stock and target inventory levels with your finance team to ensure they align with financial constraints and working capital management.
Regularly review and adjust safety stock and target inventory based on actual sales data and changes in market conditions.
Aim to maintain optimal inventory levels that balance availability and cost-effectiveness.
If you need help determining optimal inventory settings or have questions, reach out to Planster Support for personalized guidance!