No matter the size and model of your business, one of the significant modern-day issues it will face is stock and inventory management.

The storage of stock units fluctuates from time to time depending upon the market trends, customer demands, and the retail landscape. Acting according to these factors can help your business function efficiently and cut down on wastage.

Certain retailers go with their gut instinct in terms of the inventory, but best believe, this can backfire anytime and cause you to lose potential customers.

Using a safety stock formula to regulate your inventory can help you make decisions regarding inventory management with the help of backed-up data, thus expanding your overall sales.

What is safety stock?
Now a safety stock isn't some complicated action or function. It simply refers to extra inventory withheld by the seller to meet unexpected customer demands. Safety stock is the additional stock held apart from your normal stock levels for your everyday operations. The core purpose of safety stocks is to prevent stockouts.

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Why Do You Need a Safety Stock?
Apart from stockouts and the primary consequences of not accumulating enough stock, unpredictable demands and uncertain lead time are two issues that can be tackled with the help of safety stock. Let's see how?

Unpredictable demands
Every seller will have their set of products that sell well any time of the year and will have certain products that keep shifting gears in demand from time to time. When the supply and demand for a product are consistent, stocking large quantities of safety stock isn't really necessary.

Whereas products that are difficult to predict in terms of demand require increased quantities of safety stock.

Uncertain Lead time
Lead time is the basis for all inventory and stock-based requirements for manufacturers that put together products using various components.

Delay of production due to lack of supplies and problems faced due to postponement of customer delivery dates can have a significant impact, posing as a threat to disrupt the whole manufacturing line and affect your lead time. To combat unexpected deliveries, a safety stock formula will help you to compromise unexpected delays and help you to produce consistent output.

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