Safety Stock Optimization

Are you responsible for optimally using or reducing storage capacities in your company? If so, the following topics are likely to be on your agenda:

  • How can you predict when and how much material should be in stock?
  • How do you determine exactly what safety stock you need, and when?
  • What is the right balance between inventory costs and customer satisfaction?

You can achieve your goals with well-thought-out stock optimization. Read this page to learn about this exciting data science use case and how it can help you reduce your inventory costs.


A typical “safety stock optimization” question and solution

Stocks: In both private households and companies, many are faced with the question of how many stocks one should accumulate in order to be able to react quickly and be equipped, without hoarding too many tied-up capacities that are in danger of going bad. In companies, warehouse management deals with this balancing act, trying to ensure a smooth supply along the entire supply chain, by balancing between customer satisfaction through the ability to deliver on the one hand and storage costs on the other. Even with short-term orders, the goal is to deliver as completely and promptly as possible. How do you determine suitable safety stock quantities for individual items to avoid unnecessary storage costs and still be able to deliver for at least a certain replenishment lead time?

Forecasting methods calculate how orders will develop in the near future. For the available data, products, and materials, safety stocks and the associated levels of readiness for delivery are determined using various safety stock calculation formulas, and the most suitable ones are selected. Precise forecasts form the basis for determining safety stock in an efficient way.

The determined safety stock values are transferred to the company’s ERP system and used for further procurement and production planning. Planning can accurately be carried out based on these forecasts, and the supply chain can be optimized as a result. At the same time, it is ensured that the company remains able to deliver, and resources are used economically.

An introductory blog article about safety stocks

We would like to recommend this blog post to anyone who would like to find out exactly what safety stock is all about, how it is calculated, and what “service level” means:

Optimize safety stocks with accurate forecasts (in German)

Reading material on safety stock optimization

Get in touch

Are you interested in one of our use cases and would like to discuss it with Tina Geisberger? Contact her to find out how we can assist you.

Bild Tina Geisberger

Tina Geisberger

Senior Account Manager - Tina's passion and expertise are use cases and she is eager to work with you to specify which of our use cases fit your situation. Through her years of professional experience, she knows how important it is to listen carefully to find out how our predictive analytics solutions can simplify your day-to-day work. She is extremely solution-oriented and welcomes any challenge - what does yours look like?


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