Jard ’s Post

What are the differences between (Minimum Stock & Safety Stock)?? This is a critical matter which we have to put in consideration to have a fit stock control. Minimum Stock is the absolute minimum level of inventory that needs to be maintained to ensure smooth operations. It's the bare minimum quantity required to fulfill regular demand. Safety Stock, on the other hand, is a buffer stock held to account for unexpected fluctuations in demand or supply (Uncertainty requests). It helps mitigate the risk of stockouts and ensures continuous supply. Why is this important? Balancing minimum and safety stock levels is crucial for efficient inventory management. Too much stock ties up capital and increases storage costs, while too little can lead to stockouts and lost sales. By understanding the difference between these two concepts, supply chain professionals can optimize inventory levels and improve overall supply chain performance.

What are the differences between (Minimum Stock & Safety Stock)?? During my journey in Supply Chain, I found this issue with my colleagues, they can't differentiate between both. This is a critical matter which we have to put in consideration to have a fit stock control. Minimum Stock is the absolute minimum level of inventory that needs to be maintained to ensure smooth operations. It's the bare minimum quantity required to fulfill regular demand. Safety Stock, on the other hand, is a buffer stock held to account for unexpected fluctuations in demand or supply (Uncertainty requests). It helps mitigate the risk of stockouts and ensures continuous supply. Why is this important? Balancing minimum and safety stock levels is crucial for efficient inventory management. Too much stock ties up capital and increases storage costs, while too little can lead to stockouts and lost sales. By understanding the difference between these two concepts, supply chain professionals can optimize inventory levels and improve overall supply chain performance. #supplychain #inventorymanagement #logistics #supplychainoptimization #procurement

Would like to add mathematical perspective to this as anything not defined mathematically, is prone to discussions without conclusions and multiple interpretations. First, We must understand how ERP systems are designed for MRP and DRP. Lets take the most famous algo: Min-Max policy: Scenario 1: Demand and Lead Time are constant over time. Now tell me, what should be the inventory level at which you should place an order so that you don’t get stocked out? It is (Demand during lead tome = D*Lead Time). Because just when you finish this quantity, the fresh stock arrives. Any more delay in placing order will result in stock out. So what is the minimum inventory you can afford to have in this case without getting stocked out? It is demand during lead time and hence, this becomes minimum inventory. Scene 2: Lead Time and Demand are variable So now, suppose u don’t have any additional stock and u place an order just when it reaches (D*LT) ie. Demand during lead time. Two things can happen DURING THIS LEAD TIME. Either Lead time will fluctuate or your demand rate will fluctuate. If both of these becomes higher, you will get stocked out. So you decide how much stock out u can afford to have: set the service level: Z and set a safety stock. Now when, ur stock hits = (ss+ d*LT) you place an order which becomes your minimum inventory or in other terms Re-Order Point. Now the question is how much to order: To answer this we have maximum inventory level which says you order = (Max-SOH) only when SOH hits < SS+(d*LT) , where Max = (CS+SS+d*LT) Example: Lets say ur Cycle stock = 4 days, lead time = 3 days and SS = 2 days In this case, Max Inventory = 9 days, Min inventory = 5 days The ERP system will check every 24 hrs. Lets say ur SOH is equivalent to 7 days. It won’t place an order. Now ERP checks again after 2 days where SOH is less than 5 days, lets say = 4 days. Now, it will place an order equivalent to max-soh = 9-4 = 5 days = 5*demand rate or demand for next 5 days. This is one of way of operating supply chain, out of multiple replenishment policies.

Improving supply chain resilience is essential to effective inventory management but supply chain challenges make it hard. What's the right way to approach inventory management in these conditions?

Improving supply chain resilience is essential to effective inventory management but supply chain challenges make it hard. What's the right way to approach inventory management in these conditions?

Improving supply chain resilience is essential to effective inventory management but supply chain challenges make it hard. What's the right way to approach inventory management in these conditions?

Improving supply chain resilience is essential to effective inventory management but supply chain challenges make it hard. What's the right way to approach inventory management in these conditions?

One of the technique for inventory management system is SAFETY STOCK. This is more conservative approach that lean toward having more inventory than needed. Thus, this approach works well when supply chain may be inconsistent and inventory does not always arrive on time. It ensures there is always extra stock set aside in case a company can't replenish certain items.

What are the differences between (Minimum Stock & Safety Stock)?? During my journey in Supply Chain, I found this issue with my colleagues, they can't differentiate between both. This is a critical matter which we have to put in consideration to have a fit stock control. Minimum Stock is the absolute minimum level of inventory that needs to be maintained to ensure smooth operations. It's the bare minimum quantity required to fulfill regular demand. Safety Stock, on the other hand, is a buffer stock held to account for unexpected fluctuations in demand or supply (Uncertainty requests). It helps mitigate the risk of stockouts and ensures continuous supply. Why is this important? Balancing minimum and safety stock levels is crucial for efficient inventory management. Too much stock ties up capital and increases storage costs, while too little can lead to stockouts and lost sales. By understanding the difference between these two concepts, supply chain professionals can optimize inventory levels and improve overall supply chain performance. #supplychain #inventorymanagement #logistics #supplychainoptimization #procurement #inventory #operations

What are the differences between (Minimum Stock & Safety Stock)? During my journey in Supply Chain, I found this issue with my colleagues, they can't differentiate between both. This is a critical matter which we have to put in consideration to have a fit stock control. Minimum Stock is the absolute minimum level of inventory that needs to be maintained to ensure smooth operations. It's the bare minimum quantity required to fulfill regular demand. Safety Stock, on the other hand, is a buffer stock held to account for unexpected fluctuations in demand or supply (Uncertainty requests). It helps mitigate the risk of stockouts and ensures continuous supply. Why is this important? Balancing minimum and safety stock levels is crucial for efficient inventory management. Too much stock ties up capital and increases storage costs, while too little can lead to stockouts and lost sales. By understanding the difference between these two concepts, supply chain professionals can optimize inventory levels and improve overall supply chain performance. hashtag #supplychain #inventorymanagement #logistics #supplychainoptimization #procurement