Safety Stock (SS) is the amount of stock we want to keep as “wiggle room” to avoid stockouts if we place an order late or the vendor is slow in shipping, etc. Safety stock can be established as either a % of lead time or as a number of days supply.Safety stock, also referred to as safety allowance, is the additional stock you carry in inventory to protect against a stock out. It forms a pad to take care of reasonable variations in usage or lead time from the averages anticipated. Safety allowance is an amount that you define for each product in IC Warehouse/Item F/M (ICF920). It can be entered as days, a percentage, or a quantity. FACTS will convert a days or percentage value to a quantity and use that value to determine the product’s order point.
When calculated as a %, we calculate a number of days supply (SSD) from the lead time (LT). So if LT is 10 days, and safety stock is 25%, we calculate 2.5 days supply for safety stock.
Safety stock then is the safety stock days (SSD) times ADU.
Better lead time values, allow you to reduce safety stock, as does being more proactive with purchasing. When lead times are sporadic, or when you order infrequently causing lead times to be based on old data, or when you are inconsistent or slow placing orders, greater safety stock values will be needed to protect against stock outs.
Safety Stock Days Minimum and Maximum
For items with very large or very short lead times, the basic math can end up calculating safety stock values that are not reasonable. For example, if lead time were 180 days, and safety stock % was 50%, the system would calculate safety stock as a 90-day supply, causing stocking levels to soar.
It is important to establish reasonable limits on the number of days supply of safety stock the system will calculate and use.
These minimums and maximums can be set differently for items purchased from vendors and those replenished from a DC warehouse.
You can set these Safety Stock Parameters and Adjusters.
An item’s replenishment order point will be adjusted by the safety stock level when the Approved Replenishment Path is set to Vendor. This level can be configured to utilize Days or Percentage of Average Daily Usage (ADU). The order point will then be adjusted by the value supplied and the appropriate calculation method.
If supplied, the Rank for an item will indicate the Safety Stock value to apply for the Order Point calculation. When an item’s Rank is recalculated, the corresponding Safety Stock and Order Point will be recalculated to reflect the new calculated results. If the values are not defined for an item’s Rank, the next hierarchy level’s Rank value is used. If a higher level Rank is not available, the corresponding value at the hierarchy level will be utilized for Safety Stock.
| Safety Stock Type | Indicates either Days or Percentage of Safety Stock |
| Days or Percentage | The number of days or percentage safety stock |
| Rank A | Value for A ranked items, dependent on safety stock type |
| Rank B | Value for B ranked items, dependent on safety stock type |
| Rank C | Value for C ranked items, dependent on safety stock type |
| Rank D | Value for D ranked items, dependent on safety stock type |
| Rank E | Value for E ranked items, dependent on safety stock type |
| Expiration Date | Expiration date for override |
| Memo | Optional memo for override |
The settings for this section can be defined at the company, warehouse, or whse/item levels only.
For an item that has a Safety Stock type of Percentage, minimum and maximum calculated days can be supplied at each Rank. This will allow a buyer to control the calculated Order Point’s Safety Stock and ensure an acceptable range for Safety Stock days.
| Minimum Days | Rank A minimum Safety Stock days for ARP Vendor |
| Maximum Days | Rank A maximum Safety Stock days for ARP Vendor |
| Minimum Days | Rank B minimum Safety Stock days for ARP Vendor |
| Maximum Days | Rank B maximum Safety Stock days for ARP Vendor |
| Minimum Days | Rank C minimum Safety Stock days for ARP Vendor |
| Maximum Days | Rank C maximum Safety Stock days for ARP Vendor |
| Minimum Days | Rank D minimum Safety Stock days for ARP Vendor |
| Maximum Days | Rank D maximum Safety Stock days for ARP Vendor |
| Minimum Days | Rank E minimum Safety Stock days for ARP Vendor |
| Maximum Days | Rank E maximum Safety Stock days for ARP Vendor |
| Expiration Date | Safety Stock by ARP Vendor minimum and maximum days for Rank expiration date |
| Memo | Optional memo for Safety Stock by ARP Vendor minimum and maximum days for Rank adjuster |
The settings for this section can be defined at the company, warehouse, or whse/item levels only.
An item’s replenishment order point will be adjusted by the safety stock level when the Approved Replenishment Path is set to Transfer. This level can be configured to utilize Days or Percentage of Average Daily Usage (ADU). The order point will then be adjusted by the value supplied and the appropriate calculation method.
If supplied, the Rank for an item will indicate the Safety Stock value to apply for the Order Point calculation. When an item’s Rank is recalculated, the corresponding Safety Stock and Order Point will be recalculated to reflect the new calculated results. If the values are not defined for an item’s Rank, the next hierarchy level’s Rank value is used. If a higher level Rank is not available, the corresponding value at the hierarchy level will be utilized for Safety Stock.
| Safety Stock Type | Indicates either Days or Percentage of Safety Stock |
| Days or Percentage | The number of days or percentage safety stock |
| Rank A | Value for A ranked items, dependent on safety stock type |
| Rank B | Value for B ranked items, dependent on safety stock type |
| Rank C | Value for C ranked items, dependent on safety stock type |
| Rank D | Value for D ranked items, dependent on safety stock type |
| Rank E | Value for E ranked items, dependent on safety stock type |
| Expiration Date | Expiration date for override |
| Memo | Optional memo for override |
The settings for this section can be defined at the company, warehouse, or whse/item levels only.
For an item transfer that has a Safety Stock type of Percentage, minimum and maximum calculated days can be supplied at each Rank. This will allow a buyer to control the calculated Order Point’s Safety Stock and ensure an acceptable range for Safety Stock days.
| Minimum Days | Rank A minimum Safety Stock days for ARP Warehouse |
| Maximum Days | Rank A maximum Safety Stock days for ARP Warehouse |
| Minimum Days | Rank B minimum Safety Stock days for ARP Warehouse |
| Maximum Days | Rank B maximum Safety Stock days for ARP Warehouse |
| Minimum Days | Rank C minimum Safety Stock days for ARP Warehouse |
| Maximum Days | Rank C maximum Safety Stock days for ARP Warehouse |
| Minimum Days | Rank D minimum Safety Stock days for ARP Warehouse |
| Maximum Days | Rank D maximum Safety Stock days for ARP Warehouse |
| Minimum Days | Rank E minimum Safety Stock days for ARP Warehouse |
| Maximum Days | Rank E maximum Safety Stock days for ARP Warehouse |
| Expiration Date | Safety Stock by ARP Warehouse minimum and maximum days for Rank expiration date |
| Memo | Optional memo for Safety Stock by ARP Warehouse minimum and maximum days for Rank adjuster |
The settings for this section can be defined at the company, warehouse, or whse/item levels only.
See Also
Understanding Replenishment Values
Entering Safety Stock Replenishment Parameters
Replenishment Parameter Maintenance Procedures