What is the primary purpose of Safety Stock?

The primary purpose of safety stock is to ensure that there is enough inventory on hand to meet unexpected increases in demand or to cover delays in supply. This buffer stock acts as a safeguard against stockouts, which can occur due to various factors such as sudden spikes in customer demand, longer lead times from suppliers, or other unforeseen disruptions in the supply chain. By maintaining safety stock, organizations can provide better service to customers, maintain production continuity, and avoid lost sales that may arise from insufficient inventory levels.

While promoting new products, reducing inventory costs, and increasing the turnover rate are important aspects of inventory management, they do not address the fundamental role of safety stock. Safety stock specifically focuses on mitigating risks associated with variability in demand and supply, which is a critical element in effective inventory control and management.