[EN] Safety stock trap

Aktualizacja: kwi 2

Late delivery? We lost a few parts and ran out of production? We have not placed an order and are out of material? Did we break parts during production? Let's create a safety stock!

You can often hear the proposal of a safety stock as a remedy for all problems related to the lack of material. In theory, it looks very logical. Having a safety buffer, we have a much better chance of avoiding problems with the execution of production in the event of unplanned problems. However, putting on safety stocks can drag us into the trap of sweeping problems under the rug. The negative results of our problems disappear, which generates a great temptation not to deal with their solution. What's worse, if our method works, we most often re-use it in similar cases.

What results can we expect:

  • The growing safety stock increases our inventory levels, devouring our capital

  • Unresolved problems pile up and, what's worse, bad practices can settle in the organization as acceptable), the organization does not learn

  • Companies very often not managing safety stocks actively - for example, they lack regular verification of their level and validity, which in the longer perspective generates huge amounts of stocks that are not justified at all

  • Establishing a safety stock for suppliers who have permanent problems with deliveries very often does not give much - how are we to obtain subsequent batches of deliveries from a vendor to build a safety stock, if it is not being made with current orders?

We must remember that safety stock or safety stock must be the last method we choose (in a situation where we are not able to solve problems quickly) and what is important - temporary method. The first task of the safety stock is to ensure the continuity of production, and the second is to give us space to improve the processes that are the root cause of the material issues. After resolving the problems, the stock should be disposed of as soon as possible.

I encourage you to complete a short (4 questions) survey on safety stock management: