Managing Lead Times and Safety Stock
Stockouts disrupt operations and overstocking ties up cash and space, and both often stem from misjudging lead times. Understanding lead times and setting sensible safety stock keeps supply steady without waste.
This guide covers managing lead times and safety stock for reliable supply.
Understand your lead times
Lead time is how long between ordering and having usable stock, including processing, delivery and any checks. Knowing the realistic lead time for each item, not the best case, is the basis for reliable reordering.
Lead times can vary, so plan around typical rather than optimistic figures.
What safety stock does
- Covers demand that is higher than expected.
- Absorbs delays in supplier delivery.
- Prevents stockouts during the lead time.
- Provides a buffer without excessive overstocking.
Set reorder points sensibly
A reorder point is the stock level at which you reorder, set so that normal usage during the lead time, plus a safety buffer, does not run you out. Tying reordering to this point removes guesswork.
Combined with par levels, reorder points keep supply steady automatically.
Balance resilience and cost
Too little safety stock risks stockouts; too much wastes cash and space. The right level reflects how variable demand and lead times are and how costly a stockout would be for that item.
Critical items justify more buffer than easily substituted ones.
Planning supply reliably
Base reordering on realistic lead times and considered safety stock, and communicate your needs to suppliers so lead times are predictable. Reliable supply is a system, not luck.
Request a quote with your volumes and timing so lead times and supply can be planned.
Related products and guides
Frequently asked questions
What is safety stock?
It is a buffer of stock held to cover higher-than-expected demand or delivery delays, preventing stockouts during the lead time without excessive overstocking.
How do I set a reorder point?
Set it at the stock level where normal usage during the realistic lead time, plus a safety buffer, will not run you out, so reordering happens automatically before you run low.
How much safety stock should I hold?
Enough to reflect how variable your demand and lead times are and how costly a stockout would be. Critical items justify more buffer than easily substituted ones.
Need help specifying the right products for your site? Request a quote with your quantities and delivery area and the Mitrend team will help you shortlist the relevant products.