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Topic Title: Managing 'just in case' stock
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Created On: 09/11/2019 03:47 AM
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09/12/2019 09:41 PM
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Daniel Pybus

Hello Everyone,

I have a quick question if anyone can help. I am working in a company trying to introduce some lean stock management practices. I have read that you shouldn't hold extra stock because you expect you will need it in the future, which makes sense. However, we have standing orders with clients, where they have orders sent in advance for up to six months for different components in various quantities. The stock we need to order for them comes from different parts of the world, and it can be problematic getting hold of it at times. In this case, would it be adviseable to hold that extra stock?

I appreciate any advice with this :)
09/18/2019 08:25 AM
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Scott Alexander

depends ... the stock you hold is a pretty basic calculation. There is one part, actual Safety stock, that could be the 'extra' stock you mention. I use Safety stock to handle the weaknesses in the supply chain. So calculate your CYCLIC stock and your BUFFER stock. Think of it as you minimum target stock level. Then play with the Extra stock you want to be safe (so you can attain your desired service level). The less you hold, the less room you need, the less counting you do, and the happier your accountants will be.

If your standing orders provide you with a luxurious supply lead time, you could buy to order (no extra stock required) ... aside from how much before the required ship date you schedule its arrival from your suppliers.

There is another post you might find informative on this site (forums > manufacturing > Managing 'just in case' stock.