Safety Stock vs Lean Manufacturing

In this time of volatile markets, supply chains are struggling to find the right balance between keeping lean manufacturing practices with just-in-time (JIT) inventory strategies and buffered inventory levels with plenty of safety stock. According to Gartner VP of Supply Chain Research and Advisory Geraint John on Supply Chain Dive, large manufacturers in the auto and high-tech sectors are calling on suppliers to increase safety stocks on certain items for up to one year worth of stock At the same time in a survey given by Supply Chain Dive to 1,339 supply chain professionals, only 21% of respondents believe availability of safety stock to be a top-three indicator of supply chain resiliency, while more than double (43%) said undisrupted order fulfillment cycle time. Inventory strategies are very much industry dependent, but ultimately the overall strategy needs to be targeted and tailored to the company’s needs.

There are many pros and cons to either strategy you employ. Holding excess inventory gives you the advantage of being able to decrease the risk of shortages, which leads to quicker response times to customers, and this in turn keeps you competitive. Along with these advantages comes the risks of obsolete and unsold inventory, as well as higher storage costs and insurance premiums. Lean inventory is compatible with JIT strategies and gives you a financial competitive edge. The problem with lean strategies is that there is a smaller margin for error, and if your calculated stock levels lead to backorders and stock outs you take a hit on customer satisfaction.

Regardless of whether firms are continuing lean practices or keeping safety stock inventory, end-to-end visibility to bottle necks in material movement is most important in a successful inventory strategy. StrataFlows is the cloud-based platform to proactively plan for and keep up with changes in material movement and supply chain. Our platform is an incident command center allowing users to have end-to-end real-time visibility when a part goes missing or a supplier is late. We help clients stay resilient in these times by keeping production flowing by tracking suppliers, demand, and issues, and give them the tools they need to take action. The Hot Parts and Issue Tracker modules help our clients keep their continuous improvement goals by giving visibility and collaboration tools to stay agile in a changing market. Click here to for a free trial of StrataFlows.

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