{"id":319,"date":"2020-11-10T05:15:16","date_gmt":"2020-11-10T05:15:16","guid":{"rendered":"https:\/\/www.cac.net.in\/blog\/?p=319"},"modified":"2020-12-12T12:12:48","modified_gmt":"2020-12-12T12:12:48","slug":"how-to-maintain-availability-with-safety-stock-after-covid-19","status":"publish","type":"post","link":"https:\/\/www.cac.net.in\/blog\/how-to-maintain-availability-with-safety-stock-after-covid-19\/","title":{"rendered":"How To Maintain Availability With Safety Stock After Covid-19?"},"content":{"rendered":"\n

While COVID-19 is a global health crisis\naffecting thousands of people around the world, significant economic impacts\nare expected to continue in the future.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

From a Supply Chain perspective, companies\nshould carefully monitor demand and inventory to meet the loss of production as\na precaution to future factory closures and economic recession. <\/p>\n\n\n\n

Most companies face stock-outs while their\ncustomers are in quarantine around the world. Therefore, they must take the\nnecessary steps to supply the required stock and meet the demand of their\ncustomers.<\/p>\n\n\n\n

All companies, without exception, want to\nguarantee their sales and for this they need to have the right product at the right\ntime, in the right amount and in the right place. <\/p>\n\n\n\n

At this point, it is necessary to understand the importance of inventory security and consult inventory management companies<\/a><\/strong>. Because inventory plays a critical role in increasing a company’s profitability. <\/p>\n\n\n\n

Below, we’ve answered a compilation of\nfrequently asked questions and answers on Supply Chain and inventory management\nduring the COVID-19 process.<\/p>\n\n\n\n

HOW\nCAN YOU CONTROL SAFETY STOCK?<\/strong><\/p>\n\n\n\n

Safety stock is the amount of additional\nstock that companies hold to minimize the risk of out of stock. <\/p>\n\n\n\n

However, being overly cautious can result\nin cost increase and stock obsolescence from overstock: both reduce your\nprofitability. So, what factor should you consider when determining the optimal\nsafety stock level?<\/p>\n\n\n\n

WHY\nDO YOU NEED SAFETY STOCK?<\/strong><\/p>\n\n\n\n

We know that toilet paper was running out\nin many cities within a few days in the first month of COVID-19. Although this\nmay seem like a success for companies making sales, it quickly caused many\ncustomers to be disappointed. <\/p>\n\n\n\n

So, should the retailer keep more inventory\nsafety stock to meet this unexpected demand? Is it possible to plan such a\nlarge fluctuation in demand ahead of time? Probably yes.<\/p>\n\n\n\n

As a result, determining the optimal safety\nstock depends on the balance between service level, stock capital and risk.<\/p>\n\n\n\n

WHAT\nFACTORS SHOULD BE CONSIDERED TO DETERMINE THE SAFETY STOCK?<\/strong><\/p>\n\n\n\n

Even if the most accurate sales forecast\nhas been calculated, there will always be some difference between actual sales.\nAlso, your suppliers may not always be able to deliver your order on time or in\nthe agreed quantity. <\/p>\n\n\n\n

The purpose of the safety stock is to\nsecure your stock against sudden changes in the demand and supply curve in\norder to reach the targeted service level.<\/p>\n\n\n\n

While there are many factors that affect the need for safety stock, according to best inventory management companies<\/a><\/strong>, there are 4 main factors to consider:<\/p>\n\n\n\n