Glossary
Safety stock
Also called: buffer stock
Definition
Stock deliberately held back and not advertised, to absorb demand spikes and the lag between a sale and every channel learning about it.
Safety stock is insurance, and like all insurance it has a premium: units you are holding but not selling. Applying a blanket buffer across a whole catalogue hides sellable stock on slow movers where lag never mattered.
Set it per SKU based on how fast the item actually sells and how variable its demand is.
Related terms
- Reorder pointThe stock level at which you place the next purchase order, calculated as average daily sales multiplied by supplier lead time, plus safety stock.
- OversellingAccepting an order for stock you cannot ship, usually because more than one channel held its own idea of how much was available.
- Inventory ledgerA record of every stock movement — sale, return, adjustment, transfer, receipt — from which the current quantity is derived rather than stored.