Safety Stock Calculation

I hope that you have enjoyed reading the article, "A New Safety Stock Calculation."

Safety stock levels are undoubtedly being reviewed in supply chain departments throughout the world these days. With Hurricanes Katrina and Rita devastating the Gulf Coast and forcing many suppliers to declare Force Majeure, executives are asking supply chain managers "What should you have done to prevent us from having interrupted supply?"

Maintaining higher inventory and safety stocks is one answer but certainly not the only one. In fact, it may be the last resort.

Forward buying prior to hurricane season, identifying substitute suppliers, and countless other options exist. Focus on identifying the option with the least total cost without compromising continuity of supply.

I know, you've heard so much about the hurricanes that you probably were hoping not to read about them here too. But, let's face it, their effects are still to this day being felt throughout the supply chain. And we don't know what Force Majeure event will come next.

(By the way, if you don't know what Force Majeure is, you may want to check out our online course "Supply Management Contract Writing").

Until next time, good luck keeping your continuity of supply!

Respectfully,
Charles Dominick, C.P.M., SPSM
President
Next Level Purchasing, Inc.
Give Your Purchasing Career A Boost By
Earning Your SPSM Certification Online At
http://www.NextLevelPurchasing.com