Inventory glossary
What is Safety stock?
Safety stock is the extra inventory you hold above expected demand to cover surprises in sales or supplier delays.
If you only ever order enough stock to cover your average sales, a single slow shipment or a faster-than-usual sales week leaves you with empty shelves. Safety stock is the buffer that absorbs that uncertainty so you do not run out while waiting for the next order to arrive.
Set it per SKU, not as one flat number across your store. A fast-selling candle scent with a supplier that sometimes ships late needs more safety stock than a slow mover with a reliable supplier. Review it every few months, since sales patterns and supplier reliability both change.
Formula
Example
A candle store sells an average of 10 units a day of its bestseller, with a supplier lead time of 7 days on average. On its worst weeks, sales hit 16 units a day and the supplier has taken up to 10 days. Safety stock = (16 x 10) - (10 x 7) = 160 - 70 = 90 units. That 90-unit buffer protects against both a slow shipment and a sales spike happening at once.
Common mistakes
- Setting one safety stock number for every SKU instead of basing it on each item's own sales variability and lead time.
- Never updating it, so safety stock set for last year's sales pattern is too high or too low for this year.
- Confusing safety stock with reorder point. Safety stock is a buffer level, reorder point is the trigger to place a new order and includes that buffer.
Safety stock and SteadyShelf
SteadyShelf factors each SKU's sales variability and supplier lead time into its forecast so the reorder quantities it suggests already account for a safety stock buffer.
Work it out for your own products with our free tool: Safety stock calculator.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Reorder point · Lead time demand · Buffer stock · Demand variability · Stockout
FAQ
How is safety stock different from buffer stock?
In most everyday use they mean the same thing: extra stock held above expected demand. Some people use "buffer stock" more loosely for any cushion, while "safety stock" usually refers to a number calculated from sales variability and lead time.
Does every SKU need safety stock?
No. A slow-moving item with a very reliable supplier may need little or none, since the cost of holding extra stock may not be worth it. Reserve higher safety stock for your best sellers and anything with an unreliable supplier.
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