Inventory how-to

How to calculate safety stock with variable lead times

Use the longest lead time you have actually seen from a supplier, not the average, and add extra safety days on top of that.

Short answer: Use the longest lead time you have actually seen from a supplier, not the average, and add extra safety days on top of that. If a supplier sometimes takes 10 days and sometimes 25, plan around 25 plus a buffer, because planning around the average will leave you short in the slow weeks.

Why averages fail you

If you use an average lead time, half of your orders from that supplier will arrive later than your plan assumes. That is fine if the stakes are low, but for a core SKU it means stockouts roughly every other cycle. The simplest fix is to plan for the slow case, not the typical case.

A practical way to set the number

Look at your last 5 to 10 orders from a supplier and note the lead time for each one, from order date to stock received. Take the longest one or two, ignore any extreme one-off (a shipping strike, a holiday closure), and use that as your planning lead time. Add safety days on top to cover demand swings, not supplier swings. The two buffers do different jobs: lead time buffer covers the supplier being slow, safety days cover sales being faster than expected.

Keeping it simple without formulas

If tracking every order's lead time feels like too much, a rougher rule still helps: take your supplier's quoted lead time and add 30 to 50 percent as a buffer, especially for overseas suppliers or anyone who has missed a date before. Revisit the number every few months as you collect more orders, and tighten it once a supplier proves consistently reliable.

Step by step

  1. List your last 5 to 10 orders for the supplier and note order date and received date for each.
  2. Calculate the lead time in days for each order.
  3. Pick the longest lead time, dropping any clear one-off outlier.
  4. Decide safety days separately, based on how much your daily sales for that SKU swing week to week.
  5. Add the two together: reorder point = daily sales x (longest lead time + safety days).
  6. Recheck this every few months as new orders come in, and shorten it if the supplier gets more reliable.
  7. Flag any supplier whose lead times swing wildly as high risk and keep more stock on hand for it.

Worked example

Suppose a supplier's last 8 orders took 9, 11, 10, 14, 12, 22, 10, and 13 days. The 22-day order was a known holiday delay, so you treat 14 days as your realistic worst case. Daily sales for the variant are 6 units, and you add 4 safety days for demand variation. Reorder point = 6 x (14 + 4) = 108 units. If you are at 70 units on hand with none on order, you are already past the trigger and should place an order now.

How SteadyShelf helps

SteadyShelf lets you set a lead time and safety days per supplier and uses that to generate the order-by date and reorder point automatically, so you do not have to recalculate this by hand each cycle. It does not analyze your historical order dates to detect lead time variability for you, so you still need to review past orders yourself and pick a realistic lead time number to enter.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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FAQ

Should safety stock be the same for every SKU from one supplier?

No. Use the same lead time assumption for the supplier if it ships everything together, but vary safety days by SKU based on how unpredictable that item's sales are. A steady seller needs fewer safety days than a spiky or promo-driven one.

What if a supplier has almost no order history yet?

Use their quoted lead time and add a large buffer, 50 percent or more, until you have real data. Treat the first few orders as a learning period and tighten the number once you see how they actually perform.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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