Inventory how-to

How to decide how much safety stock to keep

Safety stock is the buffer you hold to cover demand spikes and supplier delays during lead time.

Short answer: Safety stock is the buffer you hold to cover demand spikes and supplier delays during lead time. Set it in days of extra cover per SKU, based on how variable the sales are and how reliable the supplier is, then convert that to units with your daily sales rate.

Start with lead time variability, not a flat rule

Safety stock exists to cover the gap between what you expect and what actually happens. If a supplier always ships in exactly 14 days, you need less buffer. If lead time sometimes stretches to 25 days, you need more. Look at your last several orders per supplier and note the spread between the fastest and slowest delivery, not just the average.

Factor in sales variability per SKU

A steady seller that sells 5 units a day, every day, needs less safety stock than a SKU that sells 0 some days and 20 on others. For spiky or seasonal items, add more safety days. For flat, predictable items, you can run leaner. Treat every SKU on its own terms rather than setting one safety number for the whole catalog.

Convert safety days into units

Once you have a safety day figure (say 5 days for a steady item, 10 for a volatile one), multiply it by the daily sales rate to get a unit buffer. Add that to lead time coverage to get your full reorder point. Review it every few months, since lead times and sales patterns shift.

Watch for the cost of too much buffer

Extra safety stock ties up cash and shelf space. If a SKU sells slowly or has a short shelf life for your business reasons, keep safety days low even if the supplier is unreliable, and instead work on getting a backup supplier or shorter lead time.

Step by step

  1. List each SKU's supplier and average lead time
  2. Check the last 5-10 orders per supplier for how much lead time actually varied
  3. Classify each SKU as steady, variable, or seasonal based on recent sales
  4. Assign safety days: fewer for steady SKUs, more for variable or seasonal ones
  5. Multiply safety days by daily sales rate to get the unit buffer
  6. Add that buffer to lead time demand to set the reorder point
  7. Recheck safety days every quarter or after a bad stockout or overstock

Worked example

A store sells a steady phone case at 4 units a day. The supplier's lead time is usually 10 days but has run as long as 14 days, so the owner sets safety stock at 4 days. Reorder point = 4 x (10 + 4) = 56 units. A second SKU, a seasonal phone case design, sells at 4 units a day on average but spikes unpredictably, so the owner sets safety stock at 8 days instead: reorder point = 4 x (10 + 8) = 72 units, even though the average daily sales figure is the same as the first case.

How SteadyShelf helps

SteadyShelf lets you set safety days per SKU per supplier and uses them automatically to calculate each order-by date and suggested quantity, so you do not have to redo this math by hand every week. It does not analyze lead time variability for you or auto-tune safety days based on past stockouts, so you still need to review and adjust those numbers yourself as patterns change.

$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 product?

No. Products with steady, predictable sales need less safety stock than products with spiky or seasonal demand. Set safety days per SKU, not as one store-wide number.

What happens if I set safety stock too high?

You tie up cash and shelf space in stock that sits longer than it needs to. High safety stock is a reasonable trade-off for critical or unreliable-supplier items, but it is a real cost, not a free insurance policy.

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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