5 Easy (But Overlooked) Ways to Reduce Safety Stock in Retail
Maintaining optimal safety stock levels is crucial for balancing customer satisfaction with cost efficiency.
Drawing from our extensive experience in assisting retailers to reduce safety stock by at least 10%, here are five actionable strategies to consider:- Measure and Manage Cycle Time: The total stock you need includes safety stock to cover forecast errors. Shortening each step in the cycle means you’ll need less of it.
- Forecast for the Whole Warehouse: For slower-moving lines, forecast at the warehouse level to reduce error rates. Then, allocate down to stores or use Min/Max replenishment to maintain accuracy.
- Optimize Pack Rounding Rules: Avoid blanket rounding rules; instead, round up 0.5 for fast-sellers, 0.6 for medium, and 0.7 for slow movers. This small change can have a big impact.
- Reduce Presentation Stock: Creative displays can help reduce “minimum presentation” stock without affecting aesthetics or customer experience.
- Switch to Single Units for Slow Sellers: If you distribute in packs, consider singles for low-demand items to avoid stockpiling.
Have you applied any of these methods to optimize your safety stock? Share your experiences and insights!
Stay updated with more best practices by subscribing to our mailing list.- Measure and Manage Cycle Time: The total stock you need includes safety stock to cover forecast errors. Shortening each step in the cycle means you’ll need less of it.
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Posted by Brian Hume
15th November 2024
