Usable Inventory and Safety Stock

Having an understanding of how much space you will need for your inventory is incredibly important. You need to ensure you’re covered with enough in your inventory to use for what your data says you’ll need for projected orders. Along with usable inventory, you will need to make sure you have enough inventory for a safety stock to buffer against delays in resupply orders.

Your usable inventory includes all the goods you need to have on-hand to make sure you have enough to fulfill orders. When trying to find the right amount to have as your usable inventory ask yourself questions like, what does it take to run my business each day? How many days is it between receiving new inbound shipments? Everything is these scenarios should be covered by your usable inventory so that you avoid stockouts that can get very expensive.

After that, you’ll need your safety stock. Your safety sock is a small buffer to try to avoid supply chain disruption risks. So, when trying to understand and decide how much inventory you need stored in your warehouse, take you usable inventory as well as your safety stock and make an educated decision.

Now is the time to create those forecasts. Use the forecast for both your usable inventory as well as your safety stock to ensure your warehouse storage is large enough to hold everything you need. There is still time to use a bigger space or start outsourcing you warehouse operations before the space you have now starts to limit your scaling business.