In today’s business environment, every company needs to maintain safety stock levels to meet unexpected customer demands or overcome the uncertainties associated with obtaining the supplies needed to produce finished goods. In order to maintain high customer service levels, the importance of safety stock planning cannot be overlooked. The term safety stock refers to the extra product businesses keep on reserve in their warehouses to ensure they do not run out of that product in the future. Safety stock is essentially a hedge against unforeseen spikes in demand. Maintaining a sufficient level of safety stock allows businesses to continue supplying goods to their customers even if they encounter supply disruptions. Safety stock smoothing, in turn, is a method of estimating and planning for a stable level of safety stock during a specific period in the future.

Supply planners generate safety stock values based on the specific criteria used by their businesses. Several factors impact value calculations; they can fluctuate based on customer demand, forecast inaccuracies, etc. Oracle’s Safety Stock Smoothing methodology can be employed by companies to avoid maintaining excess and to keep the required values during necessary periods of time. This allows smoother business processes that meet your current customer demand without adversely affecting operations. Safety Stock Smoothing is used by the manufacturing and distribution centers of large retail industries across the U.S. and Europe. Organizations can gain a strong competitive advantage by leveraging this methodology.

To manage deviations, organizations can use the Safety Stock Smoothing method for all finished goods for which safety stock has to be maintained. This process avoids fluctuations and allows your business to maintain stable product levels during a selected time period. Safety Stock Smoothing in Oracle Supply Planning Cloud offers a complete solution to overcome the challenges of the normal fluctuations encountered in safety stock planning.

 

 

Considering Safety Stock Smoothing?

For those considering safety stock smoothing, we have outlined our generic implementation methodology below:

1. Based on your business, enter the parameters for safety stock smoothing in the supply plan options.
2. Select whether all items or only specific items will be considered for smoothing.
3. Select the interval for the smoothing to be completed.
4. Note the percentage deviation allowed for smoothing after the original values were calculated.
5. Once the Smoothing parameters are considered, the safety stock value is set. This will help your business avoid fluctuations.
6. Some “Safety Stock Bucket Start Offset Days” are often set at the start of the smoothing interval.

Inspirage understands the challenges facing companies today to keep production flowing and customer demands met. We help our customers achieve seamless supply chain operations by utilizing Safety Stock Smoothing in their supply chain planning. As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s 2021 Game Changer Award for SCM Service Delivery Partner of the Year, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact Inspirage today to learn more about the role safety stock smoothing can play in your organization.