Safety stock is the additional inventory held above expected demand to protect against supply or demand variability, such as transport delays or seasonal peaks, reducing the risk of stockouts.
In trade practice
Buyers calculate safety stock levels by analysing lead-time variability and demand fluctuations over previous seasons, then converting the result into a minimum pallet or tonne quantity to maintain at the warehouse. For frozen food, the calculated volume must fit within contracted cold store capacity, as excess stock held at ambient temperature to save cost defeats the purpose. Procurement teams review safety stock targets periodically, particularly before high-demand periods such as summer for frozen berries, and adjust purchase orders accordingly.
In a specification
Inventory or supply agreements may define a minimum safety stock level in tonnes or pallet positions that the buyer or third-party logistics provider is contractually required to maintain at all times.