The Coming Build Up of Safety Stock
A tail-wind for companies enabling data-informed decisions and scalability
In recent weeks, we’ve all faced stock outs and rationing of goods in the face of “panic-driven” demand. Grocery products such as milk, bread, and eggs are in tight supply while shelves are scant of household items such as toilet paper, disinfectant wipes, and hand soap. Since the 90s, businesses have aggressively adopted the concept of just-in-time inventory where one only holds what’s required to fulfill immediate business demand. The CFO’s office appreciates the reduction in waste and improved working capital positions. As a result, businesses have also reduced levels of safety stock, leaving them more exposed to more frequent and more severe mismatches of supply and demand. We believe there will be a broad-scale shift in rethinking safety stock and new opportunities to build a more antifragile supply chain with products that enable data-informed decision making and scalability.