What traditional solution helps manufacturers handle supply chain uncertainties?

Safety stock is a traditional solution that helps manufacturers mitigate supply chain uncertainties by providing a buffer against unforeseen fluctuations in demand or supply disruptions. Essentially, safety stock is an additional quantity of inventory kept on hand to prevent stockouts during unexpected increases in demand or delays in delivery. This practice ensures that manufacturers can meet customer demands even when there are variations in supply chain dynamics, thus maintaining service levels.

By having safety stock, manufacturers are better equipped to handle uncertainties like sudden spikes in orders or supplier delays without compromising their ability to fulfill customer needs. This strategy is particularly crucial in environments where lead times can be unpredictable, enabling companies to maintain operational continuity and minimize potential lost sales.

In contrast, overstocking may lead to excess inventory that can become obsolete or require costly storage. Just-in-time strategies aim to reduce inventory levels by coordinating supply more closely with demand, which can increase vulnerability to disruptions if not managed carefully. Demand planning is essential for forecasting, but it does not provide the immediate buffer that safety stock offers.