Extra inventory maintained above normal requirements to protect against unpredictable fluctuations in customer demand, supplier lead times, or supply chain disruptions. This safety cushion helps warehouses maintain service levels while accommodating the inherent uncertainty in forecasting and procurement cycles.
Buffer stock serves as insurance against stockouts that could result in lost sales, production delays, or customer dissatisfaction. The optimal buffer level balances carrying costs against the risk and impact of inventory shortages. Advanced WMS solutions calculate appropriate buffer quantities using historical demand patterns, lead time variability, and desired service levels.
For example, a warehouse supplying seasonal products might maintain higher buffer stock during peak periods when demand spikes are common and supplier capacity is constrained. Similarly, items with long or unreliable lead times typically require larger buffers to ensure continuous availability while avoiding emergency expediting costs.
