Keeping inventory well organized is essential to optimize the management of the auto parts store and provide a good customer experience. And, in that sense, maintaining a safety stock is essential. Have you ever heard of this term? Follow our article and find out why it is important to your company and how to implement it on a daily basis.
What is a safety stock
When making purchases with suppliers, it is very common for business managers to check the parts accumulated in the stock and, based on this survey, place an order for new products. In this process, only the number of parts needed to meet demand is generally considered, at least until a new order is placed with the supplier.
Theoretically, if the need for parts remained the same in all periods, there would be no problem with that. But have you ever stopped to think about what would happen if your store received a large order, with a much higher demand than you are used to, all of a sudden? In addition to losing sales, you also lose the chance to increase business revenue!
This is just one of the situations that safety stock helps to avoid. This concept consists of keeping extra products, without exaggeration, in stock, so that the store is safer to meet more demands or even to not suffer from common situations in daily life, such as delayed delivery, replacement problems and others unforeseen events.
In other words, with safety stock, you reduce the risk of losing sales or ending up delaying the delivery of services due to a lack of parts. Not to mention all the benefits that arise from the implementation of this culture, such as promoting an even more satisfying experience for its customers, who receive fast and hassle-free service.
In addition, you maintain your normal production flow, without rushing through calls or paying employees overtime to deal with accumulated demands. Remembering that, with the correct amount of items in the safety stock, you also prevent products from getting stuck, reducing purchasing and storage costs.
How to implement safety stock in auto parts
To calculate the safety stock of your auto parts products, you must pay attention to demand characteristics, delivery time and the real need for each one of them. To make it easier to understand, let’s think of a practical situation. Imagine that you are calculating the optimal for the valve tappets in your inventory.
Start by thinking about what the demand is for the part. Does it come out quickly or does it tend to stay in stock longer? Is demand highly variable or is it something easier to predict? The greater the demand variability, the greater the safety stock must be, thus ensuring product availability. On the other side of the coin, if demand doesn’t vary much, the safety stock may be smaller.
Finally, analyze how important demand is. If, in your store, the valve tappet has a smaller output than the valve guides, for example, you already know that it’s only worth expanding the guide order a little bit and that you can secure the purchase of tappets. In other words, the key is to strike a balance, avoiding excesses and shortages in stock.
Calculating in practice:
Remembering that there are several ways to calculate the ideal safety stock for each product in your store. One of the most practical considers the days that the parts usually take to be shipped and the days required for them to be delivered by suppliers, multiplying the two amounts. Imagine that you use 10 piston rings a day and the delivery time for new parts is 20 days. The account looks like this:
Safety stock = quantity of daily sales X delivery time
Safety stock = 10 X 20
Safety stock = 200 piston rings
Easy wasn’t it? Of course, this type of calculation works best for products that don’t have a lot of demand variability. In other cases, it would be necessary to consider this item to calculate the safety stock in a more complex and detailed calculation.
We hope this article has been helpful in understanding the importance of safety stock for the auto parts store. If you have any questions about this subject, leave your comment below so we can talk better. Enjoy and share this material with your team!
