Safety stock optimisation for mining and industrial operations
Safety stock should be calculated, not based on historical rules of thumb. Optimisation balances service-level requirements against inventory investment and supply risk.
What is required
A realistic working-capital budget, agreed between stakeholders
Inventory profiled into groups where end users agree with the risk taken
An understanding of risk and how it is measured
Planning strategies per risk profile and policies derived from them
Performance monitoring and adjustment
Materials can be statistically forecastable, plannable from history, plannable from existing plans or end-user insight, or managed with mitigating strategies such as alternatives. Cost, lead time, supplier reliability and plant impact decide whether to stock and, if so, the minimum quantity: the safety stock.
Transparent and explainable policy calculations rather than black-box recommendations, with different approaches per demand profile. Planners create profiles and bands, simulate availability, compare performance and implement them in production.