Safety stock is a way of mitigating the risk of a shortfall in product inventory. This usually happens when there’s unprecedented demand for your product, and your supply chain is struggling to keep up.
Logistics managers will turn to safety stock – additional quantities of items held in the warehouse to act as buffer stock – when they come to an understanding that replenishing the stock won’t happen in time. So rather than lose potential customers to the competition, it’s better to forecast for this eventuality instead.