What is dynamic safety stock?

What is dynamic safety stock?

06/29/2022 - Pricing strategy

An up-to-date inventory is key to optimising resources in your catalogue and warehouse for online sales. The constant transactions, purchases, sales, returns, all complicate inventory stability and make it hard to keep the right stock level - without having too much or too little. Do you know how dynamic safety stock works? Do you know the improvements it brings to catalogue intelligence for your business? Read on to find out!

Why should you use dynamic stock, not static safety stock?

A correct calculation of your dynamic safety stock will enable you to optimise your inventory, avoid excesses that incur increased storage costs, or even worse, necessitate selling off stock as it is the end of the season, or close to the expiry date, etc.

Classic safety stock is referred to as static: it maintains an extra fixed stock level over time. Future orders replenish each item sold. On the other hand, dynamic safety stock allows you to adapt the number of stock items that are replenished according to demand volume and seasonal fluctuations.

With this formula, you will be able to adapt the safety stock to the actual needs of your e-commerce business at any moment in time. You will be able to hold sufficient stock in the warehouse to cover sales forecasts and avoid debts for storage when the demand level drops. It is optimal stock management.

How to set your dynamic safety stock

Setting the ideal dynamic safety stock for each product involves an adjusted and realistic demand forecast designed to optimise your online store’s resources.

Many factors are involved in calculating dynamic safety stock, including sales, product availability, seasonal peaks in demand, discounts applied, and sales channels. A tool like Reactev’s catalogue intelligence software will provide all this data on your sales to help keep your store’s stock optimised.

Each product in your store has its own dynamic safety stock, as it is different for each item. Standardised rules choose to maintain the same percentage of blocked units for sale and can lead you to make a mistake. However, applying data intelligence to your catalogue will allow you to achieve optimal safety stock and allow it to fluctuate over time, to a large extent eliminating errors. 

Safety stock?

Automate your dynamic safety stock

The key to keeping your dynamic safety stock up to date is automation using a catalogue intelligence application. In an e-commerce store with thousands of references, it is impossible to do this manually and constantly. As we have already seen, applying the static safety rule to items is inefficient.

Reactev’s catalogue intelligence tool opens the doors to all the benefits of this type of safety stock: improved warehouse efficiency, better sales and fewer losses caused by having to get rid of stock for a lower price than you paid for it.

This software is artificial intelligence-based and learns from rules followed and events which occur over the sales season. So, with catalogue intelligence, you will be able to achieve the following business objectives:

  • Avoid stockouts and losing sales opportunities.
  • Avoid needing an oversized warehouse and extra maintenance costs.
  • Make the right investment in products which will actually sell in optimal conditions.
  • Solidify your good customer relations by guaranteeing the availability of units of the product.

Request your Reactev demo now and start making the most of intelligent automation of your business. Optimisation is just a click away!

Category: Pricing strategy

Tags: ecommerce, pricing

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Angela de la Vieja
Content Manager

The first dynamic pricing solution designed by and for retailers