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Safety Stock and Manufacturing Techniques for a Global Organization

1. What is a safety stock and when should it be used? How have safety stocks been used in a global organization with which you are familiar? Were they relied upon appropriately?

2. What is the difference between synchronous manufacturing and just-in-time manufacturing? Compare how each affects scheduling and controlling. How can a global organization begin to rely on these methods to become more competitive and efficient?

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1. Safety stock is the buffer stock that is maintained by organizations to prevent stock-outs. Since demand varies cyclically throughout the year, a shortfall of stock would mean a loss of sale or revenue. Sufficient safety stock help in preventing such situations and aid organizations to operate as per their plans. The organization must be able to manage the safety stock as per business requirement. When a company launches a new product, the concept of safety stock acts like a strategic tool which helps in judging the accuracy of the forecast and thus in judging the demand of the product. If the forecast is less accurate, more safety stock is required.

Wal-Mart boasts of a well trained workforce that is aligned with the network of suppliers. At Wal-Mart, advanced technology skills are used for supporting replenishment, like to calculate safety-stock. High degree of accuracy is maintained in calculating safety stock inventories. The organization has the ability to spot errors more quickly and make better decisions about calculating and modifying service levels. Merchants often tell Wal-Mart to increase their inventories. Professionals at Wal-Mart know how to calculate safety stock to attain desired service level, and identify when adding cost could be ...

Solution Summary

The solution details the importance of safety stock as well as explaining the difference between synchronous and just-in-time manufacturing systems for a global organization in 768 words.