Maintaining reserve quantities of inventory, known as buffer stocks, offers significant advantages in managing supply chain disruptions and demand fluctuations. These safety nets consist of extra materials kept on hand to prevent stockouts and ensure uninterrupted operations. For example, a manufacturing company might hold additional components to continue production even if a supplier experiences delays.
The strategic implementation of these reserves offers numerous benefits. It improves customer service by fulfilling orders promptly, even during periods of unexpected high demand. It also mitigates the risks associated with volatile supply chains, providing a cushion against disruptions caused by natural disasters, political instability, or supplier insolvency. Historically, the concept has been crucial for industries dealing with long lead times or seasonal demand peaks, enabling them to maintain consistent supply levels.
