“No one ever achieved greatness by playing it safe.”
This quote is attributed to Harry J. Gray, an iconic business manager and philanthropist who, through acquisition, assembled one of America’s largest manufacturing corporations. During his career, he received numerous recognitions and honors and was inducted into the Junior Achievement National Business Hall of Fame. My guess is that Mr. Gray was an expert at risk assessment and containment.
Wikipedia defines risk as a consequence of action taken in spite of uncertainty. Given that uncertainty is a fact of life in business, risk management is not only unavoidable but essential. In the context of inventory management, the most common risk strategy against stock-outs is to purchase extra inventory as safety stock.
Tags: buffer inventory, forecast, Harry J. Gray, inventory management, order cycle, replenishment, replenishment planning, risk, risk assessment, risk management, risk mitigation, safety stock, safety threshold, stock-out, supply and demand, time-phased