Safety Lead Time

Used in ordering replenishment inventory from a supplier of goods or raw materials. It provides a safety buffer so that on-site inventory does not run out causing delays in shipment to customers. A safety lead time may be calculated based on past experience with the supply/demand for a specific material, vendor, or industry and uploaded into a material requirement planning (MRP) system for ongoing use. This technique may be used in combination with or in lieu of safety stocks (excess inventory stored on site).