We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Buffer Inventory?

By Felicia Dye
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Buffer inventory is a portion of a company's merchandise that is sometimes referred to as safety stock. These terms can be used to refer to any goods that a company has on site or en route that exceeds its current needs. Safety stock can be beneficial because it can help to ensure consistency of availability to consumers, but there may be drawbacks, such as the inability to sell the extra supplies.

To understand what safety stock is and the role that it can play, it is best to first understand what inventory is. Companies that sell goods commonly keep a certain amount of those goods on hand for immediate delivery to customers. For example, a shoe store is likely to have a certain number of shoes on site so that an individual who is interested in making a purchase does not have to wait to obtain the desired items. These stocks are known as inventory.

The amount of inventory that a company maintains is normally based on its need. If a shoe store generally sells 600 pairs of shoes in July, then it would likely have approximately that many shoes in stock during that month. There are some instances, however, when a business may decide to order more merchandise than necessary. This is considered buffer inventory, and it can serve as a major benefit.

One of the benefits of buffer inventory is that it can provide stability. This is possible because companies can immediately and effectively handle unexpected surges in demand. This reduces the risk that a company will miss opportunities to serve consumers who may go elsewhere if their demands are not immediately satisfied.

Also, there are a wide range of circumstances that can cause delays when companies attempt to replenish their inventory. Examples include inclement weather, supply shortages, and disputes with suppliers. Maintaining buffer inventory allows a company to reduce the probability that it will experience outages of desired goods. Some companies may develop a buffer supply because they are taking advantage of special offers from suppliers, such as sales, rebates, or bulk discounts.

There may, however, be some drawbacks associated with buffer inventory. One of them is the task of storing extra merchandise. If a company does not have adequate space, the additional merchandise may be stored in a manner other than that which is recommended, or a company may incur storage expenses. Another drawback is that a company may invest in buffer inventory, but demand for all of the goods may never materialize. For this reason, careful consideration should be given to the amount of buffer inventory that a company acquires.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.