In business operations, stock kept to protect against unexpected demand or supply delays is called safety stock.
Safety stock is extra inventory held above the amount expected to be needed during normal replenishment. It helps a business continue serving customers when demand is higher than forecast, a supplier delivers late, or a production problem interrupts supply. The appropriate level depends on demand variability, lead-time uncertainty, service goals, and the cost of holding inventory.
Safety stock is often confused with cycle stock. Cycle stock is the inventory used between routine replenishment orders, while safety stock is the protective reserve for uncertainty. Too little safety stock can cause stockouts and lost sales; too much ties up cash and increases storage, insurance, and obsolescence costs.
Inventory systems may calculate safety stock using historical variability and a target service level. It is a planning quantity, not necessarily a physically separate pile in a warehouse.