Terms & Glossaries of Shipping and Trading

Buffer Stock

Buffer stock is the extra product set aside to compensate for unexpected delays from suppliers or when the demand is greater than anticipated.

What is Buffer Stock?

A buffer is usually defined as a cushion, absorbing the impact of potential harm.

Buffer inventory (also known as safety stock, supply chain safety net, or contingency stock) refers to a surplus of inventory that is stored in a warehouse in case of an emergency, supply chain failure, transportation delays, or an unexpected surge in demand.

Raw materials, component parts or finished goods maintained in inventory specifically in anticipation of unforeseen shortages of materials or component parts or unusual demand for finished goods.

Even if you don’t predict a higher volume of orders in the near future, having a “buffer” in how much inventory you have available to meet demand provides peace of mind, as both your supply chain and the market can be unpredictable.