In inventory management, strategies such as minimum stock and zero stock have become essential tools for companies seeking to optimize their logistics operations and reduce costs. These methods not only allow companies to maintain an efficient flow of products without overloading their warehouses, but also improve responsiveness to fluctuating market demand.

However, the effectiveness of these strategies is highly dependent on the robustness of the underlying logistics. Competent logistics management is essential for the minimum stock model and the bold zero stock approach to be truly effective.

This article explores in depth how implementing these inventory strategies can transform supply chain management, highlighting how our company, Across Logistics can be your strategic ally on this journey to logistics efficiency.


What is minimum stock level?

Minimum stock, also known as minimum inventory, is the lowest quantity of a product that a company must keep in its warehouse to ensure an uninterrupted flow of operations and avoid interruptions in production or sales.

This amount is crucial for companies that want to maintain a balance between operational efficiency and customer satisfaction, without incurring the costs associated with excessive storage of goods.


Minimum stock functions

Stock out prevention: The main objective of the minimum stock is to avoid the “stock out” situation, where the lack of products can result in lost sales and dissatisfied customers. Maintaining a minimum inventory helps mitigate these risks by providing a cushion that allows the company to react before stock is completely depleted.

Supply chain optimization: By defining a specific minimum stock level, companies can optimize their supply chain, better plan their orders to suppliers and improve lead time management. This leads to a more agile and efficient supply chain, capable of adapting to market changes and consumer demand.


Cost reduction: Although there are costs associated with holding inventory, minimum stock helps to avoid the much higher costs associated with production downtime or the inability to fulfill customer orders. Thus, an optimum point is found between having too much and too little inventory.


How to calculate the minimum stock

The calculation of minimum stock is vital to ensure the efficiency and effectiveness of inventory management. There are different methods to determine this quantity, but all of them focus on balancing demand and supply in an efficient manner.

The basic steps and commonly used formulas are described below:


Demand analysis

The first step is to analyze the historical demand for the product. Factors such as seasonality, market trends and cyclical variations must be considered to obtain an average of demand during a specific period.


Replenishment time

This factor refers to the time it takes to receive the products from the time the order is placed with the supplier. Supplier lead time plays a crucial role here, as it directly affects how much inventory needs to be held.


Minimum stock formula

A simple formula for calculating the minimum stock is:

Minimum Stock = (Average Daily Consumption × Replenishment Time) + Safety Stock


Where the average daily consumption is the average daily demand, the replenishment time is the number of days it takes the supplier to supply us with the product and the safety stock is an additional buffer to prevent unforeseen events.

This formula can be adjusted and customized according to the specific needs and dynamics of each company. It is essential to maintain a periodic evaluation of these calculations to adjust for changes in market conditions or changes in the company’s operations.


Differences with safety stock

Although often confused, minimum stock and safety stock are different concepts that serve different purposes within inventory management:


Minimum stock:

As described above, minimum stock is the minimum amount of product that must be held in inventory to ensure an uninterrupted flow of operations until the next supplier shipment arrives. Its main objective is to prevent the interruption of sales and production.


Safety stock

On the other hand, safety stock is an additional quantity of product held in inventory to protect against unforeseen variations in demand or supply. This type of inventory acts as a cushion against the risks of higher than expected demand or delivery delays from suppliers.

More information on safety stock


The main difference lies in its purpose, while the minimum stock is focused on maintaining basic operability, the safety stock is about mitigating the risks associated with uncertainty. Both are essential for robust inventory management and can vary considerably depending on the type of business, the speed of product turnover, and the volatility of demand and the supply chain.


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What is zero stock?

Zero stock is an inventory management strategy that seeks to minimize a company’s inventory levels to almost nothing, relying on highly efficient delivery and production systems to replenish products just when they are needed.

This approach is part of what is known as“Just In Time” (JIT), a methodology that prioritizes efficiency and storage cost reduction.

The objective of zero stock is to simplify supply chain operations, reduce capital tied up in inventory and minimize the risks associated with product obsolescence and depreciation.


Benefits of zero stock

Reduced warehousing costs: By minimizing warehoused inventory, companies can significantly reduce the costs associated with storage space.

Increased efficiency: The zero stock strategy fosters a more agile supply chain and faster responses to customer demand.

Improved product quality: Since products are produced or delivered “just in time”, there is less risk that they will deteriorate or become obsolete while waiting to be sold.


The importance of logistics in minimum and zero stock management

Implementing minimum stock or zero stock strategies entails great challenges, but also significant opportunities for logistics optimization. For these approaches to be effective, it is essential to have a robust and well-coordinated supply chain, in which reliable suppliers and quality freight forwarders play a key role.

Across Logistics, with its proven expertise and customized approach, emerges as the ideal partner in this scenario.


Reliable suppliers

Suppliers are not simply entities that supply materials or products; they are strategic partners that must be able to react to market fluctuations and adapt quickly to changing needs.

For a minimum or zero stock strategy to be successful, it is essential to have suppliers who not only understand these objectives, but also share a commitment to efficiency and timeliness.

Careful selection of suppliers therefore becomes a critical part of inventory management, ensuring that the necessary goods are available just when they are needed, without delays or quality problems.


Quality and trustworthy freight forwarders

A quality freight forwarder is equally crucial. These professionals manage transportation logistics, ensuring that products get from one point to another efficiently and on time.

In a zero stock model, where every delay can translate into production stoppages or lost sales, the forwarder’s ability to minimize delays is critical.

This involves not only planning efficient routes but also proactively handling any detours or inconveniences that may arise, always maintaining fluid and transparent communication with your customers.

In this sense, Across Logistics assures customers a constant flow of products, essential for maintaining inventory at minimum or zero levels. Specialized in the design and operation of logistics routes, we offer not only efficiency, but also resilience in the face of possible interruptions. We personally ensure that every delivery is on time and on target, a vital factor in the success of inventory strategies that require absolute accuracy and reliability.


Constant monitoring for total control

Using advanced technologies, Across Logistics offers customers real-time monitoring systems that provide complete visibility of the entire logistics process.

This continuous monitoring capability is crucial to effectively manage inventories at minimum levels, allowing our customers to make quick decisions based on reliable data for any deviation or incident in the supply chain.


Across Logistics: Your reliable logistics partner

At Across Logistics we not only understand the challenges associated with minimum and zero stock management, but we also offer comprehensive logistics solutions that are specifically tailored to each customer’s unique needs.

Our approach is designed to ensure that inventory management is as efficient and cost-effective as possible, allowing our customers to focus on growing and expanding their businesses without worrying about logistical complexity.

This detailed approach and commitment to excellence positions Across Logistics as the ideal logistics partner for companies looking to not only survive, but thrive in a competitive marketplace, leveraging advanced inventory strategies to stay ahead of the curve.