Right-Sizing Safety Stock in Healthcare

The challenge

A regional healthcare provider held generous stocks of medical consumables across its sites, largely because running out of a clinical item was unthinkable. Over time, buffers had been set by habit rather than analysis, tying up working capital and storage space while shortages of some items still occurred.

The approach

Supply chain staff worked alongside clinical leads to classify items by clinical criticality, availability of substitutes and supply lead time. That shared classification mattered more than any formula, because it gave clinicians confidence that critical items would be protected.

Safety stock levels were then recalculated from actual usage and supplier reliability for each class. Items with reliable supply and ready substitutes were reduced carefully; critical, hard-to-source items were kept at protective levels or increased. Changes were phased in with monitoring and a clear route for clinicians to raise concerns.

What changed

Working capital was released from items that did not need large buffers, while protection for critical clinical supply was maintained. Storage areas became easier to manage, expiry waste became more visible, and clinical teams gained a clearer understanding of how stock levels were set.

Lessons for practitioners

In healthcare, the classification must be owned jointly with clinicians before any stock is reduced. Right-sizing is not the same as cutting: some buffers should grow, and saying so openly builds the trust that allows others to shrink.