Ep 3. Inventory Planning Framework

I had a great sunset run last night along the LA coast with my good friend Daniel at conversational pace, sharing wins and lessons in work and life. I’m very grateful to get able to get outside, sweat, and cool off in the great Pacific Ocean.

In Today’s Email:

• Inventory Planning Framework

• Topic #2

• Bookmarks

I recently spoke with Sean, the VP of Operations at Cuts Clothing, who is one of the most experienced e-commerce operators in the space.

Our conversation inspired me to make this framework for inventory planning:

Step #1 - Source of Truth

It is non-negotiable to know your past sales data and current inventory levels. If your numbers are off, you’re at a big disadvantage.

For simple brands, a simple Shopify export might do. Otherwise, investing in a solid ERP or WMS will get your ducks in a row.

Step #2 - Data Context

Export your source of truth data into a google sheet and run time series analysis.

Make sure to also add context to the raw numbers. If you ran discounts or promotions make a note of that. If you have any product launches or promotions coming up, make a note. Talk to your marketing team to see what campaigns they are planning for. Think about your product portfolio and releases to see where there might be cannibalization. 

Step #3 - Scenario Analysis

Think about your best, worst, and middle-case scenarios.

Once you’ve come up with scenarios, ask yourself if the worst case is something you’d be comfortable with, what you would do in each scenario, etc.

Step #4 - Alignment

Check with your team if the order is in alignment with the company's broader goals. Marketing, operations, finance, and leadership all might be optimizing for different goals, so make sure you are on the same page.

Step #5 - Vibes

Leave the final 5-10% of your decision up to vibes.

So if you have a strong feeling about a certain color or product selling well, allow yourself to order more than your spreadsheet tells you to.

Step #6 - React

Nobody knows the future, and macro events can make your plans obsolete fast.

Inventory planning is a constant iterative process. Once you’ve locked in a PO, you still need to monitor daily how your sales and events in your company line up against your PO, and use the levers at your disposal to make the PO work.

Step #7 - Let Go

Inventory planning is one of the hardest parts of working in e-commerce, and everybody who’s been in the game for long has made mistakes.

I over-ordered earlier this year and thought I make a big mistake, but once tariffs hit, being overstocked was the best position to be in. That was complete luck.

Let go of perfection, and instead embrace adaptability.

See you all next Thursday 👋

Keyan

PS: Whenever you’re ready… we help founders reduce COGS by 10% and eliminate logistics overwhelm. If you’d like to work together, just reply “Ops” and I’ll shoot you details.