Chapter 10: Inventory Planning & Data Analysis - The Dollars Are In The Details

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In this chapter we’re going to discuss how much inventory to keep on-hand, and how to use the sales data to figure that out.

 INVENTORY PLANNING & DATA ANALYSIS

The “best” amount of inventory to keep on hand depends on a few factors.

1. How much room do you have to store the product?
2. How much capital do you have to spend on it?
3. How many units will you sell in a month?
4. What’s your lead time for restocking?

Most apparel brands have a 2-3 week lead time for screen printing, meaning how long it takes them to get product once they place the PO (Purchase Order), so we’ll use 3 weeks as the average here to keep the numbers nice and easy.

In a perfect world, if your lead time on production is 3 weeks, you’d want to keep about 6-8 weeks of inventory on-hand. If your numbers are dialed in, you’d reorder at week 5 and ideally have all the new inventory arrive 3 weeks later on week 8, right as the old stock is running out.

And if your sizing ratio is dialed in too, you’d run out of all sizes at the same time, as well.

Obviously the real world doesn’t work like that, and you’ll over order sometimes, and run out of stock early sometimes. Or you’ll have advertising campaigns swing wildly up or down which will affect how long the inventory will last.

But you should always try to stay on top of the numbers and aim to be as accurate as possible to maintain the highest profitability with the least amount of overhead or wasted inventory.

Shopify is currently the best e-commerce platform for apparel brands, one of the key plug-ins we use and recommend is an app called Deep Mine.

Total guide is 4 pages long and includes a Checklist Worksheet on Page 4.