Demand planning for emerging CPG brands is extremely challenging and can have huge impacts on cash-flow.
Inventory drawdowns used by scaling retail brands
How scaling brands use inventory drawdowns to determine production quantities, and grow efficiently.
How do you know how much to produce? We started Pantry to make it easier to get products onto retailers' shelves. We've seen brands up to 50M use the same version of this spreadsheet again and again. Configure it for your own SKU mix, lead times, and cash considerations.
Perfection is the enemy of great. The goal isn’t to be perfect – just to choose a plan that won’t kill you. You must iterate monthly, if not weekly as you get new information.
Step one: What is my demand and safety stock?
- How much stock you should hold on hand can vary based on many factors, how much cash you have, your expiration date, and your MOQs. But I’ve found the basics of forecast accuracy x lead time x expected demand to work as back-of-the-napkin math. Check out this article to understand demand forecasting.
Step two: When do I need my finished goods to hit the warehouse?
- Using this spreadsheet – you can look for months when you should be restocking the warehouse. Anytime the drawdown turns red, there should be an order the month before. Eyeball MOQs.
Step three: when do I need to place POs?
- Once you know the dates and amounts you need for finished goods, it’s much simpler to repeat the process with raw materials. This is the topic for another example sheet. If you are interested comment or shoot me a DM.
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