How Does the Helium 10 Inventory Manager Calculate My Restock Recommendations?

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Keeping your inventory in stock is not only a quantity but a timing challenge. The goal of all the Helium 10 Reorder Recommendations in Inventory Manager is to give users information about what to order (Reorder Units) when (Reorder Date).

Inventory Manager incorporates four metrics when calculating Reorder Recommendations for each SKU. 

The first two points of data, pulled by Helium 10 from Amazon, are used in combination with the third and fourth points of data, entered into Inventory Manager by the seller, to calculate the recommendations. It's important that all these pieces of information are as accurate as possible to construct good Restock Recommendations.

Amazon Data applied by Helium 10:

  1. Inventory Quantity - Amount of inventory recorded in four areas:
  • Current - Inventory Classified as Available, FC Transfer, and FC Processing by Amazon
  • On Order - Units ordered from your Suppliers, as documented in Open Purchase Orders
  • Inbound - Units recorded as outstanding in active Inbound Shipments being sent to Amazon FBA
  • Local - Inventory reported at your Local Warehouse
  1. Forecast - Expected future sales of the designated SKU, based on past sales.

You can change which forecasting model is used by going to the Product page for the SKU and changing the model.

Helium 10 offers advanced forecasting models like the Helium 10 Exponential model and the Helium 10 Additive model. You can also choose to forecast based upon velocities of specific periods.

Seller Provided Data:

  1. Lead Time - The time it takes to source your product.

It is very important to enter in accurate Lead Times for your SKUs. If you don't put in the correct Lead Times, Inventory Manager can't generate good suggestions. For example if you enter information that it takes 30 days to replenish your inventory, but it really takes 70 days, Inventory Manager will produce inaccurate recommendations, causing you to run out of stock.

When calculating Lead Time, take into account:

  • Manufacturing
  • Freight
  • Customs Clearance
  • Transferring from port to end destination
  • Processing at Amazon's warehouse (if sending direct)
  • Seasonality (peak vs. off peak times for your suppliers) or any other potential delays
  1. Reorder Frequency - the length of time between when the shipment arrives and when you place your next order.

This number gives you breathing room. If you run a tight schedule, only ordering enough for your Lead Time, and your Lead Time is 30 days, you risk being out of stock (which can affect your ranking and the Buy Box) every month, if any untoward delays occur.

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Sample Scenario

Reorder Date, or When To Order

Let’s say today is Day 0. You have 300 units of Inventory Quantity for a SKU in stock and available for purchase on day one.

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Inventory Manager analyzes your sales and Forecasts, going forward, that you will be selling 10 units per day, starting on day one.

Using this information, Inventory Manager calculates that in 30 days you will run out of inventory. So, 300 products in stock / 10 sold per day = 30 days of inventory.

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Using your estimation for Lead Time, Inventory Manager works backwards from your anticipated Out of Stock date (Day 30) to come up with your Reorder Date.

If your Lead Time is 20 days, then Inventory Manager will notify you to place an order 10 days from now (Day 10). So, 30 days - 20 days = 10 days from your Reorder Date.

Your Reorder Date occurs on Day 10, to ensure that new stock is ordered, shipped, processed and available for orders occurring on day 31, or the day after you anticipate that the current stock will be sold out.

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Reorder Units - What To Order

Now that your Reorder Date is established, you need to estimate the Reorder Units (what or how much to order).

Several factors can complicate a simple reorder.

  1. If your manufacturer requires you to purchase more units per order than you sell in one month, you may have lengthened the time between restocking orders.
  2. If you want to only reorder units 30 days after you have received the previous order, you’ll need to build your Lead Time into the current order schedule so that you have enough units in stock to carry you through that Lead Time for the following month.
  3. Lead Times may exceed a thirty day window.
  4. Any combination of the above listed situations.

Inventory Manager accommodates the need to order enough product to cover your Lead Time, in addition to 30 days of sales. If the Lead Time is estimated to be 20 days and your Forecast predicts that you will sell 10 units per day, then you’ll need 200 additional units (20 days x 10 units sold per day) to cover your Lead Time.

If your Reorder Frequency is generally 30 days after your last shipment, then you’ll need at least 300 units (30 days x 10 units sold per day) in stock, in addition to the Lead Time stock..

Fortunately, Inventory Manager lets you modify your Lead Time and your Reorder Frequency to accommodate these scenarios. For example, if you want to only order new stock after the last shipment comes in, but your Lead Time is two weeks, you will need to reorder more than a 30-day supply to cover the number of sales occurring before the next reorder date.

Based on these figures, your Reorder Units will be 500 units (200 + 300).

Putting this all together, your Reorder Recommendation would be:

  • Reorder Date: Day 30
  • Reorder Units: 500 units

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What if I choose to order at a different time than Inventory Manager’s recommended Reorder Date?

Some sellers may not choose to wait until the last recommended time to place an order. Sellers can just place the order by changing the calculated dates. 

A seller might do this because they have many different SKUs they need to source from a Supplier and want to batch them together, or they anticipate higher sales due to the season or an upcoming promotion,  and order earlier than Inventory Manager recommends.

 

Helium 10 allows you to stay flexible regarding orders by providing the most up-to-date recommendations, no matter when you want to reorder, because Inventory Manager tracks and generates suggested Reorder Units every single day. 

If you checked the Reorder Units column in Inventory Manager each day it might look something like this:

  • Day 6: 460 units
  • Day 7: 470 units
  • Day 8: 480 units
  • Day 9: 490 units
  • Day 10: 500 units

(Note: This changing number of units will be based on the same forecast of 10 units sold per day.)

You can view your Reorder Units column to see the amount it is recommended to order as of today. As time approaches to the Reorder Date, you’ll notice that the suggested Reorder Units increases, as units are sold.

You can always check the suggested Reorder Units - On Last Order Date by clicking on the blue text and going into the Reorder Suggestion Detail modal.

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Reorder Recommendations vs. Transfer Recommendations

Inventory Manager always takes into account your Local Warehouse inventory when providing Reorder Recommendations. The software is designed to recognize that you will replenish your inventory first from your Local Warehouse, before reordering more from your suppliers (if you have a local warehouse).

For example, if you have 1,000,000 units of a SKU at your Local Warehouse and you’re selling 2,000 per month, Inventory Manager will recommend that you transfer stock from your Local Warehouse instead of purchasing more from your Supplier (Reordering). Inventory Manager will recommend that you transfer this inventory, until you deplete your Local Warehouse.

Reorder Recommendations and Transfer Recommendations always give suggestions depending on the makeup of all your documented  inventory, whether it is stored at an Amazon facility or at your Local Warehouse.

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