Counting it, allocating it, and keeping every channel telling the same story.

Most inventory problems are not counting problems. They are reconciliation problems between a storefront, a warehouse, and a spreadsheet that each believe something slightly different. Work through the definitions, the arithmetic, and the failure modes.

20 questions answered

• What is available to promise?→

  Available to promise is the quantity you can actually commit to a new order right now. It is on-hand stock minus what is already allocated to open orders and reserved for other channels, plus inbound stock arriving inside the promise window. It is nearly always a smaller number than the on-hand count.

• What is safety stock and how much do I need?→

  Safety stock is the buffer held to absorb variability in demand and in supplier lead times. The quantity depends on how erratic each is and the service level you want to hold: steadier demand and reliable lead times need less, and a higher target service level needs more. It is sized per SKU, since the variability is per SKU.

• What is a reorder point?→

  A reorder point is the stock level at which you place the next purchase order. It equals expected demand over the supplier lead time plus safety stock, so the order lands before the buffer runs out. Hitting it is a trigger to buy, and it has to be recalculated when demand or lead times shift.

• How do I allocate inventory across channels?→

  Decide whether each channel gets a reserved pool or draws from one shared pool. Reserving protects a wholesale commitment from being sold out by DTC, at the cost of stranding units that another channel could have sold. A shared pool maximises sell-through and risks missing a retail order. Most brands reserve against committed purchase orders and share the rest.

• What is inventory accuracy and how is it measured?→

  Inventory accuracy is how closely the recorded stock matches what is physically there, measured by counting a sample and comparing. The stricter measure counts a SKU location as accurate only when the count matches exactly, with no netting of overages against shortages across the warehouse, which can hide offsetting errors.

• Why does my storefront inventory not match my 3PL?→

  Because they are two systems synced on a delay, and every event between syncs is a divergence. Returns restocked at the warehouse, damages written off, orders picked but not yet marked shipped, and inbound receipts all change one side before the other. The gap is the sync interval multiplied by how much happens inside it.

• What causes overselling?→

  Selling the same unit twice, on two channels, before either learns about the other. It happens when each sales channel holds its own copy of the stock count and they reconcile on a timer. A unit sold on a marketplace stays visible on the webstore until the next sync, and both orders get accepted.

• What is cycle counting?→

  Cycle counting is counting a subset of inventory continuously instead of everything at once. SKUs are grouped by value or velocity and counted on a schedule, so fast-moving and high-value items get counted often and slow ones rarely. The warehouse keeps operating throughout.

• How often should I count inventory?→

  Count by value and velocity rather than on a single calendar. A common split counts the top fifth of SKUs by value monthly or more, the middle band quarterly, and the long tail once or twice a year. Anything with a recurring discrepancy moves up a band until the cause is found.

• What is dead stock and what should I do with it?→

  Dead stock is inventory that has stopped selling at any price you would accept. It occupies storage, consumes working capital, and usually loses value while you decide. The options are discounting, bundling it with products that do move, selling it to a liquidator, or writing it off, and all of them are cheaper than holding it another year.

• What is inventory days of supply?→

  Days of supply is how long current stock will last at the current rate of sale: units on hand divided by average daily units sold. It converts a quantity into a time, which is the form a buying decision actually needs, and it is directly comparable to supplier lead time.

• What is lead time and why does variability matter more than length?→

  Lead time is the elapsed time from placing a purchase order to having sellable stock, including production, transit, customs, and receiving. A long lead time is manageable because you can plan around it. A variable one is not, because you have to hold buffer stock sized for the worst case rather than the average.

• How do I handle inventory across multiple warehouses?→

  Hold one logical inventory position with quantities by location, then decide per order which location ships. That requires knowing what is at each node, what is in transit between them, and the routing rule — usually nearest to the customer with stock, subject to keeping each node above its own reorder point.

• What is a stock transfer?→

  A stock transfer moves inventory between your own locations — warehouse to warehouse, warehouse to store, or warehouse to a marketplace fulfillment centre. The units stay yours throughout, so they are in transit rather than sold, and both the sending and receiving location have to reflect that or the total count goes wrong.

• What is lot tracking and when do I need it?→

  Lot tracking records which production batch each unit came from and where it went. Food, beverage, supplements, cosmetics, and anything with an expiry date need it, both to manage shelf life and to execute a recall. Without it, a recall means pulling every unit of the SKU when only one batch is affected.

• How does inventory work for bundles and kits?→

  A bundle has no stock of its own; its availability is derived from its components. Selling one has to decrement every component, and the quantity you can promise is set by whichever component runs out first. Pre-assembled kits are different — those are built in advance and held as their own SKU with their own count.

• What is sell-through rate?→

  Sell-through is the share of received stock sold in a period: units sold divided by units received, expressed as a percentage. It measures how fast a product converts into revenue, and retailers use it to decide whether a line keeps its shelf space.

• Should I hold wholesale inventory separately from DTC?→

  Separate the commitment, not usually the stock. Physically splitting inventory strands units on whichever side is slow. Reserving quantities against confirmed wholesale purchase orders inside one pool protects the retail commitment while leaving everything uncommitted available to DTC.

• What is economic order quantity?→

  Economic order quantity is the order size that minimises the combined cost of ordering and holding. Ordering often means more transaction and freight cost; ordering rarely means more capital and storage tied up. The formula balances the two against annual demand, cost per order, and holding cost per unit.

• What is inventory shrinkage?→

  Shrinkage is stock the records say you have and the shelf does not, from theft, damage, miscounts, receiving errors, or picking mistakes. It surfaces as a negative adjustment at count time, and the count only tells you the total — locating the cause requires tracking where in the flow it appeared.

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