Let's Fix Your Supply Chain And Save You A Ton Of Money (With Lara Guevara) transcript

[Music] if you are operating an e-commerce business you are going to love this episode of the Andrew Ferris podcast that is because we are talking about a topic that is often referenced but rarely referenced with real detail real insight and that is optimizing the efficiency of your supply chain I don't talk about it that much because I'm not an expert on this subject but I do know how much it matters and so on this episode of the show I've got Lara gavara on the show to talk about things like how there are Savings in your manufacturing Relationships by understanding how shipping works for example from Shipping your from your manufacturer to your 3pl right forward Freight uh how there savings related to blanket POS are there savings related to understanding not just your manufacturer but your manufacturer's vendors your manufacturers manufacturers right all of those kinds of things there is a lot here that you are going to love we got into inventory forecasting all of that and so you are going to love this episode lar gavara is the CEO of more Staffing you've heard me talk about more Staffing on this show and perhaps their sister company daughter company more fractional supply chain where they are specifically bringing incredible experienced Filipino talent to e-commerce businesses and so yes this episode technically speaking is sponsored but I want you to know this episode is not a plug for more fractional supply chain in terms of like you know we're not going to spend the whole time talking about how great their service is what we talk about on this show is basically what it is that more fractional supply chain looks for to help save and create efficiencies in the supply chain if you don't know this stuff well you're going to learn a lot on this episode Lara really does know this stuff well she's got deep expertise she's run Supply chains for e-commerce Brands she's seen it from every side and she's worked with a lot of Brands like I said stay tuned learn a lot from L gavara CEO of more Staffing and more fractional supply chain Laura how's it going great to see you as always hey good morning from the Philipp Andrew and afterno or good evening to our leeners right yeah it's it's like 2:30 for me in the afternoon in La about 6:30 in the morning for you in the Philippines and who knows what time it is for people listening to this in their cars or on a walk or whatever it is you know so yeah uh how's things in the Philippines right now how you doing of course Filipinos started celebrating Christmas last September one so we are nearing the actual celebration and everyone is very excited a lot of Christmas parties on the side and schools are starting to have Vacations so everything is five minutes time at this point okay awesome yeah we're recording here in the middle of December and so yeah that's uh yeah it's a long Christmas celebration in the Philippines yes yes okay I didn't know that it's the most it's the longest and the like the the most important convert and like analyzing it's in the in the US the biggest is Thanksgiving followed by probably the Christmas in New Year but in here since September it's all about Christmas until the three kings on January so it's a very very long Christmas season okay got it yeah all right yeah we I mean it probably depends for us like certainly in e-commerce land the biggest the biggest time is like right after Thanksgiving of course into into Christmas but then yeah okay so listen you and I part of this conversation came up from you tweeted you tweeted this great Thread about and everybody should go follow you on Twitter by the way and I'll I'll put the link the show notes to go follow laa on Twitter you know you you tweeted like all of these different ways that people can think about getting more efficiency in their supply chain for eCommerce like you know this world like the back of your hand and I was like my gosh why have we done an episode about this I don't I don't know I've actually wanted to do an episode about this for a while but just haven't I don't know just haven't had the right person to talk to or haven't thought about it and so when you tweeted that like let's do this and you immediately respond yes let's definitely do that so I I don't know where the best place to start is I I think maybe the simple thing to do is to talk about sort of like all the elements of the supply chain that you see as like the the top places where the lowest hanging fruit is maybe that's the place to start so when you guys have people come to you who want e-commerce supply chain help you have a you have part of your service at more staffing called more fractional supply chain and so you have people come to you specifically looking for supply chain help when they come to you what are the most common like lowest hang fruit things that like immediately you're looking for going I'm pretty sure you probably have some efficiencies to be gain to gain here like what's top of mind for you all right so first and foremost I would like to start um this conversation by saying supply chain is an investment and there is a return if the team is managed well or if supply chain is managed well so commonly um we actually as for question we make sure that we first ask their pain points and what are their priorities their projects that they wanted to move forward first in supply chain because different e-commerce businesses have different priorities but I would say 75% of our clients would say it is the um inventory planning at at the same time it the followed by new product development or launching of new products for their campaigns so when we have this discussions with them during the discovery call we would see what are the the top three things that we can improve on immediately because we want to provide to them an actual return in the first three months of working together and those are savings sales opportunities and supply chain risk management for the savings we can directly communicate with a vendor for Price negotiation and that's applicable for the cost of the product and at the same time this is the most commonly neglected negotiation is the freight for water which is sometimes higher cost than the product itself so I you would start identifying who are your vendors are you connecting to the actual manufacturer or a middleman because we it is very important that we find that direct manufacturer so that we can negotiate with them directly with cost and from there we either we can help them with the actual cost of the product and followed by the cost of fre forwarding and that is usually like straight forwarding cost is Trier than cost of the product because we have a lot of straight forwarding services in in China or or in Asia and other parts of the world wherein you can actually see more than 30% is handled properly so I would start in those yeah yeah well I miss that alone is a really fascinating observation because I've actually seen people point this out that like essentially you're referring to like Freight from the manufacturer to the 3pl right like ocean Freight right that's right okay so or to your Warehouse or whatever right so it's funny because I've seen people talk about the possible savings here very vaguely I actually only I've seen like I've yeah but rarely when I hear people talk about negotiating with their manufacturer do I hear anybody call out this line item basically and say like there are savings like here and you're saying a lot of times it is actually like ocean Freight is it as expensive as the product itself that's right sometimes more more expensive so there can actually be bigger faster savings there and that's just by that I mean are you are you able to go and ask like have your Manu ufacturer set up with a different with a different SE freight company or something like that like is that like is that is that the way you're doing this basically getting them to ship it with somebody else or like how how do you even control that yes most of our when we ask them who are your vendors who are your Freight forwarders is the next question they would say um we just rely from the freight forwarders of our vendors and then boom that's the that's a lowest headings there because not only your vendors can get profits from the product but they're also getting profit from the fridge Waters so they are the middleman of that if you don't know how to do your own shipment it's a huge additional cost and sometimes like most of the time when we ask them who are your freid forwarders now we are in the mercy of our of our vendor Freight forward or no I use freightos flx Sport and those are programs or apps that you can um book your your own Freight Freight shipment but that's very expensive because it has a platform so it's like if if those are the two answers that we get and 100% those two will be then we already have the advantage of saying we can give you savings within three months we haven't heard someone yet that has their own connection of plates for water and that can actually give you more savings than negotiating the actual product and that's just by you knowing your way around around what Freight foring is available in China and some of that so if somebody's Manufacturing in China just by doing that alone you're going to you're going to potentially have significant savings right there yes yes my gosh that is that con yeah go ahead keep going sorry keep going connection network connection and Network all straight forwarders that's why if I if I am like dedicating 10 hours a week for supply chain research and and updating myself with latest Trend 50% of that is in Freight is shipment and others are like combination of negotiation for for the vendors what's in for 20 for the next year but 0% of my time is dedicated understanding the shipment status right now because that is where we can get a quick and biggest savings B on experience that is awesome that's for is that mostly for people shipping from China or or is that elsewhere in the world too it can be applied to any anywhere from Asia there's not much issues with or much savings with other parts of the world but anything coming from Asia there can be a huge potential savings yeah makes sense okay so that's really fascinating to me the do you find any pullback in quality when you do that like do you end up and you know is there a sort of you get what you pay for thing here do you end up having any issues on that side of things actually n for Freight uh forward unlike negotiating an actual product they might lower the quality of the raw materials of the product that you're using for Freight forwarding the only thing that you have to check when you're negotiating cost is where is this Landing or where is this docking in the US and at the same time what is the route and there are so many programs where you can check the route of the vessel that's another part in a whole story on on being able to track shipments so if they say that normally it will take 30 days to ship this products from Ningbo to La for example and they would say we we are going to use a different port cheaper but it will take 35 days it will have additional five days and so that Clarity and communication and transparency that you don't if you don't mind the additional five days before it arrives and at the same time you will get a savings of 10% so you will you will then decide yes let's let's go for it so it's just what is your cost what is our lead time and then where is this docking because it's very important to know is they are docking in the busiest part of the fors there in the in the US it will take longer time and sometimes more expensive as well yeah okay man yeah it's this is just that's that's one of those details where I think about this all the time where I'm always talking to people about just like hammering away at all these parts of their business and this is like exactly the kind of thing I have in mind the idea that you would go and negotiate it's like sounds great to say okay you know negotiate down your cost with your suppliers but like what does that mean like you got to be more specific than that because yeah that your cost with your suppliers actually refers to a whole bunch of different stuff there's a whole bunch of you know there's all kinds of different things in there and so that's so interesting um okay you you said something else really fast fasinating in your Twitter thread originally which was and I'll link the the Twitter thread as well in the in the show notes but you said something about one of the best places to negotiate for Supply chains is actually just by being more aware of local currencies and of of the exchange rates basically can you talk about that a little bit yes the funny thing about this is when I started working with e-commerce businesses like more than side years ago the first client that I have um negotiating and using R&B and not US dollars so actually that's where I'm coming from like the new or the I'm not saying Old-Timers but probably the more the business owners that have been doing this long term has know this technique already and then we noticed that the new ones dealing with the vendors they would start with negotiating bya US dollars so I actually learned negotiating in the beginning using R&B and somehow I realized or I noticed when I have new clients they would ask me to do USD because that's how they probably they just don't want to convert and they think it's the same and they just wanted to see everything in US dollars as compared to seeing R&B and Computing the conversion themselves so there's a huge probability of savings here because when we negotiate with their local currency we can encourage them an open costing relationship they can provide to you their um raw materials cost using R&B as well and then just a margin which is usually what will be their profit so they can also make sure that if they if they are uh of course they have their manufacturers as well and suppliers as well so this is one step back is is actually understanding three tiers of your suppliers so your tier one is the your vendor your manufacturer tier two is the vendor of your vendor and tier C is the vendor of your vendor of your vendor so having that R&B um discussion with them is helping your tier one vendors to negotiate better with their tier two and with their tier SC so they have they don't have to monitor exchange rate of USD and R&B it's faster for them it's more fair for them than actually for you and then it will help them give you the true cost of their product so a lot of Advantage there and the downside the only downside for you is if you will launch this technique but you don't have time to uh monitor this and so that's why I I keep saying this that if you will do this way of negotiating prices with your vendor make sure you track you track US dollars conversion to chinese1 because it's not and and if we can't see that there the dollar will be weaker in the next few days then you have to let your vendor know that they need to secure their orders to their suppliers before we have a higher conversion rate so it's just making sure that first you know when you need to let your vendor know lock in your price lock in your price your vendors as well because we will lock in with you it's like a blanket po wherein instead of ordering just for the first quarter of the year and wanted to order for the second quarter of the year and the or the third quarter of the year so your vendor there your manufacturer will also order their raw materials for the rest of the year and it's like helping your vendor as well to land their orders ahead so the savings can be observed not only by you or experienced by you but also by your vendors so technically you're helping them as well yeah that way it's not just you winning at their expense or whatever it is right yeah that makes sense yes so helpful again the same thing I was saying with that last one it's like when you talk about starting to do some of these things it makes it's really about understanding every single layer and every single detail of the process and that's the way you actually end up creating efficiency for yourself man so good what else should I know or what else should people know about negotiating with vendors on the cost of the goods themselves like on on the cost of the actual product itself like what are the other are there other efficiencies there for savings you know is there is there anything I'm not thinking of here besides you know forward shipping and or forward Freight and and obviously what you just mentioned in terms of exchange rate and all that kind of stuff are there are any other key sort of Leverage points in those conversations yeah so uh one I previously mentioned about blacket po it's like if you know that the product right now or the raw materials right now is cheaper we want to secure that and we want to order ahead but that means you have to also uh you have a bet you you need to have a cash good cash flow here because you are Advanced ordering to get the lower the cheaper price but if you don't talk people through talk people through with a blanket poo is because I I just want to make sure people understand what you're talking about all right so blanket POS usually when we forecast demand um planning and inventory for casting we order usually in the cycle of 45 days or 60 days so you are going to be you are planning your products ahead for 45 days or 60 days blanket POS we wanted to extend that forecasting into a longer term and we want to see if there's an opportunity of savings in ordering a six month worth of product instead of two months and then if we see that there's any opportunity there to save we're going to create an order purchase order that has the whole quantity for the next six months for example but there's no delivery date it's just for your vendor to secure their raw materials as well not only raw materials is to secure their labors as well their production capacity as well because the the when you help your vendor plan their Productions ahead you're you're up for and great savings there and then not only not only they can secure your their raw materials at a lower cost you're also ensured that you will not run out of this product because they they have secured their product as well so bled PO is ordering for a long much longer time sometimes for a year but there's no date on the delivery and it has an arrangement that you will be sending the dates on the delivery once you have like the the usual forecasting timeline that you have so if you run your forecasting or inventory planning every months for example then monthly you will update the vendor on the delivery dates yeah that makes sense that so when I've seen blink ao's done typically what I see is people they secure they like commit to the order but they don't pay for the whole thing until later right like I mean that's like you're actually G to pay for it depending on your terms later you're just you're just committing to the inventory up front and committing to some kind of payment isn't that right that's right yeah okay so so you don't have to have the cash on hand to order a Year's worth of stuff or whatever that's not the idea the idea is that yes you you just know that you're going to need that much stuff so like if I was on the inventory if I was on the demand plan side of this what I would do is look at especially for like core products that I know for a fact I'm going to sell right I'm not gonna I'm not gonna go place a blanket PO for like a new product I'm launching that I'm not sure I it's GNA do I'm gonna go place it for you know my hero product that's GNA go take up a huge portion of my inventory that's right and um with regards to payman you should the arrangement with the vendor is having like if you are in the 3070 like 30% um deposit if you do a blanket po you will only do a deposit on the quantity that you wanted delivered at a certain period of time your vendor should be securing their raw materials as well without paying it with the vendors at at that time so yes you you don't have to have the cash flow to pay like the whole 30% for that black blet po that makes sense is maybe oh so actually I cut you off so blanket P was one of the places where you thought there was a potential savings for for Brands like if you can commit to the inventory in advance you can get savings on it you can lock in the price all those things maybe you even do that relative to the strength of the dollar if the in that particular moment it might be a good reason to do it but what else you you were going to go to some other ones that you thought were some other places for Savings in in that side of things yes I also mentioned earlier the um I knowing your tier one to three vendors because most see I can say 99% of e-commerce businesses know their tier one only tier one and not tier two and tier three when you um know your tier two and tier three vendors you will have the advantage of letting your vendor know that you know what you're doing as well in terms of net cost negotiations the confidence that you you provide and at the same time being able to understand the whole supply chain of your vendor can help you with negotiating price as well so how would you check and confirm if the price you're getting is valid and it's it's fair so it's only because you know the raw materials and the prices of their raw materials as well and then making sure that you understand how how they produce it so many of vendors in China are using third party factories so make sure that when you're dealing with um a new product or actually an order you are dealing with direct manufacturer and it's hard to know because you're not in China but there are so many solutions to this so one is making sure you have a third party quality check team and that's we have I can I can um actually share with you the the link of my favorite third party third party Checker in in the in China for example China Vietnam India but they will be doing the auditing for you just to make sure that first they can they can check if the manufacturing companies are compliant many of shin as you know these issues um they some are not following not not compliant so they have to make sure that they are compliant with the salary working hours age of the labors that you're using at the same time the real capacity of of the plan do they have the real capacity if there's a surge in po if not what will be their risk management plan do they have Partners so that someone can fulfill the orders on their behalf third is if it's their real manufacturing plan so it's a for example for a price of $300 for doing that all day audit you know that your your vendor can be trusted and that is really actually doing the actual products that you're organiz that when you say be trusted that you what it sounds like what you're saying is both to accomplish the work that you've asked them to do and to do it at the Quality that you're asking them to do it at but also to do that without exploiting people right like in terms of labor labor laws and so of that right yes yeah which I know is always like that's a concern I've had about working with some manufacturers across the world or some vendors across the world where it's it's not like I necessarily think they're definitely doing that it's just that I know I'm far from it and so it's hard for me to beware and I don't I don't want to touch that if I'm a company you know it's not not what I'm interested in doing so so yeah that's really cool so yeah we will you can go ahead and give me that when this when this over you can give me that and I will put the link in the show notes to a third party auditor it's 300 bucks to go get that done yes I mean that's that's nothing that's like absolutely go do that so that's a no-brainer yeah okay so the link for that will be in the show notes as well and and so go check that out as well Okay so we've covered those two blanket po third party auditor what's the what's did you have another one did you have another one place to negotiate with for your manufacturers I have another question understanding your understanding your tier one to tier three oh yes yeah that's right sorry yeah that's yeah that's another thing that I it makes so much sense when you say that and when you when you were talking about that do you think like should I just go ask my number my first tier manufacturer my tier one manufacturer like just go ask them who they're working with yes that's right so for example I'm ordering an apparel I'm ordering polos for for my company I would ask where are the Fabrics coming from so they should be able to Pro provide the name of their vendors as well and at the same time we can do our own audit to their vendors and and that that is this practice is done if you're doing corporate um supply chain you you actually go to your vendors vendor but in the remote setup people are forgetting about this very good practice because it's it's more complicated it's in China so the the least you can do is to know the name do your own research and provide like asked the third party to do the audit for you before uh when I was working for KFC here in Philippines we go to different parts of different countries to check our the manufacturer our warehouse our vendor for different raw materials that we have but right now it's becoming less and less of bad practice because of the limitations of remote but there's a solution to that and we should not be doing a shortcut for for that practice as well yeah that makes sense okay what do you think about negotiating payment terms and this is something that gets talked about a lot and something in some ways that I think a lot of people really fetishize the idea that you would like everybody loves the idea of of having negative cash conversion Cycles or of or of being able to you know just for cash management being able to essentially use your manufacturer as as a lender essentially you any thoughts about how e-commerce brands should be thinking about negotiating terms relative to negotiating prices because those two tend to be at odds with each other in my experience where you can get better terms but essentially you're asking the the but you end up paying more per unit and so like you know there's like a back and forth like do I want better terms or do I want uh cheaper costs you know and and so I don't know how you think about negotiating payment terms with with your suppliers so first um step for this if I am working with a client I would ask their priority if it's better term or better price because you're right there should be it can be one way or the other but there's a balance as well so if your priority as a company right now is to save on cost I will do the best negotiation for the payment terms based on the cost that we have so an example of the best terms that probably I've gotten previously is 30 days net so it arrives already in in our um warehouse and we're not yet paying the 50% and that is our hero product being able to negotiate that our hero product bestselling Bo shorts and then at the same time having the best payment terms for us so what we do is 50/50 it's a 50% sorry 10% deposit and then 40% will be paid before the product leaves China and then 50% will be paid 30 days after it arrives the warehouse so that's the best payment terms that we that we had with that I had negotiated with a vendor but I had that because I believe that we already have a long-term relationship with a vendor so we have to consider that if it's a new vendor it's probably not going to work essentially you've built up credit they know you're going to pay them they don't have to worry about that they can they can do all that you know if they need to finance it they can and they can they can be okay did did you say you you negotiated those terms specifically on one product yeah the hero uh the best selling product and actually not just one spu it's for example we have a board shorts but it is like 10 designs so it is applicable to the 10 designs of our board shorts yeah but negotiating terms for different products differently makes a lot of sense and I don't know I've never thought about that but but it's the same thing with the blanket poo thing that we're talking about where it's like if you are approaching different parts of your inventory and your relationship to manufacturer differently across those things of course I mean of course things that you're producing at a higher volume that are more reliable that you know you're going to sell through that you could forecast more accurately those are the kind of things where you would want to go and get you know longer payment terms place a larger po get cheaper costs Etc instead of feeling like you have to do that across the entirety of everything that you're ordering which is which is actually definitely how I've heard most people talk about this in the past is the idea that like you would sort of get Allin rates but instead you're saying it sounds like think about it in terms of different different SKS having different impacts I would say apply the Paro principle I we we know that like focus on your biggest product first and then have different projects savings projects for that product and you will see because that will move the needle do not focus or use your ngg with 100% of your product and then ending up not being able to have a successful um campaigns or Supply chains uh savings for all of the products so focus on your biggest product your hero product your best sending product and start doing projects for that start doing cost negotiation payment terms Freight shipment and different ways on how to how to get all blanket bills for that year yeah it's really smart Okay uh I want to talk a little bit about about inventory forecasting and demand planning because there's a whole other side of this besides on the supply chain side for e-commerce businesses and this is something I see people really struggle with yeah Advocate a lot that part of the thing you do here is start by just building a good forecast in a business in general right so I talk a lot about cohort forecasting and using forecasting your new customer Revenue returning customer Revenue differently and put out a few different things about that I'll link again in the show notes a guide to sort of phase one of a cohort forast that's that's something I talk about a lot and so but let's just assume that an e-commerce business comes to you and has a cohort forecast in place and they're beginning to think about sort of you know they forecasted their spend they forecasted new customer Revenue they forecasted returning customer Revenue what should they be thinking about on inventory forecasting or maybe it's even before they get to that full business forecast to think better about inventory forecasting and demand planning yeah so before I uh answer that question all the things that we've discussed earlier before this is actually the problems that e-commerce usually don't know and and this side the inventory planning is the problem or the challenge that they know yeah everybody know we ask them yes if we ask them what's your pain Point number one is this so I'm very happy um actually discussing this or or makes us decided to discuss this with our with our clients because this will definitely support them with growth in terms of proper ordering for casting so I would start by answering we should have the past data the most important two things is the past data and future campaigns so let's um discuss past data uh first so past data um historical sales order histories all of those should you should have those data and if you don't that would be completely um your forecasting is completely will be definitely off Shopify for example is providing this information and all you have to do is download like the past data but for um po historical uh purchase order history you should have tracked it otherwise you don't have the DAT and and the quantity that you've had and you can't use this data for your forecasting so everything should be captured when you are working with supply chain so I would say my I would tell my team members to always have a tracker for everything like Po a Tracker arrival shipment tracker because all of this data will be used in forecasting in the future if you go in and work with a new client for fractional supply chain aent they don't have data at all we will start creating trackers for them and then we are going to to start um using them for so that in the future they can use it but if they have that it would be very helpful for us to create the template for forecasting and inventory inventory planning so that is um the past data or or like the other thing that's for that can contribute to a better forecasting and then next is future campaigns once you have the data of your previous sales is not enough you don't add your campaign growth or marketing strategies or marketing campaigns aligned or or plotted or plans for the next quarter for example so we're discussing how much should we uh what is our multiplier if we are to discuss this with our marketing supply chain and marketing person if we are going to have a huge marketing campaign for our Euro product this Thanksgiving for example what is our U multiplier how much percent is our buffler so having that transparency and and communication with your marketing is very important so again it's using fast data for say historical sales and then combining it with future future forecast with your growth um and marketing marketing campaigns there are um let me say something about that really fast Laura no I this is so key and like I I've I've just been with so many Brands where I mean I've actually been on the marketing side of this with a supply chain person just so frustrated with me because suddenly I'll start selling a product for all of us who are running Facebook ads you know you you you've seen this happen you run a new ad that hits on a product that you weren't expecting and that's great but inventory doesn't come out of nowhere so if suddenly let let's say you have three products in your business and product a is your hero product and product B does fine and product C doesn't do very much well if you suddenly start running an app for product C and it crushes and suddenly product C starts selling a lot more than you expected that's Fant fantastic but you are going to run out of inventory it's going to happen and so there's two approaches to this one of them is that's okay actually you start doing that now you know you've got this banked and so you slow down your sales on your you know if you're you're you know listening to this podcast maybe you're running bid caps now you take a lower bid cap you take a higher efficiency you slow down the sales velocity in that product and you wait until you restock or whatever right but there's another thing here which is can actually go the other way which is if you know you have a lot of product a and you plan to keep selling it youve placed that blanket for example you're committed to the inventory like we just talked about that means the marketer now has a challenge which is sell product a build your ads spin your creative wheels on product a when you're seeding products to influencers do it on product a like all of those things matter and and so however you approach products B and C are going to have to be necessarily down like different different conversations and so especially again once you've once you've got like the blanket poo kind of thing or something like that if you've made a commitment like that that we've talked about now it is part of the marketer's job to just sell a particular product and you're right the the the solution to this is actually very straightforward it's get those people in the same room so to speak could be on slack or whatever right but get them in the same room so to speak talking about what are we doing inventory wise what's our plan what do we need to sell and do we need to actually speed anything up and of course your marketing team may they want run a sale or do a gift with purchase or something like that if if their sales are too slow or let's say your sales are too fast on a product it might mean getting rid of your sale on that product I actually just did this with a client like that was that was moving through some inventory too fast it was working too well and so they had a BOGO on a bunch of you know a product going and they just took this product out of the BOGO they just made a thing and said like no can't can't do buy one get one on this product anymore why because they're gonna run out of it it just and they weren't gonna be able to go fasten so yeah I think that's so much of it and that means that also means that generally if you're building a like a year-long forecast in advance there has to be some assumption built into that forecast like like you said like looking at historic sales velocity across everything and go like okay this is what we expect to sell and if something's going to change it's gonna it's gonna do that for marketers this can be really helpful because it can actually stop you from spinning your wheels against something you can't sell anyway and people people will otherwise they'll start thinking like how do I sell a bunch of this product whatever well if you go put a bunch of creative resources and go plan a photo shoot and all that kind of stuff around a product that you can't move because you don't have enough of it anyway that was a wasting your money don't do it instead it allows you to align your resources against your biggest opportunities yeah one report that would help ask your inventory planners about this is is your slow moving products in your slow moving product report you should see all the details that you need if you wanted to if you wanted to do um marketing campaigns so that you focus on those with a lot of inventory and slow moving because the thing here is I'm smiling earlier because this is the actual scenario that is happening with us it's marketing it's it should not be marketing versus supply chain but that's what happening because hey hey marketing it it's very easy to tell us that you're doing a marketing campaign for this of course we want ask the company to sell but at least let us know so that we can give you an advice if this is the right product or we can already advise our vendor I need this product air shipped right now because there are products that are small that doesn't have to be uh SE Shi so at least a do of corer shipment it's it takes it takes three to five days and then so that I can support you it's always how supply chain is a support department how can we support marketing campaigns so having that transparency that even we we cannot um stop you from trying out ads and the likes we at least can share our thoughts and track and actually most important for me is I will track that data I will trap the result of your marketing campaign because I can use it for for future forecasting yeah and one of the things you said there that I've seen also done is like somebody actually gets on the phone with their manufacturer and says like hey we actually think we're going to sell a lot more product C than we expected can you switch around your your manufacturing schedule is it possible for you to move things up and sometimes they can sometimes they can't but if they can sometimes it's also it doesn't matter to them they don't then yeah they they might not care at all they might be like sure we can switch you know whatever it wasn't going to be a big deal for us we we're happy to do it sometimes it is a big deal for them depending on what the product is and the complexity of but like yeah I think I think I think that's you're right you just have to do that I mean the way have seen actually play out again from the marketing side in part is to actually have whoever's running especially again if they're running meta ads or something like that if a new ad hits for a product that you were not previously selling a lot of it's like like send a message immediately and say you know hey we're we're spending we were spending five grand a day on product a and no money on product C before well now look we got a new ad and it's going to spend three grand a day on product C and we weren't planning on doing that okay this is out of nowhere immediately alert somebody this this new product is taking off we have an ad that took off go go tell somebody today right now yeah here you go and then you can decide okay we have very little of this we need to get more right away or we have a lot of it don't worry about it or we have a medium amount let's watch and see how it goes see if this result holds and if we should react or if we should just kind of carry on you know whatever so but you just kind of notify somebody immediately Yeah Yeah the more we know uh we are problem solvers so the more we know the more we can help solve the uh inventory issu so that that can help get that the other thing I'll say here is that like the truth is inventory forecasting is impossible I mean it's just like the for a growing e-commerce business the eror bars are going to be wide on your forecast they just are like just like and so the notion of like oh my gosh how do we make it so we stop running out of inventory the answer is like H if you're growing fast it's going to be pretty hard like do your best and I bet you guys Laura could can help a lot with thinking about some of those things with just some good communication but it's just gonna be really really hard oving it but there's no like yeah there's no 100% like I had a mastermind last night with two inventory planners that we have so we I I was uh I asked them so if you last year you sold you sold X number of your hero product and this year because you sold that last year this year you doubled it because you know that it will it will have more sales but then again this year you sold everything by November doesn't didn't even you don't even have stocks for December so like how are you going to measure the forecasts that you've done inventory planning that you've done for this year and a lot of contributing factors has to be considered like again marketing campaigns one of the answer that I get earlier that is I think going to be helpful um that they use for their company is that they observe the number of new customers so new customers and repeat customers and they sometimes and and they use it as a multiplier so if they have like more from that yes right and so that could be um that could be that's one at the same time you have to add multiply for your campaigns if you're using doing a lot of promos for for Q4 and then so having that said are we going to have 100% of 100% forecast it's basically the answer is no because what we aim is to make sure that we also balance Overstock and understock if you are going to Overstock and your product is uh what do you call seasonal and you're left with a lot of products for January and it became it all we all know that January onwards is the off B season for selling and you're now left with a huge product inventory seting cash flow in your Warehouse so it's making sure that you have enough but also having a little bit of a buffer but not too much that you're being you're you you'll end up with a a lot of products in your Warehouse that you can sell anyway in the next coming months which is very very tricky because from being the the busy season of gifting season and then suddenly drop January to March so that's that's how it should be I would say that managing Overstock and under stock should be always that's cost if the product I always say is the product small is the product cheap is the product seasonal is it can we use it all the year round if the answer is if the answer is yes then we get Overstock we for sure can handle and sell it next year but if it's a jacket for for Christmas that is very heavy very hard to ship from China to to to us and then also it's it's the design is Christmasy and that's something that we really have to it's better to get out out of stock than Overstock than have a remaining furn yeah I it's it's like that's so insightful and so right like this so much of the question sometimes there's generalized advice given about like oh you should make sure that again you like really optimize for inventory turn and make sure that you have a fast cash conversion cycle and that's great well look if your product is really really small and really really cheap to make actually that's not true what you should optimize for is never running out especially if you know you can sell it right because it's because it's not because it actually doesn't tie up that much cash to keep it and so but like you said like if you're product is really seasonal or something like that like you can end up sitting on it for a year that's actually a big problem you do tie up a lot of cash now you have to say we're willing to risk losing out on some growth potential we'll we'll take a higher profitability on our products now even if we have to raise the price or slow down our ads or something like that we'll we'll do that we'll let that money trickle down to the bottom line of our business yeah and yes it's true we won't grow as fast at the Top Line because of that and that tradeoff I think is like is is really really dependent on what the product is and on what your cash position is some of those things yeah so being out of stock is not a sign of failed inventory planning being out of stock of a Christmas J jacket by November or December is actually a success which means you have sold all of your Christmas product and you're not left with anything for for January to to sell which is probably you'll not be able to sell but also for for the small products that can be sold all year round out of stock is is a site of uh failure in forecasting because you shouldn't be running out of those small cheap products that you have so again it's a matter of categorizing your products we usually have category ABC for for for our products fast moving slow products we we can discuss you can discuss this with your supply chain manager and and the owner which is um have being able to categorize your products by its size price lead time and mq we haven't um discussed it yet but minimum order quantity which can be a great consideration for ordering as well yeah it's it's so helpful to remember that like so many of the generalized Rules and Things you see in general commentary around this stuff actually doesn't really work that way like things are actually more specific than than what the generalized rules uh would suggest sometimes you know yeah yeah okay so talk about more fractional supply chain or about more Staffing really anything here Laura I think I think from the person who's listened to this conversation and is like oh my gosh there's so much stuff I don't know or maybe even they're thinking like I don't have time to go and do all this stuff it sounds great but I don't have time talk to people about how you're helping them solve that okay so I mentioned in the beginning of this call that supply chain is an investment if we if we can um handle it correctly what we're what we're hoping to do uh and to support our clients with and by the way Andrew this product was born because of our travel two months ago wherein we we went from north um California to South and met with you we went to our e-commerce vendors look at their warehouse meet with them ask their pain point and and most of the common issues that they have is really having not enough people to work on their supply chain so one of them has a supply chain manager but supply chain manager can can do end to end of course but you have a limitation on their expertise so I would say for example my expertise is in New prod development project management sourcing and negotiating my list is inventory planning so whenever I that's why I'm I mentioned earlier I have a mastermind with inventory planner because I want to continue learning about inventory planning because that's my least expertise in the enter and supply chain ideally you have four members um demand and inventory planner which is good in it sales sheet data analysis which includes data Gathering and data presentation next is you should have a source saying person your new product development lead which is the expert in negotiation sourcing vendor management and then third is uh a support and Advent coordinator which can track your POS order processing send your orders do all the uh needy grey stuff of of supply chain and ideally you have the manager who will Who will um manage all of those members but again earlier I've mentioned the limitation on budget as a as an e-commerce business that is just starting up it's 100% impossible to hire for fulltime at the same time or even hire for parttime in one season so what more supply chain is hoping to fractional supply chain we hoping to support is give you the expertise of all of those um important categories in one service so we will handle all of those and like our team will be able to understand and provide you the actual um expertise that you need so for example you're needing for this season focus on inventory planning only so when you are uh when we know that your focus is inventory planning we will be able to support your your members with um an expert in inventory planning and if you have a Shar in prioritization the next few months then you you can also get the expertise of a new product development and supply chain or or sourcing experties for that so again we want to make sure that we can support the endtoend Supply Chain by having different expertise provided to you instead of just one person who can do everything yeah that makes so much sense I so I uh I think that's great the combination of being able to do some of these things um for a USC Commerce business both already with the savings of of doing this with a Filipino Talent was already going to be cheaper than hiring that person in the US and as I always say when I do our more Staffing ad reads and those things being able to do that while also paying a good wage in the Philippines means that first of all it's not exploitative which is great but secondly it's also going to attract really good really good talent right like I mean because the because the value is competitive there it's gonna it's gonna you're gonna find really good people so there's that but then on top of that to be able to do that at a fractional level Etc without having to like bring somebody on and commit to fulltime and some who's going to come in with that level of expertise across the business and even be able to bend the program to the need that you have at the time again to me is like a no-brainer I've already recommended more Pro supply chain to one person to you and I know you've you've had at least one meeting you know really specifically for for a business that was Manufacturing in China and where you know we were able to look at it and say like okay you know they wanted some supply chain help and just to go like go like you you should absolutely go talk to them and and immediately I think was very helpful so yeah I think I think there's like this service to me when you when you told me about this Lara I was like this is a freaking no-brainer for people like like I If for so many Brands and I I talk so often to Founders who are especially on that sort of like moving from 1 million to 10 million in Revenue where they're really starting to bring on more Health this is like one of the first things that I would personally be thinking about in my business is like as that as I'm starting to show real growth possibilities in it I'm going to need help with these things I'm gonna help with inventory planning I'm gonna need help with and these are timec consuming I'm gonna need help with planning a lot of stuff going to know that world like people don't get into e-commerce because they deeply understand supply chain it's the same way they don't do it because in accounting they get into it because they love product they love customer and they love marketing that's why they and so they they really wanted to grow you know they want to grow their business with Facebook ads nothing they do but this actually really matters to running a great e-commerce business it's like having an efficient supply chain where everything works it's it's reliable it's safe and uh and you're not going to make all of your customers frustrated when you run out of your products all the time and at the same time you're not going to miss out on the opportunities plus you're GNA get savings by negotiating rates intelligently and all those things it it's just it's a very obvious service to me so um okay okay you can go uh what's the website for more fractional supply chain so it's more Supply chain.

Co okay more Supply chain. I actually it's funny I partly wanted you to be able to say it but also I was trying to remember what it was because I know it just changed so um more Supply chain. you can go to there and I think we still have a code right AJF 20 is that right yes that's right okay that's right so 20% off your first three months which is awesome too so there's even an offer for doing it anyway I I think uh like I said there's a bunch of show notes here and stuff like that that you could follow up on for some of the things Laura talked about today but I think this is probably a very very helpful episode to people any last things Laura before we hang up anything else people really need to hear yeah um we wanted just to um the main support that we can do for fashional supply chain is being adaptable and flexible for for what your um company's needing right now again our focus is to provide savings to you in the first three months and and having a fractional supply chain can and have a direct savings at the same time a longer effect of of the support that we do and so part of the document that we are going to provide to you is a Playbook of supply chain from understanding your business into creating a new processes for a company even we're not in your company anymore you have the Playbook to use so whoever is joining your team they will be able to know the supply chain process because of that Playbook so hopefully we can help one e-commerce at a time like right now we can only handle five comp clients but we are hoping to support more clients in the future next year but but again it is it is a good um opportunity for us to help our our e-commerce business owners to continue with their supply chain hopefully more get on that weight list if they if they get filled up like I I think that weight list will be bursting at the seams after this episode honestly it would be if I if I was running an e-commerce business I would be on the phone with you so cool okay thank you Laura so much that is awesome thank you thank you always good to talk to you I know that in the future we will find a time to discuss like focus on supply chain because we've we've discussed like the end to end of it and we wanted to focus sometimes on forecasting new product development project management things so hopefully we have uh CH so get to yeah yeah let's do another one for sure I think people are going to love this episode and they're going to want me to do bring you back on do it's going to be the most popular sponsored episode in the history of sponsored episodes cuz it's going to be really all right thank you so much [Music] Laura right I told you right I told you this is going to be a good episode I told you you would like this and like I said to Lara at the end I am fully expecting to bring her back and talk about all the things we did not get to she told me after we hung up that there was a bunch of stuff related to like inventory planning tools she's working on and and so yeah I love her distinction between problems that brand do know they have and problems they don't know they have I think it's a really helpful way to break up what's going on with different brands and so I hope that was helpful to you I would love to hear from you about this episode please email me podcast AJF growth.com or reach reach out to me on Twitter AJF andrewj feris that's where I am you can also go to alf.com for anything that I am doing if you want to see what's going on there I would love if you'd rate and review this show of course do uh follow up with Lara by the way she gave you all the links all the links are on the show notes there as well and you can go reach out to get more fractional supply chain as she said she does not have that many slots available so if you're interested in working with her you should make sure to go beat the doors down as fast as possible to get on to either start working with them now or get on their weight list uh I think it'll be a really big help to you like I said yes R and review all the usual stuff share this with somebody I think that this will be a very helpful episode to a lot of people so if there's somebody you know who's operating an e-commerce business make sure to share it with them as well thanks so much as always for listening I'll see you next [Music] time I know the eyes CL and I [Music] song