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Inventory Setup Guide
Inventory Setup Guide

This document walks through Restock Settings, Lead Times, Reorder Frequency, Safety Stock, and Demand Planning.

Shelby Rothenberg avatar
Written by Shelby Rothenberg
Updated over 2 years ago

Introduction

Kapoq’s Inventory Module allows you to manage inventory plans, shipments, forecasts, strategies, and monitor key metrics to improve sell thru, in-stock and IPI scores with ease.

The Inventory Module takes into account current inventory utilization and storage capacity, alongside sell-through rates, factoring in your custom inventory plans/model to help you stay in-stock while improving processes and efficiencies.

There are Alerts presented daily to act on, such as restock alerts, stranded and excess inventory alerts, and also demand planning solutions to help forecast accurately.

In addition, it’s worth noting that Inventory and Advertising work together, so setting up your initial inventory model and plans within Kapoq will help communicate across modules to surface more relevant alerts and opportunities. For example, Kapoq includes alerts for Ads Targeting Low Inventory SKUs.

The following document will help you navigate Inventory Setup and walks through:

  1. Inventory Restock Settings

    • Lead Times, Reorder Frequency, Safety Stock & Demand Planning

  2. Inventory Groups

    • Create Groups, Assign to SKUs

  3. Sources

  4. Forecast & Simulator

  5. How to Leverage Alerts & Apply Changes

Section 1: Inventory Restock Settings

At an Account level, updating the Inventory Restock Settings will help sync an account's initial Inventory Model and Demand Forecast. It’s important to set up the overall account wide inventory settings first so all alerts and recommendations presented reference a more accurate and general baseline.

Once set up, Kapoq will present more relevant Restock Alerts based on defined Lead Times, Reorder Frequency, and Safety Stock.

Let’s work our way down the Settings page, inputting the default and overarching account parameters.

Note: We always recommend building out the initial account wide settings to establish an overall baseline Inventory Plan.

If it is your first time setting up inventory settings, Kapoq will display an inventory wizard walk-through to help you become familiar with the platform's Inventory Plan and model. As you work your way through the Inventory Module, more custom inventory plans can be assigned to groups of SKUs when different suppliers / vendors / warehouses require different sets of lead times, reorder frequencies, and safety stock amounts.

Lead Times

Setting up Lead Times will help Kapoq determine how early you need to know about potential stockouts.

For context, Lead Times should include the total elapsed time to:

  1. Review and approve the reorder

  2. Create an order for your supplier

  3. Provide shipment paperwork to your supplier

  4. Account for supplier production time

  5. Supplier shipment preparation

  6. Transportation of the product to Amazon

  7. Time to receive and process the product at the FBA warehouse

To set up, input Lead Times within Inventory Settings.

Note: 21 days is the default time frame initially input. Edit and update this number to best reflect your overall account Lead Times across all products within an account.

Reorder Frequency

Setting your Reorder Frequency based on your current reorder cycle and process will help you sync your suppliers / vendors / warehouses with Kapoq to better time the eventual reorder alert and task.

To set up, navigate to the Inventory Settings Tab and down to the Reorder Frequency section shown below.

Note: 21 days is the default time frame initially input. Edit and update this number to more accurately reflect your account wide Reorder Frequency.

Safety Stock

The intention of Safety Stock is to have a buffer zone and additional inventory available in case things do not go as planned. It’s insurance protection when lead times, inbound shipments, and even Amazon receiving processes exceed standards or expectations.

To set up and define Safety Stock within Kapoq, navigate to the Inventory Settings tab then down to the Safety Stock section shown below.

Note: Lower Safety Stock improves your sell-through rate. Higher safety stock prevents out of stock situations but can take up valuable storage space and impact restock limits. Higher safety stock also increases your average inventory and can lower your IPI score.

Demand Planning

The Demand Planning section allows you to create an account wide demand forecast based on your sales history. Once set up, the demand planning feature will calculate inventory plans to help plan future restock alerts.

The initial parameters allow you to reference a number of historical sales lookback windows (7, 30, 60, 90, or best 60 days) which will help drive the baseline account level inventory forecasts and restock amounts. Inputting weighted averages of historical demand from specific lookback periods, or your best sales period ever, will help define the calculating factor your settings.

To set up, navigate to the Inventory Settings, then to the Demand Planning section, shown below.

For each field, you can specify a weighting by inputting a percentage amount next to the historical period. The weight will take into account the lookback periods sales, excluding out of stock days, and references those weights in the restock calculation. The total weighting must equal 100%.

The Demand Adjustment accounts for expected growth or decline in sales. Kapoq will use this percentage to adjust your daily sales demand forecast and gets utilized during the restock calculation. Inputting a positive number communicates sales are to increase by x percentage as expectations are x% more than the historical weighting defined. Vise versa, a negative number expects sales to decline by x%.

Once complete, Kapoq will leverage all inputs to calculate your inventory model, generating restock alerts, restock amounts, forecasts, etc. to support Inventory Management.

Note: You can upload your own custom SKU demand forecast or even flat forecasts in case you want to do something custom. We’ll walk you through these in Section 2 - Inventory Groups.

Storage Settings

Storage Settings can be input in the below view manually. Per Amazon, Storage Limits update once a quarter while Restock limits update once a week. A best practice is to utilize this cadence when updating settings per each account in Kapoq.

Overrides

Settings in Kapoq are based on a hierarchy with the following levels:

  1. Account Wide (Global)

  2. Inventory Groups

  3. SKU Level

SKUs inherit settings based on the most granular level of the hierarchy that is set up.

In some instances, Overrides are needed. Overrides can be applied at the SKU level, superseding previously assigned Inventory Groups or account-level settings.

For example, the account wide (global) setting for reorder frequency may be set to 21 days. However, if certain SKUs are reordered more or less frequently than every 21 days, you have the ability to adjust the inventory settings (e.g. reorder frequency) for specific SKUs following the steps below.

To summarize, Kapoq provides levers which allow you to override previously assigned parameters. Overridden parameters remain in effect unless otherwise reverted.

There are a few ways in which you can Override SKUs Inventory Parameters:

  1. You can select the magnifying glass next to a SKU in the inventory grid and enter new values on the Overrides tab

  1. SKU-level overrides can also take place in any of the Inventory grids by scrolling to the far right and clicking directly into any of the Reorder Settings.

Section 2: Inventory Groups

Inventory Groups, as defined in Kapoq, allow you to pair SKUs together under the same inventory model. Grouping similar SKUs is intended to help connect products that have the same Lead Times, Reorder Frequency, and Safety Stock amounts, along with similar sales demand forecasts. Furthermore, Groups can also be associated to (Sources) specific locations where the products will ship from en route to an Amazon warehouse. For example, a manufacturer, warehouse, or 3PL will likely retain similar inventory plans that can be grouped together.

By leveraging Groups and assigning SKUs to respective groups, Kapoq can provide more targeted inventory recommendations for these items.

To set up, navigate to the Inventory Management Tab and then to Groups to begin.

Select the “Add Inventory Group” button, shown below:

Choose a name that aligns with the group and then input all parameters:

Once a Group is created, return to the All Inventory tab to assign the Group to a respective product list.

There are a few ways in which you can assign groups:

  1. Selecting each SKU one-by-one within the grid

  1. Selecting a list of items in bulk within the grid and using the mass Action dropdown to apply Groups across the selected set

  1. And/or download the bulk file, assign Groups in Excel, and reupload

Then make adjustments within the Excel File, assigning SKUs to their respective Groups.

Save the file and reupload for the changes to be applied.

Section 3: Sources

Sources in Kapoq define where the goods ship from. A source could be a Supplier, Warehouse, Prep Center, or Freight Forwarder. As Source locations and operations (lead times) likely differ, creating and assigning Sources to SKUs will allow you to distinguish where products are coming from.

Sources can be created by navigating to Sources > Add Source, shown below:

Eventually, as Kapoq evolves, you will be able to create shipment plans / replenishment orders for a group of products based around a particular Source.

Section 4: Forecast and Simulator

Forecasts

The Forecasts Tab in Kapoq allows you to upload a custom day-by-day SKU forecast over any given time period.

To set up, navigate to Forecasts > Bulk Upload, shown below:

Download the Bulk Upload file and complete the fields, then reupload to have the forecasts applied.

Thereafter, the custom forecast will feed the inventory alerts such as the Restock Alerts to support your inventory plans specific to the SKUs.

Simulator

When assessing and building a forecast, Kapoq Simulator feature can help you map out and visualize inventory plans.

First navigate to the Simulator and select a SKU:

Once selected, input updated metrics in the Settings panel on the left hand side and click “Recalculate” to populate the simulator charts:

The following interactive graph will give you an idea of the pace of the Sell Through and the triggers / times at which you should reorder and send new inventory inbound. You can also save these settings at the SKU-level, which will override any account or group level settings you have.

Section 5: How to Leverage Alerts & Take Action

Alerts within Kapoq are presented on a daily basis to review and action.

Each dashboard will contain a comprehensive set of alerts sorted by what we consider to be the most important tasks to tackle. Next to each Alert, you’ll find an assigned dollar value which states the estimated financial impact of this action. This is a great way to help prioritize work so you’re not spending time on small alerts that drive little to no impact on your performance.

To take advantage of Alerts within Inventory, Alerts will appear on the Inventory Dashboard page:

Selecting an Alert will take you to the opportunity.

Within the Alert, selecting each row via the checkbox or selecting all, allows you to complete the designated task one-by-one or in mass.

Selecting Restock in this example will bring you to a popup, shown below:

Depending on the Alert type and the Action, there will be alerts that allow you to execute a change directly from Kapoq that get sent through the Amazon API.

Other times, there will be alerts like the Restock alert which requires a change be completed directly in Amazon.

For example, by selecting Action Taken in this Alert, the system will take note that a change happened outside of Kapoq. During our next API sync, Kapoq will confirm if the Action Taken accomplished the Alert presented and the specific Action will be removed from the Alert list.

If you have any questions, do not hesitate to contact us with questions at help@kapoq.com.

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