Taming The Hidden Chaos of DTC Inventory Management

Hey everyone,

Welcome back for another bite to chew on.

“Inventory Management Spreadsheet.”If you’re a brand of a certain size, these are three of the scariest words in the world. 

Inventory management is a must in DTC. SKUs, packaging, warehouses, clients, suppliers. Ideally, you know what you have, where it is, and what it all costs you. 

Obviously! Easier said than done though.  

Here's the thing about inventory management that nobody tells you when you start a brand: It's not just about counting boxes.

It's about managing a complex web of suppliers, warehouses, and sales channels – each speaking their own language and using their own systems.

Today we’ll go over the systems we built to help us manage the chaos. 

On the Menu

• The reality of modern inventory management

• Building a system that actually works

• Projecting needs across channels

Exciting News! We’re launching the Obvi Founder Accelerator soon 🚀

We love sharing our experience and insights here at Chew On This.

But we think we can do even more to help ambitious founders avoid landmines and uncover the levers that will accelerate their growth.

We haven’t completely decided on a name yet, but for now, we’re preparing to launch what we’re calling the 🚨 Obvi Founder Accelerator 🚨

Students will get lifetime access to our comprehensive DTC & e-commerce playbooks. But that’s only the beginning →

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✅ Exclusive events & masterminds to meet and network with ambitious DTC leaders and operators.

✅ Martech & vendor discounts from our list of vetted tools.

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Join up to get the business insights, learning, and accountability to actually take the actions that will grow your business.

This is a high-touch and high-commitment program.

As a result, there will only be 20 seats available in our first cohort. Because this is our inaugural run, anyone who signs up will get a one-time, discounted price.

If you are a brand with traction (making at least $2M annually) looking to take your business to the next level, please reply to this email and mention The Obvi Founder Accelerator.

The Multi-Channel Maze

Remember when inventory management meant counting stock on shelves? Well in eCom it’s a bit more (read: much more) complex than that. 

At Obvi, we're juggling inventory across multiple 3PLs and distributors, each with their own quirks:

→ Our main 3PL updates inventory through a Google sheet... once an hour

→ A different 3PL handles our Walmart inventory

→ Amazon has its own universe of SKUs

→ Major distributors with specific stock, SKUs, and case pack counts

→ And then there's the office inventory for Faire and events

Here's what makes it even more fun: The same product might have three different SKUs depending on where it's stored. 

Our product "BURN" becomes "15004" at our Walmart 3PL and something completely different at Amazon. Some locations track by unit, others by case pack of four.

Then there’s the transit black hole. 

When inventory moves between locations (like from our 3PL to Amazon), it enters a 7-14 day “grey area” where it's not counted anywhere. At month-end, this creates discrepancies between the balance on our books and actual inventory counts.

Most inventory management platforms can't even handle this reality. They assume every product has one SKU, every warehouse counts the same way, and inventory magically teleports between locations. 

Making Order Out of Chaos

We’re going to assume you’re not operating with an ERP. We didn’t for years, but we still managed to tame the chaos with spreadsheets and processes. 

After years of trial and error, here's what actually works:

1. Create a Single Source of Truth

We built a master SKU list that maps every variation of every product across all channels. It's not sexy, but it works. Each product has its alternate SKUs listed, along with conversion rules for different pack sizes.

Game-changer → We stopped trying to force every system to speak the same language. Instead, we created a translation layer. 

Think of it like this: if you're in Rome, you speak Italian. In Paris? French. But somewhere, you need a master document that connects "hello" to "bonjour" to "ciao."

2. Daily Inventory Snapshots

Our team gets a daily Snapshot (yes, really) with current inventory levels across all accounts. It's not high-tech, but it keeps everyone aligned and aware of potential issues before they become problems.

The key is consistency. 

We track every movement, every day, across every channel. This means logging transfers between warehouses, monitoring in-transit inventory, and reconciling discrepancies before they become major issues.

3. Cost Layer Management

One of our biggest challenges? 

Different batches of the same product have different costs. Supplier changes, shipping costs, and order sizes all impact unit economics. We track every PO's true cost (including freight) and use weighted averages for financial reporting.

Here's the wrinkle that makes this even more difficult → COGS aren’t static. 

When you're dealing with multiple suppliers, changing freight costs, and varying order sizes, your unit economics can swing wildly from batch to batch. 

We've seen variations of up to 50% on the same SKU, depending on the date and the supplier. So determining a reasonable, blended average is a must. 

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The Art of Projection

Here's how we project inventory needs (and no, we don't use a crystal ball)...

Each sales channel gets its own projection formula → 

• For DTC: We correlate velocities with Facebook ad spend. We learned that for every $1,000 increase in daily ad spend, we need an additional X units on hand.

• For Amazon: We track 90, 60, 30, 14, 7, and 3-day velocities because Amazon's algorithm changes can tank (or boost) sales overnight.

• For wholesale: We use linear averages based on historical POs, but we also factor in seasonal promotions and retail-specific events.

The real magic happens when you start looking at the interplay between channels. 

🏷️ A big promotion on Amazon might cannibalize your DTC sales. 

🏪 A retail rollout could impact your overall velocity. 

Your projection system needs to account for these ripple effects.

We maintain different days-on-hand targets for each channel because Amazon requires more buffer (listings going down = death), DTC can run leaner (we control the marketing), and wholesale needs careful planning (POs are less predictable).

Here's a pro tip we learned after countless stockouts → Your safety stock isn't just about demand variability.

It's about supply chain risks too. We factor in supplier lead times, quality control holds, and even potential port delays into our buffer calculations.

Sum It Up

Perfect inventory management doesn't exist – but better inventory management definitely does. 

Thing is, it’s very difficult to force-fit everything into a single system. Instead, we build processes that account for the unique aspects of each sales channel while maintaining a single source of truth.

Remember this: The goal isn't to eliminate complexity – it's to manage it effectively. 

The brands that win aren't the ones with the fanciest systems – they're the ones that understand their unique inventory dynamics and build processes to match.

All the best,

Ron & Ash