My Amazon Guy

Inventory Management Scenarios - Flexibility is Key #129

December 09, 2020 Steven Pope Season 2 Episode 29
My Amazon Guy
Inventory Management Scenarios - Flexibility is Key #129
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My Amazon Guy
Inventory Management Scenarios - Flexibility is Key #129
Dec 09, 2020 Season 2 Episode 29
Steven Pope

We respond to comments with specific questions on how to handle your inventory management under duress. Should you hold, ship to 3PL, ship small amounts? We cover these questions in today's video.

Great video!! Could really use your advice on my current problem revolving around this max inventory limit. Not sure which approach I should take: I have 1200 units manufactured and ready to be shipped from China to Amazon. Recently my max inventory limit took a major hit. I can now only send about 500 units. Unfortunately when I informed my supplier of this my shipping cost increases significantly. I now have a few options I am weighing out - 

1.) have my supplier hold all 1200 units free of charge and PRAY Amazon lifts the max inventory limits Jan. 2021 (who knows if this will ever happen).
2.) ship entire shipment to a near-by 3PL and drip units into Amazon. (Relatively expensive and effects my already slim margins).
3.) send smaller quantity shipments into Amazon directly from China. (problem here is I’ll run out of inventory between every shipment and will have to pay more to re-rank with PPC + pay higher shipping costs from China due to smaller shipments) 

Sorry this is so long!! Waiting seems like a dangerous game to me since there seems to be no insight on if max inventory limits will be lifted. THANK YOU SO MUCH for any advice.

1) holding is a risk. China shuts down in Feb too. It's a 50/50 that Jan is when restrictions ease. If I was Amazon I would wait until Feb and use January to do long overdue maintenance. 

2) This is probably the correct choice. It has the most flexibility. And is the best one to count on.
3) This is likely more expensive than option 2) and has less reliance.

Waiting is not a good option right now - Supply chain woes, China politics are HOT mess rihgt now, and you need to be in control of your destiny as much as possible right now.

Harry Joiner's coverage:

SOURCING FROM CHINA? You *need* to watch this interview between Steven Pope and Sajag Agarwal. https://youtu.be/hoaoRi0MIaA

Little known fact:

I was a seafood importer in the 1990s. (FCLs.) I toured many seafood plants in Northern China.

After seeing several plants produce our proprietary product, we adjusted our product cost models to reflect the fact that our suppliers were deliberately adding sodium tripolyphosphate to our IQF pollock fillet portions to make the product retain water and weigh more, thereby increasing our cost.

Initially we thought we were paying $1.50 for 1 lb of fish. In reality, we were paying $1.50 for 13 oz. of fish and 3 oz of water.

For folks who don’t know what it’s like to source from China, here’s an analogy:

“Put your hand in a bucket of water. Now take your hand out of the bucket of water.”

Very often, that’s what happens when you leave a supplier’s plant. Things snap back to the way they were before you got there.

Seven years (‘92-‘99) of international trade involving 14 countries taught me two things:

1/ New overseas suppliers won’t do what you expect. They’ll do what you INSPECT. Trust but verify!

2/ Eventually, you can manage your suppliers less aggressively to the extent that you have a *personal* relationship with them. (IRL!)

Support the show (https://www.paypal.com/paypalme/myamazonguy)

Show Notes

We respond to comments with specific questions on how to handle your inventory management under duress. Should you hold, ship to 3PL, ship small amounts? We cover these questions in today's video.

Great video!! Could really use your advice on my current problem revolving around this max inventory limit. Not sure which approach I should take: I have 1200 units manufactured and ready to be shipped from China to Amazon. Recently my max inventory limit took a major hit. I can now only send about 500 units. Unfortunately when I informed my supplier of this my shipping cost increases significantly. I now have a few options I am weighing out - 

1.) have my supplier hold all 1200 units free of charge and PRAY Amazon lifts the max inventory limits Jan. 2021 (who knows if this will ever happen).
2.) ship entire shipment to a near-by 3PL and drip units into Amazon. (Relatively expensive and effects my already slim margins).
3.) send smaller quantity shipments into Amazon directly from China. (problem here is I’ll run out of inventory between every shipment and will have to pay more to re-rank with PPC + pay higher shipping costs from China due to smaller shipments) 

Sorry this is so long!! Waiting seems like a dangerous game to me since there seems to be no insight on if max inventory limits will be lifted. THANK YOU SO MUCH for any advice.

1) holding is a risk. China shuts down in Feb too. It's a 50/50 that Jan is when restrictions ease. If I was Amazon I would wait until Feb and use January to do long overdue maintenance. 

2) This is probably the correct choice. It has the most flexibility. And is the best one to count on.
3) This is likely more expensive than option 2) and has less reliance.

Waiting is not a good option right now - Supply chain woes, China politics are HOT mess rihgt now, and you need to be in control of your destiny as much as possible right now.

Harry Joiner's coverage:

SOURCING FROM CHINA? You *need* to watch this interview between Steven Pope and Sajag Agarwal. https://youtu.be/hoaoRi0MIaA

Little known fact:

I was a seafood importer in the 1990s. (FCLs.) I toured many seafood plants in Northern China.

After seeing several plants produce our proprietary product, we adjusted our product cost models to reflect the fact that our suppliers were deliberately adding sodium tripolyphosphate to our IQF pollock fillet portions to make the product retain water and weigh more, thereby increasing our cost.

Initially we thought we were paying $1.50 for 1 lb of fish. In reality, we were paying $1.50 for 13 oz. of fish and 3 oz of water.

For folks who don’t know what it’s like to source from China, here’s an analogy:

“Put your hand in a bucket of water. Now take your hand out of the bucket of water.”

Very often, that’s what happens when you leave a supplier’s plant. Things snap back to the way they were before you got there.

Seven years (‘92-‘99) of international trade involving 14 countries taught me two things:

1/ New overseas suppliers won’t do what you expect. They’ll do what you INSPECT. Trust but verify!

2/ Eventually, you can manage your suppliers less aggressively to the extent that you have a *personal* relationship with them. (IRL!)

Support the show (https://www.paypal.com/paypalme/myamazonguy)