This article is focused on identifying channel conflicts that a manufacturer may need to address before things get out of hand. The objective is to identify ASINs with significant inventory, or open purchase orders not sourced from your vendor code(s). If you are a manufacturer's representative this probably constitutes revenue leakage from your compensation. If you are a manufacturer, then you have some channel conflict with one of your customers also selling on Amazon.
The Sellable Inventory you supplied, and the Sellable Inventory you didn't ...
Amazon gives us several different inventory numbers in the ARA basic reports. First, we may have two different Sellable On Hand (SOH) inventory numbers from each of the sourcing and manufacturing views of the inventory health report. Second, we have the Available Inventory number from the Forecast and Inventory Planning report. The relationship between those sources is that the Available Inventory number is equal to the Manufacturing SOH – Unfilled Customer Orders (from Forecast report).
The difference between Manufacturing SOH and Sourced SOH should be the amount of inventory Amazon has sourced from Parent Vendor Codes for that ASIN that are not yours -- which may indicate a problem or a channel conflict.
I have heard multiple speculative reasons for why these discrepancies occur including:
Multiple Vendor sources for an ASIN,
Vendor code has changed
Returned sellable product
I have seen some cases I don’t know what to do with where Sourced SOH is greater than Manufacturing SOH which makes no sense unless you source products you don’t manufacture. Just to confirm one thing with everyone, as far as I am aware no 3P FBA/FBM inventory is included in any view of Amazon.
What is going in and out
For some reason I don’t comprehend, Amazon makes it harder than necessary to understand the flows into and out of their warehouses. None of this is revolutionary, but I found I had to go through reports for several weeks to be sure I understood everything. Net Received is what was received in the last time period by Amazon and will decrement the Open Purchase Order quantity from the previous period.
One of the interesting pieces of data is the difference in Open Purchase Orders between Manufacturing and Sourcing views. In theory, this should be the amount of open purchase orders Amazon has placed with other vendors for your manufactured ASINs (assuming there are no data/catalog issues), so monitoring this should be of interest for many people. There are similar numbers for Net Received and SOH. These numbers relate back to our current inventory by SOH Manufacturing = Last Period’s SOH + Net Received Manufacturing + Customer Returns – New Unsellable Inventory. The sourcing version follows the same behavior.
A flow summary of what's included in Manufacturing vs. Sourcing views of sales vs. inventory
The following chart shows how which flow paths contribute to the sourcing vs. manufacturing roll-ups of inventory and sales data:
The awkward part is that the terms "Sourcing" and "Manufacturing" have different meanings when used in the inventory and sales reports. The Sales reports summarize all sales for an ASIN in the Manufacturing view. Whereas the inventory report recognizes only Amazon 1st party owned inventory in the Manufacturing view.
Please let me know if you have found any of this to be different in your accounts, I am always up for hearing other examples of this (email me at jonathan@merchant-ai.com or leave a comment below).
Hope this helps people understand the data better!