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Guest Podcast

Consignment Inventory Best Practices | Microsoft Dynamics 365

Consigned inventory could be a great strategy for startups trying to get space in retailers' warehouses.

It could also be a great strategy for distributors and retailers to carry an inventory of unfamiliar brands without committing too much capital.

See Below for the full transcription of this episode!

Sam Gupta (00:22):

Hello everyone. Welcome to today's show. And if you're 20 for the first time, this is part of our digital transformation series for which we meet every Thursday at 5:30 PM Eastern. We pick one topic related to digital transformation, and we always have an expert panel here for today. We are going to be discussing about a very deep topic related to inventory, and it could be all over the place. It's called consigned inventory. So we are gonna have a lot of, uh, fun discussing that. Before we do that, we are gonna start with everybody's intros. I am going to start with my intro. If you don't know me, IM Sam Gupta, principal at Elevate iq. Elevate IQ is the independent e r P and digital transformation consulting firm. On that note, I am going to move to Chris for as intro.

Chris Ardini (01:09):

Thanks Sam. Chris Ardini, I'm the owner and c e o of Turnkey Technologies. A little over 28 years as turnkey, uh, implementing Dynamic C rrp. So consignment is a great topic, so looking forward to the conversation.

Sam Gupta (01:19):

Thanks. Thank you so much for being here. Chris, uh, chief, can I ask you to introduce yourself next?

Dave Chrysler (01:24):

Yeah, thanks Sam. Hi everybody. My name is Dave Chrysler and I own an operations consulting business working with leaders in the manufacturing and distribution spaces, uh, helping them to create systems, uh, that drive growth and operate with excellence. I come to you with more than 20 years in various operations, leadership roles and excited to chat about consignment inventory today.

Sam Gupta (01:45):

Amazing. Thank you so much for being here, Dave. Sharon, can I ask you to introduce yourself next?

Sharon Custer (01:51):

Thank you, Sarah. My name is Sharon Custer. I'm inventory optimization consultant. I help e-commerce to increase their cash flow and profitability by optimize inventory.

Sam Gupta (02:04):

Love it. Thank you so much. And, uh, if you are in the audience and joining for the first time, make sure you guys post your questions and comments. We typically try to cover them during the show and if you out of time, we'll make sure that you receive your answers. On that note, guys, we are probably gonna have a smaller group, so feel free to chime in at any point of time. We'll have slightly interactive session. You guys can also ask me any time questions if you like. Uh, but I'm actually gonna start with Chris and Chris. This is going to be just setting up these stage overall in terms of what consignment inventory means. And you know, I think the whole concept of consignment inventory has come a long way. Now people are using similar concepts. They are probably rewording them. Obviously there, there are some nuances to these business models. But when you talk about many different things, for example, even FBA Amazon business model, what is that? In my mind, that is still a very consigned inventory, but they are doing a little bit of, you know, sales f as well. So there are some layers. So do you wanna set up the stage overall in terms of what is the consigned inventory?

Chris Ardini (03:08):

Sure, sure. And I think thanks Sam. And so really, you know, at a high level, couple sides of it, right? Do I have somebody else's property or do they have mine in exactly how do I keep track of my stuff that they have and how do I keep track of their stuff that I have? And so that's is is it that simple? Well, it is, but it's complicated. And uh, as you think about, there's pros and cons. So I'm the guy selling it. The advantage for me, you give me your stuff for free, I don't have any, I don't have to put any capital out there to open up a shop and start selling. So, so I can realize margin without having a capital investment. Well, that's kind of cool, but for you, you're putting your stuff over here, could be somewhere else. What if I don't sell it?

(03:50):

You missed an opportunity, the other guy could have sold it. So there's a risk for the guy that's giving you the inventory. And then on the flip side, my stuff is where I'm using an outsource manufacturer. Yep. He doesn't own this stuff, it's my stuff. So I'm procuring, I'm buying, I'm delivering there, he's making me stuff. It's all mine. He's just doing services. So a couple of models, if you think about the back and forth, and again, there's the retail and then there's the, the production side. I'm sure I'm missing something. But in the end that's, that's the basic premise of it. And you think about, well, how do we keep track of it? He's like, wow, he sent me, let's go to the one, I'm the retailer. He sends me stuff to my system. Did I enter a po? Yeah. Do I have it at my inventory?

(04:25):

Yes. Did I receive it at a cost? Hmm. It's not going into my AP system yet. Okay. So that's very interesting. As you think about just typical business process where we receive inventory, it comes in as a cost. Cuz the cost is on the po, we expect to have to pay for it. I don't have to pay for this stuff. But again, you, you wonder if does it fly in as an a AP transaction that you just never pay it, it doesn't work like that. And I think as you look at systems technologies that are built for consignment, a lot of the standard products don't. And people start saying, well, okay, I'll bring in it at zero cost. Okay, great. It's in zero cost. You're managing zero cost, you sell some, well, the problem now is your sales transactions have a hundred percent margin. So you can't, you, you kinda lose some visibility of customer analytics.

(05:06):

If you're bringing it at zero cost, you're like, okay, well if you're bringing it in cost, your balance sheet's overstated, so your CPA's not gonna like that either. <laugh>. And everybody's like, really? Okay, well where do I put it? You know, you're keeping it off the books. Well that's a problem too cuz you can't sell it if it's off the book. So you're like, wow, what's the right answer? It's kind of, it's not funny, but I know Sam's entertained with my, uh, my storytelling, but at the same time, the low risk for the retailer, again, he gets, uh, potential for revenue without having a cost investment. The guy that's putting out there, there's some risk there. The advantage for the guy that that consigns it is he's getting visibility, he's getting product attraction. He could go big if he, hey, I'm gonna H B C, oh, you'll put it out there, we'll give you a ton of inventory if you sell it, I'll give you more.

(05:48):

That's a, that's a magical thing if it really happens and it goes viral as they say. So there's really good advantages. But you know, there's other things that come into the complexities on that. It's who's managing it? How do I report what I use? Cuz that model is, okay great, I got your stuff for free, I sold Tom, I'm gonna send you a list, you're gonna send me an invoice. Uh, the accounting has kind of clued you there as you look at how do we book it and get good margin analysis. So, but the who replenishes then, am I keeping track of your stuff and my warehouse and tell you when to send me more free stuff? And so there's a cycle stuff showing up, paying for stuff or does the vendor manage it? You're using his system, maybe there's, and then, then that brings up that technical question is how do I integrate this stuff so I'm not loading his vendor, his item list and all these transactions. So integration certainly is a great question is too, but again, settling up vendor manage inventory, we talked about outsource manufacturing, so different models who manages is one aspect. How do you track it, how do you report it, how do you cost it, how do you not distort analytics you use to run the business on margin analysis and things like that. So, but again, um, that's a good starting point. I hope so.

Sam Gupta (06:51):

Yeah, that's a very interesting point. And obviously there are a lot of different layers and we need to unpack a l a little bit, right? So you trust more, um, you know, from the customer standpoint, let's say if I'm the customer I am owning, let's say vendors inventory, then obviously I need to recognize that somewhere I cannot because this is not owned by me. So I'm not gonna have any sort of financial value of that. But then you also have challenge in the vendor system because that, that could be the other way around, right? So in some cases, yes, the vendor consigned inventory is there, but sometimes the concept exists as because in theory, probably just because, you know, it's not really a consignment concept or maybe it could be a lack of understanding. So let's say, you know, how does the con configuration look like, let's say if I'm looking at in the vendor system versus the customer system, Chris, do you wanna, you know?

Chris Ardini (07:40):

Sure, sure. And that's a great examples. Like how do you implement it? So you set up another warehouse. Oh, okay, so I got my warehouse costed, I got a consigned warehouse. Can I have multiple vendor consigned warehouse? Absolutely. So you manage these as sub locations and within your E R P architecture is one way you handle, if I'm the cu, if I'm the retailer and people are sending me a product, and likewise, when I ship my products to a vendor, you're a warehouse. In my E R P I issue the PO against the warehouse, I ship to the PO address, it's the vendors, it's my stuff, he receives it. Do I give him an app so he can check it off and receive it into my system? I'm still three-way matching it. Yeah. If he's doing manufacturing production, sometimes I even simulate those bombs in my system cuz I'm consuming my components at his location, I'm creating finished goods, I'm managing the inventory at his location through my e p system.

(08:24):

But it's done with location and even replenishment settings by location. And again, the system's typically your master planning MRPs are gonna tell you what to buy, what to purchase the locations, what to make those locations. So as you get more controls and, and planning and management of purchasing, procurement and, and production in that context, right? That helps on the retail side, right? You're hoping the vendor is helping you resupply and watching your trending so that you don't run out of his stuff. He certainly doesn't want you to run out of it. So he'll be dusted in that process of managing it as my assumption. So,

Sam Gupta (08:55):

Okay. Amazing. Thank you so much Chris for that. So Dave, I am coming to you, and obviously you have seen this more from the manufacturing perspective right now that the, the transaction that we were talking about, we sort of touched the manufacturing, but not as much I guess, right? Uh, yeah, but then number one, the manufacturing is going to be significantly com complex. That's number one. Number two is going to be, there are going to be other layers, okay? So inventory is just one case. Sometimes the problems could be, and I think this, uh, talks about this issue in a lot of different sessions, which is going to be, let's say if I'm sending you a pallet and I want that pallet to be returned to my, my shop, okay, <laugh>. So then that's gonna be a transaction again. Okay, how do you track, how do you sort of return? So there are a lot of different layers overall, I guess, you know, when we think of the consigned inventory. So Dave, go ahead and, and share your comments and, and thoughts.

Dave Chrysler (09:41):

Yeah, yeah, Chris, uh, Kristen did an amazing job kind of unpacking all the different aspects of it and, and you know, to, to layer into what you were just saying there, Sam, I mean, from just the straight up process standpoint, you know, and we talk about this kind of on, on several of these panels, but you know, it, it really hits home when you have that complexity of the consigned inventory. Uh, because to your point, you know, if you have other, um, <laugh>, you know, other intricacies, whether that's returned items, uh, items that cycle back and forth, uh, is another issue with that, uh, to have a good understanding of the processes and then, you know, Chris touched on it, but where those processes ultimately live and then who is responsible, uh, for the communication and to execute those processes. So, uh, you know, the things that I've seen, uh, get really twisted up in there are, you know, just the, uh, inventory and replenishment cycle, uh, from all of the, uh, different transactions that get created and, and again, kind of, um, coming in after the fact and, and, and executing those processes versus having the pre-planned scenario where you've actually laid out what's going to happen.

(10:54):

Kind of back to what Chris said, you know, where does that information live? Who's ultimately responsible for it? Uh, does it stay on the customer side? Does it stay on the vendor's side? How is the communication happening between those two things? Does a, uh, is it an app, is it a scan gun? Uh, you know, those types of things that happen on the customer side that then transfer that information? Does somebody physically have to come to another location to do, uh, inventory reconciliations and, and those types of things? I mean, uh, those are all of the challenges that I've kind of seen firsthand with consignment inventory. Uh, on the other side of that, you know, and Chris, you, you touched on this as well, but there are some really great advantages to the consigned inventory, um, even beyond kind of the, uh, what, what what is, is, to me kind of the obvious.

(11:45):

And that is the fact that when you've got that material, let's say, so in, in the example that I would use in the manufacturing, uh, you know, we would warehouse a significant amount of raw material that, uh, you know, we weren't paying for, but that was available for us to sell. So what, what did that allow us to do? Quick turnarounds, larger projects that maybe we didn't have to wait the, the lead time that a competitor did because we had material on the floor, we could do partial shipments, we could do, uh, uh, it, it gave us flexibility, not just from the cash flow perspective, uh, but you know, to actually service customers. Uh, and so again, just another way to kind of look at it, that was in a, a B2B scenario, um, but you know, the same would still apply from, you know, like an Amazon standpoint or, you know, those types of things. I mean, that's the advantage, right? You can get things to people when they need it because you've got 'em there ready to go, and then the transactions get created, then the cash changes hands, then the margin, you know, is captured. So I'll, I'll pause right there. Uh, uh, unless you have any follow ups,

Sam Gupta (12:52):

Yeah, I do a bit follow up. And by the way, I, uh, the word that you have used in your description is the twist, and that's probably the right, uh, you know, articulation of, of the whole process because it could be all over the place overall in terms of, uh, the process. But, oh, I wanna touch on this comment from Richard, uh, future, and by the way, follow Richard. Uh, so the first name is r i c h a r d and the last name is uh, h o u L t O N. Uh, the question that he is asking is, there is no such thing as a free lunch though. Uh, and you'll pay for this in edit transactional cost, and, uh, no supplier takes on these arrangements for free. You need to make sure that these edit costs don't overweight the carrying cost of inventory. So I think Richard is talking more from the warehouse perspective, and I think there is another layer in this conversation that is gonna be more of the three pl. Um, when you have the international transactions involved, the cost could be far higher. So I believe Shannon is probably gonna talk about that because she talks, um, a lot about three pl and the whole, uh, you know, inventory movement. But, uh, you know, Dave, do you have any follow up commentary here on this one?

Dave Chrysler (14:02):

Yeah, maybe not quite specific to that, but, but in the experiences that I've had with consigned inventory, it was actually an advantage on the supplier side as well, uh, because it, um, you know, so, so kind of to combat or, or give another perspective on the no free lunch, uh, it actually locked, uh, our company in and, and kind of strengthened the relationship that we had with that particular vendor, which ultimately became a single source. So, um, you know, their kind of willingness to, uh, step up to the plate and to put consigned inventory items on, uh, the shop floor of several locations strengthened, you know, our overall, uh, partnership and uh, therefore awarded them kind of single source, uh, you know, vendor status, uh, for significant, uh, significant volume of raw material. So I would say that, um, you know, I kind of understand and, and don't necessarily disagree, but I think that, uh, every relationship, every kind of situation is different. And, uh, for some suppliers, uh, there could be some very strategic advantages to, uh, you know, putting that capital up and, and consigning inventory out to, to several locations.

Sam Gupta (15:14):

Yeah, could not agree more. And I am going to provide a quick story and then I'm mo I'm going to move to Sharon, uh, related to the whole comment that you mentioned, uh, Dave, that this particular model could be significantly beneficial to businesses if they understand how to exploit this. Okay? So the story is, you know, I'm looking at a business roughly $20 million, and I'm like, okay, so what's here? Uh, and I'm looking at their org structure and they am like, what, 15, 20 people in total. And I'm like, how's this business running? There's no way in the hell you can do, you know, and by the way, me, see, this is not that they are doing a project probably, uh, you know, that maybe 20 million and then probably you don't need as many people. You know, you probably have a lottery ticket here, uh, you know, that nobody knows and somehow you are winning here, right?

(15:58):

So then I'm trying to analyze, okay, what the hell is happening in the business? Uh, how are they getting the revenue? And by the way, the kind of products that they are selling, they are very commoditized products, meaning, uh, it's gonna be like $50 cost, something like that, right? So then you need a lot of people in your warehouse to, because you are gonna have tons and tons of transactions. Uh, okay, then I am doing a little analysis in the business, okay, what the hell is going on? And then finally I realize that you know what the 10 million business was coming from Amazon fba and the reason why they are able to run this business, and people complain all the time about Amazon, how bad Amazon is, because they are going to take 30% to 40% margin. Okay? And, and obviously that's really bad, to be honest, okay?

(16:39):

Everybody wants to go for dtc. But here's the deal, okay? When you are gonna go for D tc, you have to full fell. You have to hire people in your warehouse, and that is expensive. Okay? So now you can imagine how this business is running. So in my mind, when you look at the consigned inventory, sure there are gonna be costs and you know, there is a business model around debt, but if you can figure out, it's a lottery ticket in my mind, and you can grow very fast. So thank you so much for that, Sharon, over to you. Overall from the international transaction perspective and the cost of inventory, whatever you might have to share, channel it over to you.

Sharon Custer (17:14):

I thank you Sam. Um, I wanna mention doing consignment is a risk, um, in a way that, that you have to take the risk of lost of inventory or lost count in co or incorrect count. And you have to put the consideration that if you, if you go out of business, how do you retrieve your inventory to liquidate them if you want to or if your, uh, customer or client out of business, what are you gonna do with your inventory? That's something that you have to iron out before you do consignment. The second thing that I wanna add is that do not rely on one system. Um, you have to have your own report, um, to match with your customer's report to make sure that all the inventory is counted. Um, don't rely on just them to, to say that, okay, you have 100 units in my warehouse, cuz you never know if it's correct.

(18:27):

Um, second thing besides the risk, I wanna talk about the cost. The cost is that you have to have additional way to manage your inventory when it's consignment and also the main power to do it. For example, if you are selling your product to supermarket in, in a way it is consignment that they return your item maybe three months later when your items are not sold. So that is constantly moving with new purchase order and then return. And you most of the um, uh, direct to consumer product, they have many variations. So when you come to manage your inventory in that sense, it's really complicated. You don't know which lot number that you send out when it's returned. It is really just kind of like a puzzle and <laugh> just whole thing to shuffle around. So, uh, barcode may help or you have your own weight of like figuring out with your business, how do you count your inventory accurately in the system and physical, um, count as well.

Sam Gupta (19:45):

So by the way, some amazing insights. Erin, I love the way you think your first example about thinking about the inventory, whether your customer is going to go bankrupt or you are probably gonna go go bankrupt. I don't know if anybody really thinks about that to be honest. Okay? <laugh>, you gotta be positive, okay? <laugh>, but when it comes to reconciliation as well as inventory, you definitely, definitely have to think about these scenarios. Um, and that is such a great point by the way. And you see right now we are sort of debating who sort of accounts for that, okay? Whose books are going to really have that inventory. If you have that visibility, you don't even know your own inventory, how are you going to track that is setting in somebody else's warehouse? So, great point. The second thing I, uh, I think you trust is the return, which is fascinating point in my mind because, uh, you know, around return there are gonna be a lot of different complications that I have personally seen, okay?

(20:40):

Number one is going to be, sometimes what happens is when you are asking, let's say your customers to return, you might be maintaining the inventory, but return needs to go to your supplier's warehouse, okay? <laugh>, because return is different because that may need to be manufactured or repaired or whatever. And then, you know, so the label that is gonna go for the return is going to be very, very different. So there are a lot of different complications around that. And return also throws off your reconciliation, okay? When you are going to be reconciling your inventory, your accounts are never gonna match because you know you are gonna have return, you are gonna have waste. So you have a lot of problems there. Lot number big deal <laugh>, okay? You have no idea how complicated it could get when you are going to have lot number. And honestly speaking, I don't know if you guys have any sort of experience around that.

(21:27):

When you are going to be the, going to have the intersystem, um, sort of the, the interaction between your lot numbers, it's very, very, very hard to transfer the lot number and the other e r P system because the only thing they are maintaining is the vendor cross staff. Okay? So the only thing you have is really the skew. They don't maintain it at the lot number level. There are some systems we have seen that they can probably do the cross reference based on the lot number, but that's very rare in my experience. So Sharon, over to you. Do you have any follow up comments there? Based on my commentary,

Sharon Custer (21:59):

Um, for the lot number, there are systems that allow you to track your expiration there or lot number for the food industry, but the problem is not the system. The problem is if the vendor or or the manufacturer willing to implement it, it is very complicated, uh, especially when your business is private labeling that you have oem another company produced a product for you, they have their own system. Yeah. And when the item comes to you, you, you ship it to distributor, to the supermarket. Uh, the, the, the problem comes is if, if your manufacturer or your OEM is willing to implement the system with you, and you gotta remember that the OEM is not just produce your item exactly, they produce many people's item <laugh>. So they may not want to use your system. So, um, it's just, uh, sometimes it just kind of like how, how, how do you do it?

(23:07):

You know, how how much do you wanna compromise? That's, that comes with cost, you know, because say if, if the supermarket return you a thousand items and one third of that is expired and you don't even know you have to go out to have a portion to look through it one by one to make sure that some of them can be resell. You know? So that's, that's what I'm trying to say is that there's some difficulty there. And the second thing is that you have to count that cost into your operational cost. Don't ignore it. They can be very expensive.

Sam Gupta (23:45):

Okay. Could not agree more. Thank you so much, um, Sharon for those insights. So Chris, I am coming over to you. I'm pretty sure you are gonna have a lot more layers there overall from the lot number perspective because you know, when you are talking about integrating these systems, okay, uh, integration could be tricky because the way you receive process is going to work in the other system. It's a much harder lift because a lot of systems, and again, uh, you know, if you're implementing sort of the manual process, even in the manual process, you are probably going to lose the visibility. It's already very hard to maintain that traceability inside your four walls of your facility or the warehouse. Now you are talking about integrating with the other system. So over to youre any follow up comment?

Chris Ardini (24:25):

Sure, sure. And it really, it really goes back to did we do a good assessment before we got into this endeavor and say, really, because as you do, you are, you really raise and share needed as well costs. It's like how do we, how do we track the cost? You're like, oh, the inventory's free. It's free, free. Oh, it's not free. And you think about, we're talking about systems integration. Well that's, that's an expenditure. And then even think about setting up the systems. Yeah. And hey, can I, how do I gotta, I gotta get your inventory in here. Oh, I gotta do marketing. Oh, I gotta do this or I gotta give it floor space and I gotta have guys at picket and this and this and this. And, and it's very interesting is we, we raise this, where is it a good idea or bad idea?

(25:01):

And it looks so good cuz I get a free item and when I sell it, I make margin. But we, we really don't account well. And I think that's the true word and why, you know, I started selling accounting software back in the, the beginning as people say that. But, but it is, it's the, it's the accuracy in really assessing the opportunity and, and how do you cost. And I even wrote down here, landed cost and then, but your point about lots is warranty and okay, and you go back to the vendor. Yeah. And as we're transacting here and, and there and there's no easy way to do it. You've gotta have their products in your system, you gotta have in there. So they show up on your website again, you're pricing 'em, you're doing all that stuff and, and even are you saying a $0 PO to rep punch?

(25:39):

So you really do have all the stuff in your systems. Um, you don't get away from that. The, the how you cost 'em, how you manage 'em. We nobody mentioned insurance yet. Yeah, my building burned to the ground. How much of that stuff was mine or yours? I don't know. Or maybe have lots of consigned vendors. It's not funny because my system isn't gonna give you a cost report and I'm not submitting it to my, my insurance guy either. So there's a whole nother complexity. But we, we were talking about lots and cereals and, and I think buy industry, there's gonna be easier products to, to consign into retail out and certainly the outsource manufacturing's completely differently. But even in that context, do you have 'em working in your system? In, in the, in the feasibility of doing the, the, the degree of implementation or integration you need to, to get that granularity.

(26:21):

Meaning do I have the guys over there in my outsource manufacturing recording, finish good production and, and component issues. If it's a serialized world, and again, by industry, by product line, we're gonna have a different requirement for a consigned vendor, frankly. And I think that's it. There's gonna be the simplest context, it's real easy stuff. You click, click, click, okay, I'm done. Versus there's a lot more data collection. And again, in the native system, meaning I'm extending my e r p out there, it's just like the vendor managed inventory all they're doing extending their window to you because it's much easier to you to work in their system than for them to integrate your systems. And we go back to that, that cost. And if you really take the cost and you analyze well, how long does it take me to recover that? That's where people don't do their math very good. And I think Sharon would say that, Hey, we're way in it, we're up to our ears and how do we get out now? Because we're figuring out as it catches up that you're losing money on the deal. Great points. So, um, again, a lot of, a lot of comments there, but again, the front end, how do you, how do you track this stuff so that you can see the visibility of the cost and how do you track those costs because they're not related to the product they're showing up everywhere. Indirect, right? Indirect. So

Sam Gupta (27:27):

Yeah, I could not agree more in some great commentary. And by the way, since you guys are bringing all these commentary about the insurance and the cost, you know, what is going to be the cost of following up with insurance companies? Uh, because it's not going to be just the factor that, you know, what, who had, uh, you know, that in the building, once you get into the complexity of your inco terms, okay, each of the term is going to mean something. And that's when you sort of, you know, cross the boundary of your v i p system because they're gonna ask, okay, where was the product? I mean, was it sitting on a dock? Uh, you know, was it in the warehouse, was in the world? Nobody knows because we don't have that traceability. So I don't know how do you handle that? Because, you know, and then you obviously your contracts are gonna be, um, super critical as well. So Chris, any other follow up comments there? Yeah,

Chris Ardini (28:13):

You're, you're going back to traceability because number one, the PO's initiated in the vendor system to shipped to me. Okay. He knows where it's at. Yeah. You know, we go back to when do I take ownership of it? Well, I didn't think I did right? It never belonged to me. Somebody stole it. How could it be my inventory? I mean, you're right. And, and that's, and I think that's gonna be contractual agreements and you know, at the point where you pick it up at your doc, again, to that point, am I logging into his system and doing a receiving transaction so that I could scan? I mean, again, that's what you end up with is people drop printers and even the three pls, right? Yeah. How do we extend it? And the systems technology allows that. But again, we're doing data collection in their systems so that they're getting that visibility.

(28:51):

And that's, and again, I think that's contractual. Where do you take ownership? Even in a consigned inventory? It's in my building. I have to have some responsibility for that property. How do you track it? How do you trace it other than just units? Where's the cost basis if, if there is a situation? But, uh, but again, that's where these, the cost of being in the business, not the cost of the product, right? It's free. I make margin when I sell it. I don't have to pay anything until then. Yes, you do. We're paying all these other costs, we're just not tracking them correctly. But,

Sam Gupta (29:16):

Uh, amazing. Thank you so much Chris for that. So Dave, I'm going to offer some commentary here based on whatever Chris mentioned, and then probably you can offer some commentary. I'm also going to read, uh, the statehouse comments as well. So obviously when you look at all this three pl, right, three pl, there could be a lot of different legs, uh, movements. And these guys are like, I'm making $5. I had no idea what was there in the bus. Don't call me. Okay, <laugh>, if it was worth hundred thousand dollars, that's not problem. That's your problem. Okay? So figure it out <laugh>. So it could get really, really, really interesting when you get into the whole supply chain space. Um, so Sneha is actually raising a very good point here, by the way, follows Kaari. Uh, she was supposed to be on this panel, she's not there.

(29:57):

Uh, but her name is N e h a k u a a m a r i is the last name. Um, and the comment that she's making is, I think contracts are critical here. Inventory management especially, I would say cycle count programs can be worked out when you can have your offshore vendor also help with counts. Nobody helps. Okay? They only help themselves <laugh>, we can't trust their accounts. Okay? Also incorporate portions of consignment inventory become part of the company's cycle count process too. I have done it, uh, in the past and it did work out okay. So Sneha trusts our vendors, uh, but that's not how the world works, I guess. Um, <laugh>, Dave, go ahead for your commentary, please.
 

Dave Chrysler (30:43):
<laugh>. Well, I, I do agree with Neha that, uh, you know, when you do have that relationship built out, that, that it can be, uh, you know, it can work out. Uh, but there still needs to be oversight with him because back to, uh, you know, what Chris and Sharon are saying, and, and, and you as well, Sam, I mean, um, without having that traceability, without having those contracts in place to, to understand when, uh, the, uh, transfer of ownership actually occurs when those transactions get written, uh, to both systems and then what the reconciliation is between those two, uh, kind of, you know, major events happening and those two, uh, processes. So, uh, that, that would be my comment back on, you know, on what, uh, Sneha said. Um, I didn't have any direct experience on the kind of lot serialization tracking what, uh, what we were, uh, consuming was, uh, some pretty simplified raw material.
(31:37):
Uh, so we didn't have that layer of complexity to, uh, to add into our scenario. But again, kind of the, the common challenges were back to, uh, not so much when did, uh, when did the, uh, consignment inventory, um, you know, exchange hands, it was more around the reconciliation piece, how the, how that communication was flowing. Um, and, you know, it was a situation where the systems were not integrated, we're not talking to each other, and it was very manual, uh, process at the time. Uh, so again, like we talk about with many of these things, uh, you know, kind of coming in after the fact and trying to figure out, you know, a better process for what was happening to increase that communication and visibility, uh, is, is kind of paramount regardless of the amount of complexity that ultimately gets added in. Because, you know, Chris, I think you were the one that made the comment, you know, there are some scenarios where this is fairly simple and straightforward that you can, you know, map out and, uh, not have, uh, a lot of the, uh, the process related issues in terms of when those transactions hit, uh, each, each one of those systems.


Sam Gupta (32:50):
So some great commentary there. And Dave, I'm probably gonna go back to your previous commentary to touch on one of the follow up questions that I had there. So I think you, and plus both of you have touched a little bit, you know, when you are going to be, let's say the customer, okay, and you are keeping somebody else's inventory, obviously you don't own that, you cannot keep this in your books. So how is that going to be reco recognized? So in your people previous commentary, you mentioned that I had raw material that were vendor owned. So obviously you don't have them in your system, but you still have to sort of scan them. You still have to cut the sales order on top of those because you are trying to sell, as for your comment, right? So how is system recognizing somebody else's inventory? Are you recognizing at $0 value or what are you doing there?


Dave Chrysler (33:38):
Yeah. In, in those scenarios, basically the, it was being recogniz recognized as a zero value until it was scanned basically out of their system into our system. So when that scan, when that transaction took place in the, um, you know, we accepted, um, you know, responsibility or or purchase of that product, uh, that transaction on their side, on the supplier side would then generate the, uh, invoice, uh, and receiver so we could, so we could, um, uh, generate the, uh, receiver and match on our side and receive it into inventory at a cost.


Sam Gupta (34:20):
Yeah. So very interesting commentary there. So Sharon, I'm coming to you. Uh, any sort of, you know, comments over comments, any, any stories, uh, that you might be able to share?


Sharon Custer (34:30):
I would like to share, um, it, it go actually both ways. It depends the situation. Either the retail, the retailer taking the inventory as a consignment and storing retailer's warehouse or the retailer borrowing the supplier's warehouse to store, uh, their product that they purchase. Of course it's not consignment, but I'm just talking about utilize the warehouse space in general. So, um, now I'm just sticking with the, the retail allow the supplier putting their stuff in their warehouse as a consignment's example, um, retailer may think, okay, it is consignment, the products free. I don't put out any, uh, cost to pay for the inventory. So just, let's just keep it. But remember that the warehouse space costs something, the floor space costs something that's not just money that you spend on store the product, but also the co opportunity cost. Think about it, if you have that warehouse space or the floor space, you could sell something else if that makes money. I mean, like if there's something sitting in your warehouse or sit at your floor for, I don't know, over a year, is does that really help you to make sales? Does that really help your business? Why do you want that consignment?


Sam Gupta (36:08):
Yeah, could not agree more. And I think, uh, the layer that you are touching on overall from the floor utilization perspective, uh, I guess that's the reason why if you look at the Amazon f p model, they have the penalties, okay? So in case of FPA model, I get it that, okay, you wanna sell your inventory yourself, I am simply keeping it for you. I'm gonna fulfill it for you. Uh, but you are telling me how much you are going to be able to sell. Okay? So you have to bear the cost if you're not able to sell. So that's why Amazon has three different model. Number one is gonna be your fpm in which, you know, they don't really own any sort of inventory. Uh, and then you have fpa in that case they're keeping your inventory, but you are responsible for planning. And if you, you overestimate your capabilities to be able to sell, then obviously you have to suffer a lot. And the the third thing is going to be really your vendor central in which they are owning the, the whole process. Um, it's almost like private level. Um, Jake, do you have any comment there?


Dave Chrysler (37:05):
I was just curious Sam, cuz I wasn't familiar with that, uh, penalty structure with Amazon. Do you have any insight to, to kind of add into that? I mean it's pretty, I it makes complete sense, you know, and back to Sharon's comment, uh, you know, consignment inventory only makes sense if it's helping, you know, helping you, you, uh, sell more or make it more accessible. So I'm just curious on that penalty component. I hadn't, uh, I hadn't been familiar with that. It's interesting.


Sam Gupta (37:31):
Yeah, so Amazon is like a constitution, okay? And it always is changing, okay? So they, they keep, based on the way they are learning how sellers are selling, they are always changing these rules, okay? So you are going to have penalty pretty much for everything. Uh, if you oversend, uh, if you are not able to, let's say, let's say if you're in the RPM model, I'm booking your order, then I expect you to fulfill, I don't care how you are going to fulfill and I expect you to fulfill within 48 hours. Now it's your job to fulfill. If you're not able to fulfill. And if you are, let's say if you're going over 2% or whatever, then they are going to penalize you. So they have the penalty structure pretty much for everything. That's how their business is working. Otherwise, in the vendor customer situation, good luck in running that business. To be honest. It never works. And that's why I'm saying you, you, you can never trust your vendors. You have to have a system and the processes to be able to track, to hold people accountable other way it could get really tricky.


Dave Chrysler (38:28):
Yeah, I mean that'd be really interesting to see any of the really large, you know, businesses that are in that space, how they're managing, how they're managing that process internally and what systems they're utilizing to be able to do that. Because, you know, everybody on this panel knows what what is involved in, in, you know, having a system that's, uh, uh, you know, not only able to, uh, create the transactions, but then somebody that, uh, you know, understands what all the reporting is telling you. So that's really interesting. I I didn't realize that was a, um, that was how they executed that. So


Chris Ardini (39:01):
Thank you. Great topic analytics, analytics are driving it. And I think even as you look at how good is your data to really expose the cost or expose the lack of movement or into your point about chargebacks, I mean it's a, it's a profit center for those companies, I think it would be embarrassed to disclose, but they manage that just like a revenue center and I think that they monetize a lot of the mistakes people made and, and I think they add complexity to make it challenging to that point. And if you don't have great automation and integration, right, again, you're compromise from the onset,


Dave Chrysler (39:31):
What size retailer would that though? Would that end up being though Chris? Cuz I mean I guess that kind of proves my point in terms of thinking that uh, you know, a business that would fit that model wouldn't have enough scale to invest in the infrastructure, the system infrastructure to do that. I mean, is that a, that a 10 million business? Is that a 50 50 million business?


Chris Ardini (39:49):
I see 10 50, but you know, there's actually modules they've made for chargeback processing to deal with all the Yeah. Complexities of the de credits as they continue to manipulate your account because you can't reconcile your back office systems. And again, it's almost like for the big guys, you gotta be bolted to 'em for E D I or you can't handle the transaction volume, frankly, from the ins and the outs and all the charges and everything. So, but you just have to be prepared again and understand the rules and make sure that you're managing the compliance because the yellow road, your margins, it's just like we talked about the, the cost of infrastructure and setup and personnel that people don't track and manage correctly. The charges can completely compromise your margins as well. So again, small business, you're, you could be a greater risk if you've got some good volume, okay, you got a little bit to work with, but still, if you're not really analyzing it, you can't really tell how much are you losing 3%? You're like, oh, it doesn't sound bad. That could be a lot of money. So three percent's a lot. That's a make or break for some companies. You're like, that's a, I only make four. Yeah. So anyway,


Sam Gupta (40:46):
And by the way, I guess nobody has really spoken about the other side of the equation. Okay? The other side of the equation is gonna be three PL model, okay? And three PL model has the equal number of charges. So if you are sort of sitting in routine then, then you can penalize by both, okay? And you might wanna think that this is of the revenue structure to be honest, but if you are running a serious business, you have to have this, you have to hold people accountable because the kind of systems these guys have to be honest, it's really hard for them in general. And that's the reason why, uh, I'm not sure whether you guys followed the whole, um, Amazon aggregator space, right? Uh, there was a lot of momentum overall in that because, you know, obviously Amazon businesses were growing, but if you talk to any serious investor or the seasoned investor, they do not trust businesses that are simply, let's say if they're 50 to 70% revenues based going to be based on Amazon, uh, you know, they don't trust these businesses because their businesses can be killed overnight. Um, you know, because of Amazon. And that's why you have consultants, uh, who are literally fighting their lawyers, to be honest. Uh, okay. They are fighting <laugh>, uh, with Amazon, it, it could get really hard. So it's a, it's a, it's a, it's a world out there. I guess. Um, Dave, Sharon, any other follow up comments, guys?


Dave Chrysler (42:03):
No, I mean that on that, uh, uh, Amazon aggregator, uh, point I, I did follow a bit of that and it is interesting what people are doing, but you know, it's, it's, it's not dissimilar to, um, you know, their kind of last mile delivery, uh, model either. And so there's a, you know, all of that's contractor based and you know, it, it's to have a super interesting <laugh> super interesting overall model. <laugh> just, just wanted to make that quick, quick, quick comment.


Sam Gupta (42:32):
Exactly. Shannon, any comments?


Sharon Custer (42:34):
Um, <laugh>, I dunno, <laugh>, um, I don't wanna discourage people, but really, uh, when you get for the new, new, new sellers, yeah. Um, when you going to the business, think about how heavy the stuff is. Think about, um, the packaging, how complex the packaging have to be, uh, licensing, especially food. Um, it's a lot of regulation going on with, you know, food and beauty and stuff like that. Uh, just have to consider those kind of factors that it will, you know, those costs will add up to each your profit when it's not cost of good sold, if that makes sense. Like it's not really the cost of manufacturing, um, especially shipping. I I, I noticed the shipping is quite expensive, so choose wise, the one you wanna sell, <laugh> <laugh>.


Chris Ardini (43:40):
So think about reselling intangible consignment inventory. You're like, huh, <laugh> the hell is that? You're like, okay. No, but it sounds so simple. It's like, great, I don't have to, so again, I'm gonna sell somebody else's managed service plans. Great idea. Come on in, you can go sell those and I'll pay you 20%. Oh, sounds like a great deal. There's no inventory. I don't have to bring any boxes in the back door. Does that mean it's even a lesser cost than when there's physical product moving around? It's not, yeah, because again, read the agreements and look at the expectations and anything is you go back to a business plan is just in that scenario, I'm laughing. I'm like, oh, sounds so easy. Great, we're gonna sell your stuff. But again, marketing sales awareness and there's all these soft costs that you don't understand. And I'm laughing because it, it sounds like such an easy thing, but I still have to figure out how do I transact it? How do I report it? What are my real margins? Do I really realize 20%? Probably not if you cost it right? You know, there's people that you ever heard the one, we lose a dollar on every one, but we do volume,


Sam Gupta (44:43):
<laugh>, <laugh>, you can always make it up in volume, right


Chris Ardini (44:46):
Chris? It's funny, isn't it? We lose a buck on every deal, but we do volume. They're like, that math doesn't work. And I think that's it. It's the math. And I think we've all talked about costing and indirect costing is a big peeve of mine. People don't, they just don't track it. They can't track it. And I think that's an interesting one as you think about, well how would I track the cost of doing a consignment project with a vendor? You almost need a project accounting subledger, frankly. And you're like, really? Yeah, because if you had your people clock time sheets and you really started tracking all of this development, and then, oh, I got marketing clock it all. And again, I think that that's, and all we're talking about is just do your, do your math, right? And I think what's funny that we're all on the same page there. So Chris


Sam Gupta (45:25):
Content sounds


Chris Ardini (45:25):
So easy. <laugh>, you know, we didn't talk about borrowing, is borrowing the same consignment? So now that the cannabis industry is blooming, as they would say, you know, Missouri passed that here. So everybody's really excited. They're like, we're gonna all be rich. So they're all getting imagined, being rich, but you know, imagine consigned inventory in that space. It's risky. That's all we're talking about.


Sam Gupta (45:45):
So I'm actually going to touch on two layers. Okay? So I think you are bringing a very good point. So number one, I think we did not talk about the whole moisture issue. Um, and we were talking about trust, you know, and trust could be like a, a phone call away, I guess. Um, you know, so let's, let's talk about moisture issue. So let's say if I send you the inventory class, we all trust each other, right? And I'm going to tell you that this is probably, I don't know, uh, you know, a hundred pounds or whatever, I'm sending it to you,


Chris Ardini (46:11):
Sending five


Sam Gupta (46:13):
By the time you'll see it. 75. Chris, you trust me? Ok. I'm doing business with you. Like I scanned it,


Chris Ardini (46:19):
I scanned it, it's just not there. <laugh> from the truck to the dock, something happened. I don't know. Go ahead. Sorry Sam. Go ahead.


Sam Gupta (46:27):
Exactly. Exactly. So obviously that is going to be number one issue that we have not discussed so far. So I don't know what you have seen, whether it is gonna be trust, is it gonna be trend, is it gonna be industry standards that you, uh, you typically use to be able to trust your vendors? Um, then obviously one of the things that we have not spoken about it going to be the allocation, which is your favorite topic. Uh, you know, and I don't know how the allocation is going to layer in when you are talking about this whole consignment issue because obviously you have to plan in both these systems vendor as well as the customer. So Chris allocation as well as the Sure.


Chris Ardini (47:00):
And, and allocation's an easy one. And, and you heard me earlier say that you need to add this data in your system. I've gotta have your skews set up. I've got my attributes, my dimensions, I've gotta attributes to tell me that it's not my inventory and maybe it's stocked at a different warehouse, however, we, however we track it internally, but we've gotta own it. We've gotta be able to manage it. And again, I don't even the vendor requirements redundancy is what will happen. Again, we keep talking about costs. We're gonna have two systems if they're not integrated. Yes, I am working and I'm creating extra reports to do this and that and doing some extra transactions, the trust thing, yeah, you go back to, okay, how am I inter interacting with this vendor? And there's gonna be the people that are primitive guy shows up with a truck piece of paper, okay?
(47:39):
It's, it's a little bit primitive. And then what's gonna happen then there's a guy we talked about earlier where, hey man, I'm receiving inventory into his system and I'm scanning and I'm scanning 2D barcodes and stuff, and there's less human operation in there. I mean, there's always risk depending on the nature of the products. Um, but again, I think that as you build your contractual relationship, there has to be trust unfortunately, that there's, there's always that little component, but how do we support that with empirical evidence? And again, I think that if I'm gonna set up a relationship with the consignment, you better have good systems. I'm the guy that's gonna say, show me your e r p QuickBooks. Ah, we're outta here. You can't track this stuff. <laugh>. And no, I mean, it, it's, it's sincerely trust is conveyed based on inspection of your systems and your business processes and, and how consistently, how many years in business, you're gonna have to gimme some financial statements.
(48:30):
I mean, there's, there's gonna be a due diligence when a, when a consignor constant relationship is created, in my opinion, especially if you're moving high dollar products, if it's trinkets and trash, right? Little different world. But I still think that the trust relationship with empirical evidence and, and inspection and due diligence, it's gonna help you get to that point. But there's certainly, is there compliance? Is there periodic site physical inventories? Again, how am I substantiating to you that I'm running the business professionally accurately so that you can have confidence? And again, if we're in the millions of dollars moving around, it's a, it's a whole different relationship. And I think as you look at that scale, we're moving up in terms of capability and sophistication in our systems. And we're not touching data by hand, we're not exporting, we're not importing, we've put mechanisms in place because this is part of the business plan is to grow based on using consigned inventory, right? You're either in it or you're not. And you know, that go big or go home, you gotta do enough. There's gotta be enough of a, you know, a commitment to be successful. You can't. So that's where I'm gonna tell you just to be careful, you know, so,


Sam Gupta (49:30):
Okay. Amazing insights there. Thank you so much Chris. So, uh, Dave obviously comments over comments and some of the layers that we have not touched, uh, so far. I don't think we have layered in the, the drop shipping. Um, and I don't know if you have seen any sort of challenges with the drop shipping model as well as the consigned inventory. There are some correlation, you know, um, so any insights you might have there. What else do I have that I have not covered? Uh, vendor managed inventory. I think we touched a little bit, I guess, uh, if you have any sort of insights there. Go ahead Dave.


Dave Chrysler (49:59):
Yeah, yeah. Um, yeah, no comments on the drop shipping part unless you have a specific question around that. Um, but you know, I I, I guess kind of to tack on again to what Chris was saying, uh, a little bit of the, the walk before you run, you know, typically these relationships are, are going to be preexisting relationships, uh, that, you know, have built up over time. That there is a, you know, a real business use case, uh, you know, on both sides, on, on the vendor supplier side and on, uh, you know, the, um, uh, um, the EE side of things. So, you know, that's, that's definitely something to, um, to consider with any of these. The other thing that, that kind of goes back to, you know, that that whole trust factor and, and beyond the process of it, you know, um, one thing, one other thing that we didn't really talk about, but but happens from time to time is, you know, defects nonconformances. How, how do you handle that process when consigned inventory arrives? That is, you know, not part of the consigned inventory, right? Like <laugh>, oh yeah, <laugh>. That happens <laugh>. So, you know,


Sam Gupta (51:05):
Tell, tell us more. How, how does that work?


Dave Chrysler (51:07):
<laugh>? Well, everybody sits in the shipping dock and scratches their head for a while. Usually a couple of phone calls here and there happen. Um, you know, but it depends on when, uh, again, like what are, you know, your receiving process, how, how are those, uh, orders and expected consigned inventories coming into your location so that you understand what's supposed to be received, how much of it's supposed to be received, and what's the detail behind all of that? And then again, you know, what do you do in this scenario that something, uh, comes to you that is not part of the consigned inventory? Um, you know, and depending, uh, again, I'll give you this scenario that, that, uh, you know, I've experienced before we were receiving, you know, truckloads of, uh, you know, raw material paper. Uh, so, you know, 700 pound rolls of paper, you get a truckload of that.
(51:58):
Uh, that's, you know, <laugh> consigned inventory, that's not really consigned inventory. What do you do with the truckload of paper? You know, we're talking about shop floor space and, and those types of things. So, you know, back to, you know, what are your processes? What is that relationship like with your vendor? Um, and, you know, how do you deal with those types of things? Again, that's why I go back to Chris. I think what you said was, was really smart in terms of, you know, these relationships develop over time. And with that business use case there, there has to be some beyond kind of the mechanics of, of that relationship. There has to be some, uh, you know, trust and visibility, because dfcs, nonconformances, those types of things do happen, uh, from time to time. So,


Sam Gupta (52:41):
Yeah, so very interesting. And that reminds me of a story, you know, from my experience, and this is coming from a meat industry, okay? And in the meeting in the city, I'm very traditional in general, the way they work. Okay? Um, it's the traditional days, okay, I'm buy, I'm buying from a vendor. I don't like it because smelly or whatever. Uh, and I'm not gonna accept it. Okay, <laugh>, this guy has shipped this shipment from a very far, obviously somebody is burying that cost. No, no, no, no, I just don't like it. Okay, I'm gonna accept it. I'm like, okay, what the hell is happening here? Uh, there is no sort of contract, there is no sort of expectations, and the industry is running. That's the, the process there. And I have no idea how that works. So it could be very interesting overall in some industries when they don't have the formalized contract process, uh, and the obligation, and sometimes it's just goodwill, uh, that, you know, this guy very rarely returns, I guess. So I'm gonna try to sell to him, uh, but not a good business, I guess, Dave, right?


Dave Chrysler (53:35):
Yeah. Thank you. Yeah, I mean, well, to your point, it, it could end up being goodwill. I mean, and, and it really could get, you know, vendor, suppliers in, in, you know, kind of a, a world of trouble, a world of financial trouble, uh, at the very least cash flow struggles if they're making poor decisions with who they're consigning inventory for. So, you know, it's, it's on both sides of the relationship. There's risk on both sides of the relationship. And, and again, uh, getting back to, you know, kind of how these things ultimately, or at least in my experience, how they come to be, it's, you know, built up over time and, and, uh, it's a significant amount of trust that, uh, you know, that you're putting into each other mm-hmm. <affirmative>, uh, to formalize this relationship. So,


Sam Gupta (54:14):
Okay. Amazing. Shannon, any comments or comments?


Sharon Custer (54:16):
Um, I just wanna echo what Dave and Chris said. You know, being in, uh, consignment relationship with your vendor or with your retailer or customers, it has to be ha it has to be a high level of trust. Um, the second thing is that you have to have a good understanding, transparency and specific clear workflow. How, how both parties agree how this should work, um, so that there's no gray area. The third thing I wanna mention is that how physical for your business in the consignment situation for just like what Chris said, you know, borrowing <laugh>, man when you are in consignment, and then your customer borrow your inventory, that that does help their cash flow. But, and that benefit the whole situation, right? And, um, and, and also like some of the business may not, may not be good at consignment. Like say if something is perishable or maybe something is, you know, there's a lot of waste somehow, like lost in the transition, how whatever that, there's a lot of write offs. Those are the things that you have to reconsider if you wanna do consignment or not.


Sam Gupta (55:54):
Okay. Amazing. Thank you so much, Shannon for that. So I'm quickly going to read this comment, and if you guys have any fi final comment related to this comment, you can include in your closing, uh, advice. Uh, so this is with and green, uh, a and d e r s g r e e n. Follow him. Amazing guy. Uh, receiving extra inventory, uh, absolutely happens in the weirdest ways. Um, okay, last month we ordered a container of 90%, item A, 10% item B, it shipped, item it shipped. Item B wasn't, so they just stuffed the container with an extra $5,000 of item A. That's very interesting that we never ordered or authorized. It's crazy out there and systems have to handle it. Chris, closing advice? Any comments on this?


Chris Ardini (56:41):
Sure. So, you know, as, as you endeavor into this, if you're already in the business, you probably know what you got into, but I think if you're endeavoring into it, focus on systems, focus on automation, don't, and, and identify gaps and processes. And I think to walk it all the way through in a simulation mode where you really understand how you're gonna track, receive, report, analyze, cost, that's it. Let's just do your homework, right? Thank


Sam Gupta (57:04):
You. Okay. Amazing. Thank you so much, Chris, for that. Uh, Dave, closing advice, please.


Dave Chrysler (57:09):
Yeah, I, I think Chris really nailed it. You know, it, it comes down to, uh, uh, developing your relationship, uh, with, uh, <laugh>, with the vendors, with the suppliers and or with the customers depending on what side of the transaction you fall on. And, uh, really going through that testing process, uh, regardless of the system that you've developed, uh, to ensure that you've got end-to-end visibility on both sides, uh, so that you can, you know, have that transparency, uh, from a partner, uh, standpoint, that, that will, uh, be your best bet forward, uh, <laugh> to be successful.


Sam Gupta (57:44):
Okay. Amazing advice. Thank you so much, uh, Dave for that. Sharon, closing advice please.


Sharon Custer (57:48):
Um, well, instead of closing advice, I would like to address one Andrews Greens talking about receiving extra inventory without authorize it. Um, it actually happened quite often and, uh, I, I don't know exactly your situation, what it end up here. It seems like the vendor didn't really communicate with you, but, uh, at least my past experience, like when we close the container, there's, if there's any, any extra space, we always encourage the vendor to stuff as much as possible to fill the space up. Um, that's our policy. Don't waste the space. That's our policy. So we don't know what, what is coming, you know, to the, uh, until the door, the container door is closed. So, and, and it comes down to the trust. You know, if your vendor give you good quality of par, you know, if your vendor really look out for your best interest, you know, filled up the space for me so that I can sell as much as I can, and at the same time they trust us that no matter what they feel that we will pay for it. So, um, that's just something that this gotta go back to the vendor. Why are you doing this? The root cost, and then how are we handle the situation in the future? So that's a win-win situation for both parties. Um, without any communication or consent prior to shipping item. It is not a good practice, in my personal opinion. It has to come to the, uh, uh, a sense that, hey, if I'm doing this, would that be okay with you? You know, ask for for consent.


Sam Gupta (59:36):
Alright guys, thank you so much and if you guys have meeting, feel free to drop. I'm quickly gonna, uh, wrap. We are one minute over right now. Uh, thank you so much. That's it today. If you joined for the first time, this was part of our, uh, digital transformation series for which we meet every Thursday at, uh, 5:30 PM Eastern. So make sure you guys are going to be here next week. We're gonna come back with another topic on that note. Thanks everybody for cheering in tonight. See you again.

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