🤖 Jason Panzer reveals how HexClad uses AI agents for ops

📊 Abir Syed gives you a masterclass on inventory tracking

💰 Sean Frank shares why blended margin hides opportunities

Plus, the top five headlines in DTC.

Jason Panzer President, HexClad

Get AI Agents for Operations (like HexClad)

As a former tech banker, I have a soft spot for bootstrapped companies. When the founder’s money is on the line, the decisions are more thoughtful.

My favorite example is Fulfil. It’s an ERP that unifies inventory, fulfillment, and financials into …

• Real-time visibility​
• Accurate forecasting
• Streamlined warehouse ops

It’s replaced our spreadsheets with one system that tracks everything down to the zip code, and it scaled with us as we grew from two fulfillment centers to five, and expanded into Canada, Mexico, Japan, Australia, and China.

Plus, they’re aggressively reinvesting into AI, so it keeps getting smarter and more powerful every month.

For example, Fulfil’s MCP integration with Claude has been monumental. It gives us a 360° view across every 3PL so we can spot slowdowns + fix problems before they hit customers.

We’re over half a billion a year in revenue, and I don’t think we could have gotten there without them.

Hear more from me and some members of my team on our experience using Fulfil as our ERP in this video.

Abir Syed Cofounder, UpCounting

How Inventory Flows in Ecommerce + Why Getting It Wrong Will Cost You

Inventory flow is not sexy.

But not tracking it correctly means your accounting, COGS, margins, and most importantly, the decisions you make on all of that data ... is wrong.

The vast majority of brands do this wrong because finance isn’t close to the supply chain and ops isn’t fluent in accounting.

When you understand this step-by-step flow, you can cost more accurately, avoid end-of-year write-offs, improve demand planning, and manage your cash more efficiently.

1. Purchase Order (PO)
2. Deposit Request
3. Pre-Shipment Payment
4. Landed Costs
5. Inventory Arrives
6. Three-Way Match
7. Freight Bill Arrives
8. Co-Manufacturing
9. Transfers
10. Reductions

Every brand’s supply chain is different, but I’ve chosen a medium complexity setup that should apply to most operators.

Definitions

IMS: Inventory Management System
​3PL: Third-party fulfillment (warehouse)
​GL: Line in your accounting software
​Dave: Our imaginary operator, the hero
​Elite Preworkout: Imaginary brand

 Step 1. Purchase Order (PO) 

This is the beginning of the inventory lifecycle. Dave sends a PO to his packaging supplier for 20,000 units at $0.50 each.

Inventory Management System

Most systems will log the PO, but your inventory quantity and value stays at zero. Nothing has been made or shipped.

Accounting

The PO might populate in your accounting software, but it probably won’t. Which is fine. It’s more important the PO lives in the IMS at this point.

 Step 2. Deposit Request 

Next, the supplier requests a 50% deposit before they start manufacturing. The total cost is $10k; Dave sends $5k.

Inventory Management System

Some systems will tie this deposit to the PO. Others won’t, because there’s still no physical inventory.

Accounting

Book a $5,000 cash outflow to a Supplier Deposit GL.

Common Error

A lot of operators book that $5k directly to inventory. This would mean your accounting shows $5k of inventory, but your IMS shows zero (because you haven’t received anything).

 Step 3. Pre-Shipment Payment 

The supplier finishes manufacturing and ships the goods. They send an invoice for the remaining $5k. Dave pays it.

Ownership typically transfers when the items ship. That means the moment the goods leave the supplier’s facility, they belong to Dave (even if they’re still on a boat).

Inventory Management System

This should now show 20,000 units worth $10,000, categorized as Goods in Transit.

Accounting

Both the $5k deposit and the new $5k payment should move into a Goods in Transit GL. You have $10k in GIT on the accounting side, which should match the $10k in GIT on the IMS side.

Common Error

Same as before. People move the cash directly to an inventory account, which shows inventory that the 3PL doesn’t have yet.

This creates a lot of confusion when you export data from your 3PL, and it doesn’t match your accounting records.

 Step 4. Landed Costs 

The shipment crosses the ocean, incurring customs and duties. However, those invoices are almost always delayed. For the sake of tracking, Dave estimates $600 in freight and duty costs.

Inventory Management System

Most IMS platforms let you capitalize that estimated amount to the inventory. So Dave’s 20,000 units go from $0.50/unit to $0.53/unit, for a total of $10,600.

Accounting

Since you haven’t actually paid yet, accrue this as a liability (i.e., upcoming expense). Specifically, an Accrued Landed Cost GL of $600. That increases your Goods in Transit from $10,000 to $10,600. Both systems now agree: $10,600.

Common Error

Skipping the estimate. Your inventory gets received at $10,000 when it should be $10,600. You sell units at the wrong COGS.

 Step 5. Inventory Arrives 

Inventory Management System

Inventory moves from Goods in Transit to the relevant warehouse location. If you have multiple locations (your own warehouse, a 3PL, Amazon FBA), each should be tracked separately.

Accounting

That $10,600 moves from the Goods in Transit GL into the relevant Inventory account. In Dave’s case, a Raw Materials account since this is packaging.

 Step 6. Three-Way Match 

When inventory arrives, compare:

• Your purchase order
• Goods received
• The supplier’s invoice

If all three agree, great.

But here are the most common discrepancies and what you should do about them …

Discrepancy #1: PO High

🟥 PO says 20K
✅ Received 15K
✅ Invoiced for 15K

They short-shipped, meaning they could only fulfill a portion of your order. Adjust your IMS down, pay for what you got, and flag the gap for your forecasting.

Discrepancy #2: PO Low

🟥 PO says 20K
✅ Received 24K
✅ Invoiced for 24K

They overshipped and are charging you for it. If you don’t mind the extra inventory, you can just keep it (make sure to adjust your IMS), or you can dispute the additional units.

Discrepancy #3: Receipt Low

✅ PO says 20K
🟥 Received 18K
✅ Invoiced for 20K

Ask for an adjusted invoice and update your systems to 18K.

Discrepancy #4: Receipt High

✅ PO says 20K
🟥 Received 22K
✅ Invoiced for 20K

They sent you more than they charged you for. Let them know; they’ll update the invoice, and you need to update your costs.

If you don’t tell them and just keep the additional inventory, your unit cost will be slightly off because you’re spreading the same cost across 22,000 units instead of 20,000.

It’s also the right thing to do, and how you develop excellent sourcing relationships!

Discrepancy #5: Invoice High

✅ PO says 20K
✅ Received 20K
🟥 Invoiced for 22K

They overcharged you. Dispute the invoice.

Discrepancy #6: Invoice Low

✅ PO says 20K
✅ Received 20K
🟥 Invoiced for 18K

They undercharged. Either let them know or update your costs accordingly. Again, do the right thing.

The other problem to watch out for is damaged inventory.

If it’s a significant amount of inventory, you might dispute it with your supplier. Otherwise, this is typically known as “shrinkage,” just a cost of doing business; account for it in your systems.

For example, if 100 units arrive damaged, you need to reduce the quantity in your IMS account by 100 units (at $0.53 each).

On the accounting side, reduce your raw materials balance by $53 and put that into a Shrinkage COGS GL.

 Step 7. Freight Bill Arrives 

Remember that $600 estimated accrual? Now the real invoice arrives, and it’s $800.

If all inventory is still on hand:

Update the estimate to $800 in the IMS. Unit cost goes from $0.53 to $0.54.

On the accounting side, reverse the $600 accrual and book the actual $800 to Accounts Payable. Both systems: $10,800.

If inventory has already been sold, this is more complicated. It’s also more common. Let’s imagine you still have 50% left on hand; 10,000 units. Here’s what to do ...

Inventory Management System

Update the unit cost on the remaining 10,000 units only. In our example, the $600 estimate becomes $800, but you’re only applying half of that adjustment ($400) to the units still on hand. Your unit cost goes from $0.53 to $0.54.

Accounting

Split the $200 difference between your accrual and the actual bill. Half of the amount ($100) updates the inventory value for what’s still on hand. The other half ($100) gets pushed to a COGS Variance GL as catch-up.

The end result? Your remaining inventory is correctly valued at $5,400, which matches your IMS. The COGS variance catches up the understatement from prior months.
​
​Note: In theory, you could just go back and update the COGS for all the months it was wrong, but that changes P&Ls that you already closed and reported on, so I don’t recommend it.

 Step 8. Co-Manufacturing 

At this point, all the raw materials have arrived at the co-manufacturer. Dave sends a PO to produce 5,000 units of his product, Elite Preworkout.

All the same steps apply that we just discussed:

• Dave puts down a deposit
• Makes a pre-shipment payment
• The goods move through transit
• Landed costs get accrued
• Inventory is received into the 3PL

Then, to produce the 5,000 units of finished goods, the co-manufacturer draws down on the raw materials Dave supplied.

Inventory Management System

Before the production run, Dave has $15,800 worth of raw materials across three lines: packaging, labels, and the stimulant ingredient.

After, $11,600 remains, meaning $4,200 worth of raw materials went into producing the 5,000 units.

Add the co-manufacturer’s charge of $33,300 for their own ingredients and labor, and you get $37,500: $7.50 per unit.

Accounting

Raw Materials decreases by $4,200 to reflect what was consumed in production. Finished Goods increases by $37,500 to reflect the 5,000 units now on hand. The $33,300 owed to the co-manufacturer sits in Accounts Payable until it’s paid.

Both systems agree! 5,000 units of finished goods at $7.50 each.

Common Errors

Co-manufacturer ships goods before sending the invoice.

In this case, record an estimated cost in the IMS (same process as the customs and duties accrual) and on the accounting side you book that estimate to a Goods Received Not Invoiced (GRNI). When the real invoice arrives, remove the accrual and book the actual amount.

In our example, Dave estimated $7.50 per unit; $37,500 total. But the invoice comes in at $8.00 per unit; $40,000.

The GRNI gets cleared, Accounts Payable is booked for $40,000, and Finished Goods is updated to match.

Follow the same correction process as from the “Freight Bill Arrives” step if any units have already been sold.
​
​ Step 9. Transfers 

If you ship inventory between warehouses (i.e., 3PL to Amazon FBA), here’s what you need to do:

Inventory Management System

Track each location separately.

Before: 5,000 units at your warehouse, 0 at Amazon. After: 2,500 at each. The total value stays at $40,000, but it’s split across two locations.

Accounting

Nothing changes. It only matters that the accounting software matches what the IMS shows across all locations combined.

Common Error

The mistake happens when your IMS can’t track inventory in transit between locations.

In that case, if you add up what your 3PL and Amazon report, the numbers won’t match your IMS total because anything still in transit between locations won’t appear in either count.

 Step 10. Reductions 

This is the final step. Inventory disappears for all kinds of reasons: lost, stolen, damaged, expired.

Inventory Management System

Reduce the affected units at their current unit cost.

Accounting

Reduce the Finished Goods (or Raw Materials) balance by the same amount and expense it to Shrinkage in COGS.

In extreme cases (warehouse fire, truck heist), you might classify it as an SG&A expense to avoid distorting gross margins. But for everyday losses, run it through COGS.

Common Error

The most common mistake? Nobody notices or makes the adjustments. Run periodic physical counts. If your IMS says 5,000 units and your 3PL’s shelf count says 4,500, you have 500 units to investigate.

 This is not glamourous 

But it’s the foundation of every ecom business. If your inventory tracking is wrong, your COGS is wrong.

If your COGS is wrong, your margins are wrong. And every decision — pricing, promotions, when to reorder, what to cut — is made on bad information.

Fortunately, that’s preventable. Now that you understand how inventory flows, you can build the above habits and controls to catch and address problems.

Abir Syed is “DTC’s favorite CFO” for brands wanting to grow from 8–9 figures. He’s the cofounder of UpCounting. Connect with him on LinkedIn or Twitter (X).

Sean Frank CEO, Ridge

Your blended contribution margin is a lie

Let me give you an example.

Same product. Same price. Different customer cohorts.

CM1 (Gross / Product Margin)
Returning customer - 71%
New customer - 73%

CM2 (After Marketing)
Returning customer - 59%
New customer - 60%

CM3 (True Contribution)
Returning customer - $163
New customer - $4

Blended, they are $80. Separate, the opportunity becomes obvious. You are not running one business. You are running two.

One is barely break-even.
And one is profitable.

This is why I use Saras Analytics.

- Atomic, order-level data
- Cohort and CLTV visibility
- Single source of truth

It gives me contribution margin by SKU, by region, by channel, by customer. I know where profit is coming from- where it is not.

Saras AI lets us talk to our data. It is helpful. It is very easy. It is clean, so it is accurate.

If you want to know your real contribution margins … WHICH YOU DO … then click the button.

THE FEED

​“It Was So Hard”: Operationalizing Scale With Spot & Tango’s Founder​

​The Meta Trap: Why Channel Expansion Timing Is Everything​

The Trends

Curated by the editor of CPG Wire, the five top stories in commerce and DTC.

1. L Catterton Invests in Mars Men: Business Wire​

Mars Men, a fast-growing purveyor of natural testosterone supplements, closed a $27.5M Series A round led by L Catterton. Founded by Benjamin Smith and Zach Stuck, Mars Men reached a $100M revenue run rate in less than 18 months.

Mars Men will use the capital to accelerate innovation and expand its product portfolio to address a broader range of men’s health and performance needs.

2. NBA Legend Backs IM8: Athletech News​

NBA star Giannis Antetokounmpo invested in IM8, one of the fastest-growing supplement brands in the U.S. Antetokounmpo joins several other athletes who have backed IM8, including David Beckham, Aryna Sabalenka, and Ollie Bearman.

IM8 was founded in late 2024 and reached $100M in ARR in less than a year. IM8 offers a variety of longevity products that combine premium, clinically-dosed ingredients with guidance from a world-class Scientific Advisory Board.

3. Unilever’s Food Division Merges with MKC: CNBC​

Unilever merged its food division with McCormick, creating a global flavor giant with approximately $20B of revenue in 2025. The deal brings several leading brands like Hellmann’s, Cholula, French’s, and Frank’s Red Hot under one roof.

Under the terms of the deal, Unilever will own roughly 65% of the combined company and receive a one-time $15.7B cash payment. The transaction enables Unilever to focus on its higher growth personal care and wellness portfolios.

4. Create Closes $20M Series B Round: PR Newswire​

Create, a modern creatine brand and the world’s leading creatine gummy brand, closed a $20M growth equity round led by Alliance Consumer Growth (ACG). Impact Capital, the family office of billionaire Mike Repole, also participated in the round alongside Unilever Ventures.

Create has sold more than 20 million gummies and reached a 9-figure valuation. The disruptive VMS brand also launched a new product line: Creatine + Electrolytes.

5. VMG Backs Vacation: WWD​

Leading consumer investment firm VMG Partners took a significant equity stake in Vacation, a viral suncare brand. Vacation was founded in 2021, and the company anticipated $80M in sales in 2025.

VMG has invested in several disruptive consumer brands, including Fruit Riot, Ghost, Goli, Ilegal Mezcal, and Quest Nutrition. Their prior beauty investments include K18, Drunk Elephant, Snif, and Sun Bum.

With thanks and anticipation,
Aaron Orendorff
Chief Content Officer

​But not CCO for long 🤓

P.S. (Disclaimer): Special thanks to Fulfil and Saras Analytics for sponsoring today’s newsletter.

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