It’s time to go back to class

Our goal is to create content that resonates with the community and help them improve the efficiency of inventory operations ten fold.

We understand building an eCommerce business is tough. And we also know that it becomes overwhelming to keep track of all the modern day jargon and terms around inventory management and operations. That's why we wanted to create this handy mini pocketbook to help you quickly brush up on your inventory knowledge.

Best use-case of this mini guide: Share this with your new joinee or rest of the teams (finance, marketing or support) so that no one goes pale when the word SKU enters the chat :)

Here is a list of all the important terms under Inventory Management

Top Revenue Terms

• ‍Revenue: The total income gained
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• Forecast revenue: A prediction of what the income gained could be over a specific time period, based on the purchase orders outstanding and replenishment rates
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• Sales: The number of units sold historically
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• Forecast sales: A prediction of the future sales done over a specific time period, based on the purchase orders outstanding and replenishment rates. It is closely related to demand planning and forecasting‍

Product and SKU related terms

• COGS (Cost of Goods Sold): The historical cost of goods sold
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• Retail Price: The price the consumer will pay for a good
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• Unit Costs: The cost of an individual unit
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• Category: A grouping of certain products
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• Product: An article or substance that is manufactured or refined for sale
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• Raw Materials: The basic material from which a product is made
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• SKU/Variant: Stands for Stock Keeping Unit. These are used by retailers to identify and track inventory and goods.
  Made up of a unique combination of letters and numbers that determine the characteristics of the product.
  They allow companies to more accurately and efficiently account for all stock.

Payment Terms and Purchase Order

• Collection: A grouping of products
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• Days on Hand: This is a measure of how much time is needed for a business to run through its inventory
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• Purchase Order / PO: An official document issued by a buyer committing to pay the seller for the sale of specific products or services to be delivered in the future.
  
  See the list of the top purchase order tracking and management apps in Shopify
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• Minimum Order Quantity / MOQ: The minimum number of products required for purchase.
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• ‍Lead time: The time it takes for production to start and finish
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• Payment terms: This takes the form of a document that details how and when goods should be paid for

This glossary is updated every quarter. If you enjoyed reading this mini guide and did scroll till this point, feel free to reach out to us if you would like us to include terms that we have missed out on

We have also created a list of apps to help you solve inventory management issues on Shopify.

Prediko wants to democratise inventory operations. That's why we created this modern inventory app in a heavily competitive space. Also learn why we are one of the top Inventory Planner alternatives.

Democratising Operational Excellence by Youri Moskovic

• Introducing Prediko — the Inventory OS for omni-channel brands.
• Our goal is to help you plan and order your inventory stock seamlessly.

Legacy software plagues inventory management space

The main issue is that not much has really changed in the world of inventory operations or management in terms of a better software.

In the D2C industry and the Shopify ecosystem, there has been a sudden burst of apps & software that help with acquisition & retention.

Unfortunately, there has been no major facelift in the world of inventory management software. There are a lot of legacy apps & software available in the market. However these apps & software don't cater to the needs of the modern D2C operators.

In addition to legacy software & apps, the majority of the brands still use decade old practices to keep their businesses running.

They try to estimate future sales and production orders via excel spreadsheets while inventory financing gets done through traditional banking institutions or venture capital.

These practices are error-prone, unpredictable, and lead to detrimental business outcomes:

1. >$1T is lost every year from inventory distortion due to poor planning
2. 40% of small & mid-sized businesses face rejections for inventory financing (vs. 17% for multinationals)

As businesses scale, their operational needs grow in complexity and legacy solutions let them down. This multi-trillion dollar problem is part of the reasons why independent and emerging brands fail to compete against dominant market leaders.

Eli Khrapko, co-founder & COO at Wype, one of Prediko's first customers:

“Planning and Financing Raw Materials is a big and expensive strain on our business and cash flow”.

Existing challenges for D2C inventory operators

The rise of eCommerce platforms like Shopify and industry leading tools such as Gorgias, Attentive and Zencargo has been key in supporting the emergence of eCommerce entrepreneurs. However, as privacy settings become more restrictive, online marketing performance are increasingly less predictable and this has greatly impacted the ability to foresee inventory and sales behaviours.

As the pandemic hit, the problem became even more obvious as online sales accelerated while supply chains slowed down. With lead times, shipping costs, and raw materials hitting record highs, brands couldn’t catch up with demand which resulted in an increase in out-of-stock.

Brands order lots of “just in case” stock only to find themselves with excess inventory which they can’t get rid of profitably today.

Such drastic events impact the ability of brands to predict their needs which means the difference between thriving and dying for companies. Caught between inflation and complex supply chain and e-commerce environments, it is crucial for brands to adapt ways of working to build sustainable businesses.

Freeing up capital through better planning and purchasing decisions will allow brands to focus on initiatives that grow their business.

Introducing Prediko

Prediko is an inventory OS that lets omni-channel brands plan and order their stock seamlessly. Our product helps brand operators eliminate stock-outs & overstock while spending less on inventory.

Without technical efforts, brands are able to connect their stores with just one-click integration to easily plan growth scenarios with help of smart Prediko insights, benefit from recommendations on ordering to keep healthy stock.

Anna Laura Hoefer, founder at Ripa Ripa, Prediko customer:

“Since using Prediko we better organise our supply chain; we do not risk being sold out on our bestselling products anymore, keep track of our inventory, and plan future orders accordingly. This increases our sales and reduces excess inventory which is a big win for us.

We founded Prediko in July 2022.

We built a stellar team of supply chain, data science, and finance experts. We confirmed our initial hypothesis by developing a product that is actively used by customers.

Raising capital to accelerate our efforts

Today we’re excited to announce that Prediko has raised a $5m seed round led by Felix Capital. Sitting at the intersection between retail, commerce enablement, and fintech, they are the perfect partner to accelerate our growth.

Successful apps & software such as Mejuri, Mirakl, and Juni sit under their umbrella already. An investment in Prediko is indicative not just of the need to support your chosen sector but the tools that help fuel it.

To support us in our mission we also welcome strategic investors HelloWorld and Nomad Capital as well as CEOs/founders of industry leading businesses who all invested as angels in our Seed round: Guillaume Pousaz from Checkout, Victor Jacobsson from Klarna, Romain Lapeyre from Gorgias, Romain Niccoli from Pigment, Richard Fatal from Zencargo, Pierre-Louis Lacoste from Ankorstore, and Fabrice Haiat from Yoobic.

Rodrigo Martinez, Founding Partner at HelloWorld, Prediko investor:

“Shopify enabled a new generation of entrepreneurs to operate the front-end of their ecommerce businesses with ease. Prediko has the potential to enable those and a new generation of ecommerce businesses to run their back-office operations at a high degree of excellence and profitability. The founders have the experience and hungriness to make that happen!”

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Using experience to build a practical software or apps for Shopify D2C brands

My co-founder & CTO Nicolas and I used to develop complex predictive and prescriptive operating softwares for large legacy retailers such as Tesco and DFS that unlocked millions of dollars in value for them.

I go in depth in this conversation with Storetasker to explain Prediko's vision

Surrounded by eCommerce entrepreneurs, we saw firsthand the similarity of operations between Enterprises and SMBs and the lack of support in inventory related activities for latter. We saw this as an opportunity and created a product that could help millions of brands.

To build on our enterprise experience, we joined Techstars NYC where we met with hundreds of brands to get a deeper understanding of their inventory operations.

We quickly saw a growing, underserved community of omni-channel businesses struggling to plan and order their inventory on excel spreadsheets and looking for a solution to professionalise their inventory acquisition and management.

Prediko’s now 10-strong team boasts a number of top engineering, product, and finance professionals from Lydia, Amazon, and Goldman Sachs. Together we are building the Inventory OS that lets omni-channel brands plan and order their stock seamlessly.

Jessica Warch, Founder at Kimaï, Prediko customer:

“Our forecasting is more accurate and our buying calendar is clearer than before which enables us to give our suppliers more visibility on orders.”

Journey Ahead for Prediko

We want to build a software or an app that plays a significant role in democratising operational excellence globally by making what was only accessible to the world’s largest companies and now available to businesses of any size.

Julien Codorniou, Partner at Felix Capital, Prediko investor:

“Prediko’s vision to provide a 360 inventory management solution, from planning to financing, is very powerful. Having too little inventory to sell is a nightmare, and having too much inventory is a disaster. Youri and Nicolas spent a lot of time in that space before founding Prediko and they understand extremely well the pain points, but also the opportunities ahead for their customers. We’re super excited to be part of this journey with them and bring more software and AI to help their customers get inventory management right”.

Prediko is building a category-defining business that is accelerating the speed at which entrepreneurs can operate. We help them remove barriers to save time, release working capital, and grow revenue — operations just got exciting.

For Shopify merchants, planning doesn’t fail because targets are wrong; it fails because reality gets in the way.

Previously, Prediko’s planning flow was split into two parts: planning for the year ahead and buying for immediate needs. This gave teams a clear way to set direction and take action quickly.

Now, we’ve enhanced that experience even further by adding a dedicated Supply planning step, so you can validate your plan against your 12-month inventory reality before you start placing purchase orders.

In other words, Supply planning brings more depth and confidence to the existing Plan + Buy workflow by answering one of the most important planning questions early: “Can we actually fulfill this plan with the stock we’ll have?”

And with this step in place, we’re excited to launch Prediko’s new and upgraded three-tab planning system (Demand → Supply → Replenish), a connected approach to go from planning to execution, without the chaos in between.

Introducing the New Three Tab Planning System 

We have built a new Demand → Supply → Replenish flow that mirrors how inventory decisions are taken by real teams.

The new flow starts with how much you expect to sell, validates whether you can support it, and turns that into the exact purchase orders you need to place. 

Here’s a detailed view of the 3-step approach. 

Step 1: Demand (Plan)

Demand is where you define the plan for the next 12 months: your targets, your expectations, and what “success” should look like by SKU. 

You can set or import monthly sales targets (by product, category, etc.), then adjust the forecast until it reflects your real-world view of growth, seasonality, and upcoming changes. 

Once you’re confident, you lock the plan. This becomes the single source of truth for everything downstream.

Step 2: Supply (Achievability & Feasibility)

Supply is where the plan becomes reality-checked. 

Prediko takes your Demand plan and converts it into a 12-month supply plan, showing whether you can actually support your targets with existing stock, incoming inventory, and future POs, all while respecting lead times and safety stock. 

This is where you can clearly see what parts of your plan are achievable, what’s at risk (because you’re eating into safety stock), and what’s unachievable (because inventory can’t arrive in time).

Step 3: Replenish (Action)

Replenish is where the strategy turns into execution. This step focuses on acting on the validated supply plan: identifying which SKUs need ordering now or soon, and creating the purchase orders to keep selling. 

It’s based on the numbers from Supply, so you’re not guessing quantities or going beyond your budget. 

You’re placing the right orders at the right time, with a clearer view of upcoming deliveries and the PO calendar you need to maintain inventory health. 

How Shopify Stores Can Use Demand, Supply, and Replenish Flow

With an understanding of how the flow works, let’s look at the scenarios where it becomes most useful.

1. Annual target setting

You can use the flow to translate high-level annual store targets into monthly executable inventory plans. 

Start in Demand by setting next year’s goals (sales or quantities) and then move to Supply to validate whether the plan is realistic based on current stock, lead times, and recommended orders. 

Lastly, use Replenish to convert the plan into real purchase orders and keep execution in line with the target.

2. Budget planning 

The flow makes it easy to bridge ops planning with finance approvals.

Build the plan in Demand, then use Supply to view the recommended orders and deliveries value across the next 12 months. 

This gives the finance team a clear view of expected purchasing spend while giving ops team a clear plan of what needs to be ordered and when. 

Replenish then becomes the execution layer to place POs in line with the approved budget.

3. Supplier negotiations 

The flow also helps you negotiate with your suppliers as a long-term partner and not a reactive buyer. 

Plan demand, then filter Supply by supplier to see total recommended units, number of deliveries, and approximate yearly value. 

This gives you concrete numbers to commit to and negotiate with, while helping you structure delivery schedules well in advance.

Once terms are agreed, use Replenish to execute POs smoothly throughout the year based on the negotiated plan.

4. Scenario planning when targets change mid-year

When demand shifts or business targets change, the flow helps you re-plan quickly without the chaos. 

Update the plan in Demand, then use the Supply tab to instantly see how the new plan impacts recommended orders, stock levels, and risk. This ensures you don’t continue ordering based on an outdated plan. 

Replenish then reflects the updated actions needed so execution matches the latest direction of your plan.

5. Planning for new product launches

You can also use the new flow to launch products confidently without overbuying or stocking out. 

Start by forecasting launch demand in the Demand tab, then validate in Supply whether your inventory plan or budget supports the expected sales ramp. This allows you to decide order quantities and timing early enough to meet launch windows. 

Finally, use Replenish to create the first set of POs and stay on track as early sales data comes in.

6. Cash flow control 

Utilise the Demand, Supply, and Replenish flow to prevent over-ordering and protect working capital. 

Once your demand plan is confirmed, go to Supply and review recommended orders and stock coverage across the year. 

If recommended orders are low (or zero) and stock stays healthy, you can confidently avoid placing unnecessary POs. 

Then in Replenish, you only execute POs that truly support growth, freeing cash for strategic investments.

7. Bundle/kit planning

The upgraded flow also helps plan bundles correctly by connecting demand to component-level supply needs. 

You set bundle-driven demand, then in Supply, you can review and understand the required component quantities well in advance. 

Replenish tab, then ensure you order the right underlying SKUs so bundle sales don’t break due to missing components.

How Prediko’s 3‑Step Flow Benefits Your Shopify Store Operations?

Prediko’s Demand → Supply → Replenish flow helps teams move from planning to execution with clarity. 

The key upgrade is the Supply planning layer, which sits between forecasting and ordering, bringing the following benefits.

1. Adds a validation layer between planning and purchasing

Instead of jumping straight from a demand plan to placing POs, the Supply step validates whether the plan is actually achievable based on inventory levels, lead times, and recommended orders. This reduces last-minute costly stock issues.

2. Makes budgets easier to approve

With Supply planning, teams can review the recommended order value and delivery value across the next 12 months. 

Finance gets a clear view of expected purchasing spend and projected quantities, making budget discussions faster and far more aligned.

3. Enables smarter supplier planning and negotiations

Supply planning gives you forecast-backed clarity on annual volume, number of deliveries, and approximate spend, so you can negotiate terms proactively and plan supplier schedules in advance, rather than operating one PO at a time.

4. Makes replenishment execution faster and cleaner

Once the plan is validated in Supply, the Replenish tab becomes pure execution. Teams can create the right purchase orders at the right time with fewer errors, fewer surprises, and less back-and-forth.

Plan Demand, Validate Supply, and Replenish Faster Than Ever

The biggest win in inventory management comes from the decisions you make before you buy. 

With Supply planning now built into the flow, Prediko gives you the clarity to pressure-test your plan before committing budget, align teams earlier, and avoid expensive surprises, like over-ordering or running out at the wrong time. 

As a result, every PO you place is intentional, timely, and directly tied to your plan.

If this reflects how you want to run your Shopify store, try out Prediko’s Demand, Supply, and Replenish flow free for 14 days.