Amazon’s New Predictive Replenishment Program (FLOW*) will help brands forecast Amazon Orders, and alleviate the issue of Out of Stock.
Amazon recently beta launched their Forward Looking Order Workflow (FLOW). Through FLOW, Amazon will place POs with shipment windows that open on a future week for your best-selling product. This is their way of committing ahead of time to forecasted demand and giving brands more certainty of Amazon PO behavior.
FLOW will hopefully improve Fast Track in-stock rates, reduce out of stock, improve brands ability to plan for Amazon inventory needs and manage safety stock, and realize subsequent sales lift.
Brands have the ability to choose any number between 2 and 12 weeks for their Horizon. Amazon suggests that aligning this horizon with a brands replenishment lead time requirements in order to be positioned to accept 100% of ordered quantity.
Amazon will factor in forecast variability when calculating the order amount so suggest that brands choose the nearest term horizon feasible. They will then order less ahead of time in the 8-week horizon than the 4-week horizon, for example.
More FAQ around FLOW:
1) Why is Amazon launching FLOW? Suppliers like you have told us about the struggle to forecast Amazon orders. In light of this feedback, Amazon is launching a new method of continuous buying we believe will improve your production forecasting, improve safety stock level management, reduce out of stocks, increase fast track, and otherwise ensure inventory is in the right place at the right time to better serve customers.
2) Is this temporary? So long as we observe positive economics FLOW will continue as a new normal for regular replenishment ordering. Your performance (overall confirmation rate and efficiency in processing shipments) will impact this decision..
3) How will this work? On a weekly cadence, high confidence forecasted demand will be ordered “x” weeks in advance of when the product is due to ship. These POs will arrive at the same time as your first regular replenishment orders each week. If the ASIN profile is stable both in terms of economics and demand, a large percentage of total ordered quantity will ordered ahead of time. FLOW POs should not be shipped early (on-time compliance chargebacks do apply) and we will “top-off” on any incremental inventory needs during regular replenishment ordering. The FLOW and regular order then represent the total inventory required to ship to that site that week. It is our expectation that you will route these FLOW POs with any other POs that share destination and shipment windows. Similarly, we encourage you if you prepay freight to combine POs when shipping. See the attached infographic for more detail.
4) Which of my ASINs qualify? ASINs with high and regular demand over the next couple of months. If forecasted demand falls or increases for an ASIN against certain thresholds, that ASIN will be removed or added to the list. You will know an ASIN is on the list when will receive forward dated POs during regular replen. The list is dynamic but product with reliably high velocity will remain on the list each week.
5) Are these advanced POs the only POs I need to fill for these ASINs? No. We will still be ordering this inventory through just-in-time buying. The amount we order through just-in-time buying will be the remainder not ordered ahead of time through FLOW needed to fulfill customer demand. It is important to continue to plan for the full expected customer demand when setting your inventory levels and confirming orders.
6) How will I know which POs are part of this program and which are regular replenishment orders? These advanced POs will have future-dated shipment windows and arrive alongside your regular replenishment orders.
7) Will my ASINs or these POs have special treatment? No. Existing performance expectations for PO processing apply to FLOW POs and subsequent orders.
8) What if I am not sure what my inventory levels will be for that ASIN? Please choose a horizon that allows you to fill in full the ordered volume on FLOW POs.
9) Should I be excited? Yes, we think so. We tested a variant of this ordering strategy earlier this year and saw advanced commitment drive incremental sales otherwise lost due to out of stock. As such, we invested in automating this capability.
Have questions on FLOW? Want to learn how Longtail can help set your brand up for Amazon success? Click below, we’re happy to help!
*Formerly FLRW – Forward Looking Replenishment Workflow
