How do you calculate true inventory carrying costs?

Add up your annual storage fees, insurance, spoilage and obsolescence write-offs, financing costs (if you're using credit to fund inventory), and the opportunity cost of capital tied up in stock (this can make or break early stage brands, particularly in an environment where investment capital is increasingly hard to come by). Divide that total by your average inventory value. Most CPG brands land between 20% and 30%. If you're higher, that's where to start digging.

What is a healthy inventory turnover ratio for a $10M CPG brand?

It varies by category, but most CPG brands should aim for an inventory turnover ratio between 4 and 8 times per year, meaning your average inventory sells through roughly every 6 weeks to 3 months. Perishable categories (refrigerated, fresh) should turn faster. Shelf-stable brands with long lead times might sit on the higher end. The key benchmark is whether your turns are improving year over year.

How does 'ghost inventory' impact my balance sheet?

Ghost inventory is stock that shows as available in your system but isn't actually sellable. It can be damaged goods, products that were miscounted, or items lost in a 3PL. It inflates your inventory asset on the balance sheet, understates your actual shrinkage costs, and causes you to under-order products you actually need. Regular physical cycle counts and 3PL reconciliations catch this early.

When should a brand hire a fractional COO for inventory control?

When inventory decisions are costing you more than the hire would. That usually shows up as recurring stockouts during promotional periods, out-of-control carrying costs, retail chargebacks you can't get ahead of, or a founder spending too many hours a week on supply chain problems instead of growth. A fractional COO or embedded ops team gives you senior-level oversight without the full-time executive cost.

How often should we conduct an ABC inventory analysis?

Quarterly is a solid cadence for most brands. If you're launching new SKUs or entering new retail channels, do it more frequently. Your 'A' movers change as your business evolves, and your safety stock and reorder points should reflect current velocity, not assumptions you made 18 months ago.

What is the difference between JIT and Safety Stock models?

Just-in-Time (JIT) means ordering inventory as close to when you need it as possible, minimizing on-hand stock. Safety stock is a buffer you hold above your expected demand to absorb forecast errors or supply delays. Most CPG brands need some version of both: lean on fast-moving, predictable SKUs, with a deliberate safety stock buffer on items where a stockout would be catastrophic (your top retail SKU, for example).

How do MOQs (Minimum Order Quantities) affect working capital?

MOQs force you to buy more than you might need in the short term, which ties up cash. If your co-manufacturer requires a 5,000-unit minimum but you're only turning 1,500 units a month, you're carrying roughly 3.3 months of stock from day one. Renegotiating MOQs is one of the most underutilized levers in CPG operations. Even modest reductions in MOQs can meaningfully reduce the cash you need to keep the supply chain running.

Your Sales Forecast Is Not a Demand Plan

Thought Leadership

Mar 20

Written By Josh Leider

Most founders figure out pretty quickly that they need some kind of forecast. They build a spreadsheet, run some numbers with their sales team, and call it planning. And for a while, that works. Growth is messy and fast and there are bigger fish to fry. But at some point, usually right around when the brand starts landing real retail distribution, that forecast stops being enough and the cracks start to show.

The problem isn't that founders can't forecast. It's that they're treating their sales forecast as if it were a demand plan. These are two different things, and mixing them up has a real cost.

It's one of the most common issues we see with growth-stage CPG brands in the $1 to $20 million range: sharp commercial instincts, strong sales momentum, but a planning process that hasn't kept up with the complexity of actually executing at scale.

Two Different Things, Two Different Jobs

Here's the simplest way to think about it. A sales forecast is ambition-driven. It's what your commercial team believes the business can sell. It's a target. It lives in the world of revenue goals, retailer commitments, promotional plans, and pipeline expectations. It belongs to your sales team, and it should be optimistic by design.

A demand plan is different. It's what your business is actually going to plan to supply and operate against. It starts with the sales forecast as a key input, but then your operations or supply chain team layers in the reality of what you can actually execute. They're looking at co-man capacity, current inventory levels, MOQs, lead times, and shelf life constraints. The demand plan takes all of that into account and produces something actionable that the business can actually execute against.

Think of the sales forecast as the opening offer and the demand plan as the realistic deal that actually gets done.

The Danger of Running on Sales Forecasts Alone

When brands use their sales forecast as their operating plan, they're essentially letting ambition drive production decisions without running it through any operational filter. That's where costly mistakes happen.

Take a retailer launch as an example. Your sales team builds a forecast based on projected velocity of, say, four units per store per week across 100 stores. They project monthly sell-through, build out a year-one sales plan, and hand it off. Sounds reasonable. But the demand plan for that same launch looks completely different.

Your initial purchase order isn't just sized for what you expect to sell in month one. It accounts for pipe fill, which means stocking every DC and putting product on shelf at every door before a single unit moves. In practice, that first PO can run higher than a couple months of projected monthly sell-through. Then you'll get a series of replenishment orders that have nothing to do yet with actual consumption because the retailer is still filling their distribution model. The sales forecast and the demand reality look almost nothing alike in those first few months. They only start converging once demand stabilizes.

A brand running purely on a sales forecast in this situation is going to be caught off guard, either by the initial inventory requirement, the shape of early POs, or both. They might over-produce against unrealistic sell-through projections. Or they might under-produce and miss the pipe fill entirely, which means empty shelves and an unhappy retail partner right out of the gate.

Who Owns What, and Why It Matters

In a well-run CPG operation, these two functions are owned by different people, and that's intentional. A sales forecast should be owned by your commercial team. They should be reaching. That's their job. But someone needs to pressure-test that ambition against operational reality, and that's where the demand plan comes in.

Demand planning typically lives in supply chain or operations. The people doing it aren't trying to sandbag the commercial team's targets. They're asking: given our constraints, how do we plan to actually execute against this? It creates a healthy system of checks. Without it, the sales team is essentially grading their own homework.

Ideally, the two don't just operate in silos. They come together through an S&OP process, typically on a monthly cadence. The demand review is where the sales forecast gets presented, scrutinized, and reconciled with operational realities. It becomes a consensus-driven decision that the whole business aligns on. Monthly works better than weekly because it gives the team enough runway to make meaningful adjustments without constantly chasing a moving target. It also maps naturally to financial cycles, inventory cycles, and production planning.

How to Think About the Transition

If your brand is still in pure sales forecast mode, that doesn't mean you're doing something wrong. It means you've probably been growing fast and prioritizing revenue, which is exactly what you should be doing early on. But there's a point where the complexity of your operation outpaces what a sales forecast alone can handle.

Some signals that you're reaching that point: you're launching into a major retail account, you're running multiple SKUs with different co-man relationships or lead times, you've had a stockout or an overproduction situation that caught you off guard, or your operations team is constantly reacting rather than planning ahead. Any of those is a good reason to start formalizing the demand planning process.

You don't need a sophisticated planning platform to get started. What you do need is a clear handoff between the commercial team and operations, a structured review cadence, and someone who owns the process of translating your sales forecast into an actionable plan. That discipline, even at a basic level, makes a real difference.

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The Bottom Line

Your sales forecast tells you where you want to go. Your demand plan tells you how you're actually going to get there. Treating them as the same document is like using a map of where you want to end up as your driving directions. The destination is right. The route is missing. Getting that handoff right is one of the highest-leverage things a growing CPG brand can do.

About Bravo CPG

Bravo CPG is an embedded operations team for growth-stage food, beverage, beauty, and wellness brands. We combine hands-on execution with senior-level ownership, taking full responsibility for production, co-man and 3PL management, demand planning, wholesale orders, freight, and more. We've helped brands navigate retailer launches, build their first real demand planning process, and stop making the expensive mistakes that come from running operations off of a sales forecast alone. If your brand is outgrowing its current planning approach, we'd love to talk.

Josh Leider