> ## Content Index > Fetch the complete content index at: https://abcsoferp.com/llms.txt > Use this file to discover other available public pages before exploring further. # Why Your Inventory Numbers Don't Add Up — with Ben Hussey, Co-CEO of Katana - URL: https://abcsoferp.com/episodes/s04e09-why-your-inventory-numbers-don-t-add-up-with-ben-hussey-co-ceo-of-katana/ - Published: 2026-04-21T06:00:00.000Z - Updated: 2026-09-19T21:50:19.000Z - Description: Most businesses have an inventory problem. The question is how big. In this episode, we're joined by Ben Hussey, Co-CEO of Katana Cloud Inventory, to talk about why so many growing businesses struggle with inventory visibility — and what they can do about it. Ben shares how… - Author: ABCs of ERP & Beyond - Tags: Manufacturing and distribution, Data, reporting and AI, ERP practitioners, #episode S04E09 · 53 min ## Episode notes [Send us a message about this episode!](https://www.buzzsprout.com/2109197/fan%5Fmail/new?ref=abcsoferp.com) Most businesses have an inventory problem. The question is how big. In this episode, we're joined by Ben Hussey, Co-CEO of Katana Cloud Inventory, to talk about why so many growing businesses struggle with inventory visibility — and what they can do about it. Ben shares how Katana was founded after its creator realised he had no real-time view of demand and supply across his own manufacturing business, and why the rise of multi-channel e-commerce has made the problem exponentially harder. When orders are flowing in from Shopify, Amazon, and distribution channels simultaneously, Excel and traditional ERP systems simply can't keep up. We dig into the practical side: how to assess whether you have an inventory problem (start with a single SKU and audit it end-to-end), who needs to be involved in that conversation, and how to quantify the cost of doing nothing. Ben shares a story of a customer who discovered $120,000 worth of inventory they didn't know they had — simply by gaining a single view of their stock. The conversation moves into change management — arguably the biggest barrier to success. Ben explains Katana's "strangulation technique" for phased adoption and why the most common trigger for falling back to old ways isn't resistance to new tools, but staff turnover when new hires aren't trained on the systems already in place. We also cover how macroeconomic forces — tariffs, the Middle East conflict, supply chain disruption — are reshaping how businesses approach planning, costing methods (moving average vs FIFO vs LIFO), and supplier diversification. Textile and apparel companies increased inventory purchases by 50% overnight following recent geopolitical events. The question is whether the rest of the market has caught up. Finally, we get into AI. Ben talks about where it's already useful (data analysis, workflow mapping), where it's arriving whether you like it or not (agentic commerce on Shopify, launching end of month), and why your product data accuracy is about to matter a lot more than your website copy. \*\*Guest:\*\* Ben Hussey, Co-CEO of Katana Cloud Inventory — katanamrp.com [Support the show](https://www.buzzsprout.com/2109197/support?ref=abcsoferp.com) ## Watch the episode ## Transcript The speaker labels and timings come from the edited Riverside transcript. Read the full transcript Peter Nicholson (00:52) and welcome back to the ABCs of ERP and Beyond, the podcast all about ERP systems and how they can enable growth and optimize processes for your businesses. I am Peter Nicholson and as always, I am joined by our two other co-hosts, Nirav Shah and Emily Browning. And today we have got a great guest joining us. Ben Hussey is the co-CEO of Katana Cloud Inventory, the platform that helps companies manage over $3 billion in sales annually. if you've ever looked at your inventory numbers and thought, I don't trust these, or you're still chasing stock levels across three different spreadsheets and two different outlook inboxes, well, this is the episode for you. We are talking about why ERP alone might not always give you the full inventory picture, how to actually get teams to adopt new tools, where even AI fits into all of this. So let's get into it. Ben, welcome Ben (01:45) Mm. Peter Nicholson (01:48) to the show. Ben (01:49) Thank you. Great introduction. Love it. Nirav Shah (01:50) you Peter Nicholson (01:51) No I didn't wing it. I might have had something prepared, nevertheless, so tell us about yourself. I've introduced you, but maybe speak about where you sit in this kind of space and why you're on today's episode. Ben (01:53) Thank Yeah, sure. Thank you. First of thank you. Thank you very much for having me on the show. And I guess my career post-education started off actually at a large Canadian telco running various e-commerce projects. And basically what that led me to is into the digital space, the growth of e-commerce and the related fields of auto management, management. One of the things we realized fairly early on is that automation solves a whole bunch of problems. And in our case, that was internal projects. But after kind of eight, 10 years there, I moved onto the software side of things. So the dark side as it were. And with that, I worked at a couple of different e-commerce companies, all of management. Over the years kind of grew my experience working with various different businesses. I mean, probably hundreds over the course of the decade, solving and working through various e-com. retail manufacturing, auto management, inventory, kind of associated challenges. And then almost three years ago, joined Katana and actually joined as the chief revenue officer. We have about 1600 customers and kind of two thirds of those are in North America. And so being based here just to really have a strong North American presence with our commercial team. And then a year and a half ago, when went and moved into the co-CEO role with one of our founders who is based in Europe. And as you said, one of the things we do is work with mainly small, medium-sized businesses to help them with their territory problems. And inventory is one of those kind of hard things and scary for many companies. And one of the things that we've learned is that the fear of that is something that is important to work through and I'd argue probably part of the big value of your. podcast. Peter Nicholson (03:47) Yeah, that's really interesting. One thing I want to just highlight there is what you said about your customers and seeing it's scary. was there like a, obviously a specific moment you thought crap, we need to do something or was this more of a slow realization, a slow burn? ⁓ Or maybe your background coming from that telecom space, like when you came to the inventory space, what shocked you or what kind of stood out for you? Ben (04:03) Yes. So there's a couple of things to that. a company was actually founded eight years ago. And our founder did so because he was running a large manufacturing business and realized he had no visibility into the real time orders they have. So the demand side and their supply side. What products are we making for which people? How much do we need? we making to order or are making to sell? And that was from beginning of manufacturing process all the way through to finish good and assigned. orders. And one of things he realized is that there was no good platform available. All of the of ERPs were SAP, NetSuite, Oracle. So A, too big, too heavy, too expensive. But B, didn't actually meet the need. They didn't operate in real time. And one of the things that happened, I guess, with the rise of e-commerce and with digital transactions is that the market for lots of businesses has become much more real time. Humans can fudge things. An order comes in and I can know that I could probably delay it a day and make sure I have the inventory for it. In a digital space, that's much less easy. And so one of the things that ends up happening is businesses then kind of move into this, well, don't really know what I need. And so what I'm going to do is I'm going to have lots of inventory on hand to meet the potential orders I might get. That's bad news for a business. because that means you're high in working capital, got lots of cash out of inventory that you may or may not sell. And that's one of the fundamental problems and one of the fears that comes for lots of business owners. And then the other thing that kind of happened about, I say actually post COVID really, there's lots of these now what I would call branded manufacturers or hybrid businesses that really kind of picked up, right? There's been a huge growth in these companies that make them sell their own product using Shopify, Amazon, potentially distribution into retail. So what you just heard was multiple channels. So now you've got orders coming in from multiple channels in real time. So you might be getting 100 orders from three channels at the same time. So now your ERP your Excel just doesn't work because it doesn't know what's happening because it's from three different places and it can't keep up. It doesn't have that ability. So now your problem gets even worse in terms of what you have to hold. And so one of the things we saw kind of when I joined is a really, really big growth in this area. And so we kind of, I guess from a Katana standpoint, we really extended into this market, realizing that for lots of what we would call modern merchants, those kind of more modern businesses in a small and medium size, there just really wasn't anything that can handle it. Cause they're not going to go out and buy an SAP or NetSuite too big, too expensive. Most of the thing else that really worked in the way they needed to, to run their business. And so that's one of the big, I guess, fundamental problems is what do I need? Where do I have it and where does it need to go? Right inventory right place, right time, that kind of cliche. And with the cost of technology dropping over the last 10, 15 years, you can now as a small medium-sized business have a platform that can handle that. And so for us and for me, that's been one of the big gains over the last few years is as these market shifts have happened and the technology has evolved, we can now meet that need in a way that 10 years ago, wouldn't have been possible for these businesses. And for me, that's really exciting. Nirav Shah (07:16) Yeah, Ben, that's great. Nice to have you on the show. I personally have a lot of ERP experience. And your story and your solution that you bring to market is quite fascinating to me. Oftentimes, I hear when talking to customers that use Shopify or BigCommerce, or they sell on Amazon, or even POS, they don't know they have a problem until customers due dates are missed. and they're ordering maybe not enough from a purchasing standpoint, so their planning is off, and they're constantly kind of around the hamster wheel. And they feel like they can never get their hands around their inventory. And I'm interested to kind of learn is what percentage of those customers really kind of Ben (07:51) Yeah. Nirav Shah (07:57) brought to light the solution at the end of the day, is those that, just you saw immediately in the marketplace that this was a main gap in customers that use, you know, kind of let's say QuickBooks as their accounting system. And then they have, you know, their e-commerce platforms or different omni-channels that they run off of and then your solution is fitting in, you know, very seamlessly. Ben (08:20) Yeah, the hamster wheel is a really good analogy. They're always chasing. And so they do one of two things. They chase, which means they're understocked and they're leaving money on the table. Or worse, they complete the order and then realize they don't have to stock for it and have to cancel the order. And so either version of that's bad. You've either lost revenue and margin or you've lost a customer forever. flip side is the kind of one I mentioned earlier, right? Is the way you compensate for the unknown is you over stock and you over engineer. Small businesses in particular, can dump 50, 100K into inventory you may never sell. Not a good position to be. So either way you're chasing, but you're also, think as a business owner, one of the things we kind of talk to people is this kind of feeling of anxiety about it. I don't really have a good picture of what's happening. I can go into Shopify, can look at what's happening now and I can go into QuickBooks and I can see what's happening there. What I can't do is get a single view of the inventory I have, where it exists and the orders I have so I know what the matchup is, which is fundamentally what we solve. I I found that kind of jokes that we have five platforms in one, right? It's inventory is a big thing. know, warehouse management, the actual inventory count. But what it boils down to is a single count. If you think of a single SKU, how many do you have? And updating that in real time. And that's ultimately one of the things we have found is once people start to get that visibility, some cool things happen. One is they feel good about the order match up. But we have customers, we had one, this one kind of blew me away about, I was going to say three or four weeks ago. That we got set up and running and they came back to us like, we didn't realize, but we have since discovered. that we had $120,000 worth of inventory we didn't know we had. Nirav Shah (09:57) Hahaha Ben (09:57) Like that's crazy to me because a small business you think that would be like a medium sized business I should say you think that'd be an obvious thing But one of the things that they didn't realize is they're a co-manufacturer so they don't make it themselves. They buy it from someone else very common model today and So in that model they had kind of pre-ordered and pre-built and they haven't sold it and it just kind of built up over time And they just they just didn't know But once they have that single view they can then start to understand what they have and match it up. So Nirav Shah (10:14) Right. Ben (10:27) It's in some respects, to your question, is that visibility problem. I don't know what I have, and I don't know where or how to find it and match it up. just mathematically, it's too hard to do as a human because there are too many variables, too many data points changing too often. That's where it all gets problematic. Nirav Shah (10:47) Yeah, and I think just to add to that, right, when you don't have systems in place, you can't really see, should I be, if I sell out of this item, I should be able to do a substitute of items that I have in stock, right? Like have that visibility upfront, set those business rules up into the system. So even though you are carrying a little bit more inventory, you could start thinking about maybe something that you don't want to purchase that may be a little bit more expensive, but you have a substitute that you could sell, right? So could keep that e-commerce experience going at end of the day. Because once it's kind of in the back corner, there's going to be other boxes in front of that inventory, and then that's going to be lost, right? Visually, you're not going to be able to see it, and you don't have the right reports to understand when you're looking at it from a month-end perspective, okay, well, how much inventory am I really carrying at the end of the day, right? Ben (11:30) Yeah, absolutely. we always, you know, we still recommend people have safety stock, but it's a question of how much, but also things like lead times. Right to your point, you know, if you've got a product that's got a lead time of four months or six months, then that's going to be a very different equation that you have to do with your demand and forecast planning versus something where you've got a lead time of a week. Nirav Shah (11:49) Yeah. Exactly. Ben (11:52) Do you Emily Browning (11:52) So I'm thinking of a question here and it fits really nicely to what you're talking about and the anecdote that you just gave us about the smaller business. So totally back to basics. If I work for a company and I'm wanting to understand, do I have a problem with inventory? Because maybe I do and I just don't know it and maybe I wouldn't know it until another company comes in and shows me. But what can I do first? So my question is, who needs to be in the room and what are some of the basic questions I should be asking them? Ben (12:10) No. Emily Browning (12:19) just to get an idea of what's going on in my business. Ben (12:21) I'm going to be bold, potentially, I hope not disruptive, but I'm going to say that every business has an inventory problem to a degree. And that's really a question, I think, to your point, Emily, as to what degree do I have a problem? What I would suggest for the business is to take one SKU just take one product and do a bit of an audit. Take a look at it and say, if I actually kind of follow that Emily Browning (12:28) Mm-hmm. Ben (12:44) one product from beginning to end in its life cycle. Where are my delays? Where are my problems occurring? What are the decisions that are being made? Oftentimes, businesses or people within businesses will make unconscious decisions that happen and then stick because you don't go back to it. So they then just become the way of doing things. And often that builds in some of the kind of the challenges. So take a or a sample of SKUs look across different locations, and try to identify where system orders, physical stock movements, where they change. So if you have an order going to your co-manufacturer that you need 100 units, you've got sales orders for 200, growing over time, but your standing order is 100 units, you're going to have a problem at some point. I would honestly just start at that basic kind of level. The other thing is, of course, know what inventory you have, which is the inventory count scenario. Depending on how you get, know, source your product, right? If you're dropship 3PL, manufacture and make yourself, that can change how you do that, of course. No one likes inventory counting. It's just not fun. But that obviously gives you a pretty good starting point. And again, do that for one SKU map it through. And then that will give you a pretty good idea of how big a problem you might have. Emily Browning (14:02) Makes a lot of sense, great answer. Nirav Shah (14:03) Yeah, yeah, that's fantastic. Peter Nicholson (14:06) When you do this, Ben, who should be involved? Because you're to have people we're talking about the physical world, right? We've got the warehouse, we've got actual inventory, we could. If so, there's multiple problems, either working capital tied up in inventory, or not enough inventory or not the right inventory, but also the mismatch between the Excel spreadsheet they've currently got, and what's in reality in the warehouse. So a lot of this falls on the people that might not be behind the computer all day, warehouse managers, pickers, packers. So Ben (14:08) I'm sorry. Yeah. Yeah. Peter Nicholson (14:33) When when you're doing this assessment Who I want to just double down on what Emily said is who should be involved and how do you? Make sure this isn't seen as someone coming in and bestowing them with a new tool saying no you're doing it wrong You obviously can't control inventory. Here's a wonderful new tool Use that so how do you avoid that? How do you avoid that pushback? And I think you you said disruptive, you know that being too disruptive for a business Ben (14:47) Yeah. Yeah. And ultimately that kind of fear of change and change management. mean, actually it's actually the biggest block of success we see with any customer or prospect that we talk to. It's not actually the tech that usually ends up being a problem. And I've seen this throughout my career. isn't a Katana statement. It's actually just, it's a change management and change. So to your point, you have to get buy-in and commitment within your company, your organization, however big or small that is. One of the things I would say is probably your first step, and this is something we often help our customers with is. what is your, assessing what your workflow is, how you do things, and how that relates to inventory. And so in that process, smaller companies, we often end up talking to the business owner in part because it's their money. That can matter a lot to people. If it's a slightly larger customer, then we might have ⁓ a shipping manager or an operations manager or a manufacturing manager would be on the call. Nirav Shah (15:38) Yeah. Ben (15:48) Usually we start talking to a business owner or CEO of business, but someone who's running the overall, who is aware they have a problem and want to try and understand it better. What we do, and I think most vendors do, again, not coming specific to us, and this is where I think it's good to talk to vendors, as many as you can to get different ideas, is we will often just ask a whole bunch of questions when we start talking to people to figure out what the situation is. And that usually results in a, in, the company going, you know, a lightbulb moment or, ⁓ I should go, or I don't know that I need to look into it. We would then kind of look at mapping out the workflows, but that is where you need to have someone who knows some of the how. So operations manager or purchasing manager, needs to be kind of at the table at some point to identify how things work today and therefore how you might be able to kind of look at improving. And so ⁓ from a who's involved, invariably the conversation usually begins and ends with the business owner, but somewhere in between the people on the floor will generally get involved to really make sure that how things work today and how they might change in the future is well understood. Because to your point, if someone's moving off of Excel onto some form of tech, real time system, there's going to be some effort of change in there. One of the other things we do see, the customers do sometimes is bring in an agency or an implementation partner or consultant to help them with the exercise. And that can be a couple of thousand dollars, 20,000, but you know, it can be very expensive. It doesn't always have to be. And they can often be really helpful to help that business understand where their pains are and identify potential solutions and whether that involves a new vendor or not. Nirav Shah (17:24) Yeah, Ben, what I've seen in my kind of experience, there's one thing about the tech, I think you explained that perfectly. And there's the other part of it is the change management, right? Where they're doing things on Excel for so long, tribal knowledge. or they don't have enough people, sometimes it's impossible. Like you're trying to square a circle. You can't do that. you can't force sometimes a solution in place. How do you go, how do you get past that? If I'm an owner right now and I know I have this big problem, but I can't get the adoption that I need. How do I go about and try to get the right, you know, mindset in place? Ben (17:59) So there's two things. One is, and this is something where we help people, right? So you kind of identify what the situation is and then what you really want to try and do is put some form of number on the pain and therefore the impact that's going to happen when you solve it. Because I can pretty much guarantee that if I tell a business, if we look at work with a business owner and tell them we can save you 30 hours a week from your person who's currently using Excel and you're going to find $40,000 worth of inventory you didn't know you had. $300 a month or $1,000 a month, they're going to want to say great, give me the order form, right? What you have to do is obviously get to that stage, because once you have that, then it becomes a much easier conversation within your own company to say, yeah, look, we're going to have to go through some training and some change and things. But the reason why, and this is the benefit we're going to get from it, because most people in a work environment want to be able to do their job more easily and more better. How you get to that, to your point, is the challenge. Nirav Shah (18:33) Mm-hmm. Ben (18:53) There is something that's called, we used to talk about this one a lot when talking about how do you move off a big legacy ERP like an SAP or a Netsuite. It's called the strangulation technique. Very unforgiving in its term, But the idea is that you cut pieces off as you go. And so what sometimes we'll do with the customers, look, it doesn't have to be a big bang where you just go one day from one thing to another. Let's start with a piece of it. So let's just say you're a manufacturer that manufactures all your own stuff. Maybe the first thing we do is get you set up using our purchase order capability. So when stuff comes into the factory, you're starting with the right inventory count from day one. Maybe step two is we then start to connect your shop floor using the shop floor app to update inventory as you go. Maybe step two is we now might connect up QuickBooks so that your cogs is going through to QuickBooks. And then step three, we bring your sales channels in so you complete the full circle. That's one approach, right? And it kind of depends to your point on the nervousness of change. There are some people who just like, you know what? Let's go. We'll take a Friday afternoon when it's the least busy and we want to do a cold cut over. You know, that's fine too. That's usually where people have a bit more anxiety and a bit more fear. So, you know, we try and kind of work with customers to figure out what's the right approach because the thing I've realized and we've truly realized is In my sales career, was kind of in the early days used to joke every customer thinks they're unique. Every customer thinks they're a snowflake. Turns out kind of kind of. Peter Nicholson (20:13) We still bang on saying that. Nirav Shah (20:15) I haven't heard that one before, but I don't know what you're talking about, to be honest. Ben (20:19) Well, it of turns out that in the industry management in the ERP space, it's kind of true. And so one of the things we find, you know, we don't want to publicize this. know we don't, but there are best practices and there are workflows that you should have as a best practice, but there are sometimes unique things that you can't change because of the type of business you are. And so one of things we work on it and we're working on more and more in our product is how we become Peter Nicholson (20:25) I did that. Ben (20:45) more customizable to each person's needs. And with some of the new tech that's out there, that's something we're kind of looking at and now really starting to push to really help, help people put their own brain into the best practice and their own way of doing things into the best practice. And so that's something we're actually now a big focus for us in product is, is really allowing that to happen more and more, because that also helps with that fear of change because If someone's going through that, have to change my tech and the way I do things at the same time as that adds to that kind of complexity feeling. And so where we can kind of help minimize that is something we're looking at. Emily Browning (21:22) So the biggest challenge that I find in this kind of project is that ongoing adoption. I think probably with the implementation of Katana or for any other kind of inventory improvement, I think we're replacing a whole bunch of Excel sheets. Maybe it's sitting on people's desktops. You know, they have some copy that they've started updating and now everybody's looking at different ones. And the struggle that I have is prying them away from those Excel sheets, even when we've implemented something new and wonderful. So I'd love to know a little bit about your experience there as well as your advice. Ben (21:54) Yeah, it's a very good point. The fear of change doesn't stop once you're live right? It's the, know what I'm used to. And particularly the earlier days of adoption when it's still a learning exercise, it's all kind of all too easy to go back to what you know. I would say there's no actual kind of magic silver bullet to that one because at the end of the day, all of this is a people exercise and there are behaviors involved that people have different appetites for change and risk. in their jobs in their day to day. one of the things we know this well actually with customers. So one of the things we do is we actually we track usage with our customers. So when we start to see usage drop off, we kind of know that there's a probably a change management issue going on in the background. all of our customers, we have a customer success manager assigned to them, right? What we will then do is we actually usually reach out to the stakeholders and the customers and say, hey, we noticed the usage has dropped for whatever reason. Let's have a conversation, see how we can help you. Sometimes it's training. You know what the most common one is? It's actually a bit less on that one. It's actually the person that was involved at the beginning is left or left or fired or something, no longer at the company. New person comes in and it's easier for them to adopt the old way because it's, oh, I know Excel, I'll go right versus the new. Emily Browning (23:01) Mm-hmm. Nirav Shah (23:02) Yeah. Yeah. Emily Browning (23:08) Yep. Ben (23:09) And then the stakeholder or the owner forgets that the new person needs to be trained and enabled, just like the original people were. So actually that's the one we see more often, or at least becomes more common, because in theory, if you do a good job at the beginning of getting people set up, trained and educated, that should become sticky with usage and reinforcement. So I would call it the kind of classic change management. What we have actually seen is the later change that occurs that you then don't Nirav Shah (23:14) Yeah. Ben (23:35) kind of people change that don't, you people moving roles and things is actually one of the actually the bigger triggers that we've seen versus the kind of we'll call it the natural subsiding back in to the old way. Nirav Shah (23:46) Mm-hmm. Yeah, think all really good points. When I walk into a customer warehouse, for example, then one of the first questions I ask is, do you know your inventory turnover? And most customers, I'll be honest, when I walk through a warehouse, I think it takes them about 5 to 10 minutes to think, oh, because they don't know the number. There's not a report that they're running all the time. So what that tells me planning, right, is an issue. Ben (23:57) Mm. Yeah. Nirav Shah (24:10) And the other part of that, what that tells me is if they don't know their inventory turnover, how are they managing the returns? Because returns could sometimes be a black hole when it comes to inventory management. So kinda just speak about that. I know there's not really a full question there, but just your experience around ⁓ those type of questions and processes that you see in warehouses nowadays that are missing the mark in efficiency. Ben (24:23) Mm-hmm. Yeah. Yeah, you know, it's a good, it's a really good point. One of our data points to actually to reinforce what you just said is when people adopt Katana, their turnover rate improves by 1.2x. So, right, I mean, there's obviously a problem. Because clearly you didn't know enough before and you were being inefficient in your turnover because now you've improved it because you know what you have and you're better able to match the demand. And so there are many, many, many sources for inventory turnover problem, right? Poor planning, gosh, I mean, there's first and last, there's all kinds of different things. Returns is the big one. And I mean, Nirav Shah (25:11) Yeah. yeah. Ben (25:13) I think transparently returns just a pain in the ass. Right. mean, it is, it doesn't matter what, like there's a bunch of companies out there that solve the problem. That's great. That can be expensive if you're a low margin company. It's, it's definitely an area. We obviously have returns capability in the platform to help with this. What I have seen is that it becomes less about the tech. Nirav Shah (25:16) Yes, yes it is. Ben (25:39) and in a way it becomes a bit more about your policy and process for how you bring the return back in and count it back into the system because is that a product you are going to resell so it goes into live inventory or is that going into your, know, wastage depreciation sale? What are you going to do with it? And so actually getting a really good handle on how you're going to treat things and what rules and if anyone buys on Amazon, you know this, right? If it's like a $10 product, not taking it back, they'll give you the money back, but then they're just putting it into a big box, they're reselling it five cents on the dollar to a reseller, right? Because they know that they're going to lose money on it, so why bother? Whether or not you think that's a good practice or ethical, sustainable, etc. Leave that to everyone's judgment, but that's the approach they've taken. And so I'm not suggesting everyone has to that approach, but give it that thought, but here's the key thing. If you don't know what you have, where it is, you can't do that. Nirav Shah (26:30) Can't do that. Yeah. Ben (26:30) So fundamentally, we still get back to that same core problem. And why I said the core thing of entry management is to solve what do I have? Where is it in real time? If you don't know that and where you need things, you're stuck on all of it in effect. Nirav Shah (26:45) what are you seeing right now in the market that customers are adopting? are they adopting lean principles when it comes to just in time? Are they more kind of min-max? Are they reorder points? What do you see is the trend right now when it comes to inventory control planning wisely for, and I know it's probably different industry by industry, but like, you know, for example, in manufacturing, many, many, probably decades ago, standard costing was like ideal. Everyone did standard costing. Now everyone's moved away from that, right? You're doing average or FIFO, but you know, from a planning perspective, what are you seeing right now? Just curious. Ben (27:21) So you're right, it is all over the place and it's very imagery dependent. The actual nuance to it is it's actually changing a lot because of macroeconomic events. So in the run up to November election US, people knew that tariffs were likely to come in. And so what we saw is certain industries pre-buying. And so the is it first in, last out kind of average cost and all that in a way is obviously relevant from an accounting treatment standpoint, but from an operational standpoint, the lumber industry pre-bought one year's worth of inventory within a two week period post-election. And US. Canada softwood lumber is big thing with tariffs, It's one of the products that's challenging. So we've just seen it as well with the Middle East straight from the news. I actually funnily enough I've just posted a blog on it this morning because what we saw is that certain industries as soon as the war started increased their inventory purchase by 50 % overnight. So textile and apparel did because, in my view, they used to seasonality. purchases, right, if you think of textiles and apparel, they're to the seasonality buying for clothes. And so they know this, and they know that they have to plan ahead, and they know that disruptions will impact what they should do and are able to do, particularly if they are buying from most apparel, Vietnam, Cambodia, China. And so we saw a huge shift in those industries. And so my question posted in the blog was, Does everyone else know this? Have other people actually realized that they need to think, you know, because, you know, for example, lots of people might not realize that the one of the biggest sort, there's two main sources for fertilizer, Potash in Canada, Urea in the Middle East. Food prices are going to go up. And so if you're someone that works in food and beverage as an industry and you are reliant on raw material product, Nirav Shah (29:08) Yeah. Yeah. Ben (29:18) should you be ordering in advance? And then to your point Nirav how do you treat that as a moving average cost was actually in tariff, what we see some of those people use, because the problem with the tariffs is that it would change. One week it would be on, one week it would be off. It would change mid shipment. And so it became, if you did FIFO or LIFO, the problem was you'd lose money on one of them, guaranteed. If your shipment goes up 50% overnight and you're doing "last in" and you're done, your margins disappear. Nirav Shah (29:26) Yeah. Yeah. ⁓ yeah. Yeah. Yeah, right. Ben (29:46) And so what we found was most businesses used kind of a moving average because it was the only way they could then maintain some reasonable expectation of margin. What's going to happen now with straight off the news, I think very industry dependent, very much where you get your product from. But I would argue that people should not underestimate the ability for that situation to impact through them from two standard deviations kind of thing. Nirav Shah (30:00) Yeah. the supply chain. Yeah, yeah, that's amazing. think that that nugget right there was huge. Thanks, Ben Peter Nicholson (30:14) It sounds like we've full circle and we should actually have lots of inventory of everything just in case Trump does something Ben (30:20) You know what, Peter, actually, it's funny, a of a, it's actually a good joke. It's really a good joke because we've actually been, I've been thinking, we've been thinking about this because yes, in a way, some companies do take that approach because they have to because of their supply chain. But one of things that then becomes really important is your demand planning and forecasting and your replenishment practices. Nirav Shah (30:43) Mm-hmm. Ben (30:44) and understanding what are the variables that then impact it. And so kind of going back to that real time thing, if you're doing that in Excel and you're trying to forecast all of your channel inputs and your sales orders, as well as your supply chain challenges, that's going to be a tough go, right? That's going to be really hard. If in a tariff situation, we were advising people in Katana, all your suppliers are in there, all the prices. Nirav Shah (31:01) Mm-hmm. Ben (31:09) So you can actually go in and look to see which is the right suppliers you maybe should shift to. Instead of having one supplier, maybe you should have three that you use instead. And then you can work between them depending on the situation, maybe one's Canada, one's China, one's Australia. So now you can kind of switch between depending on. So it's about being more active in your decisions and being more real time so that you can avoid these types of situations and manage to the most just in time like efficient way of doing things. lead times on product, course, is going to influence that. We're even now, we're actually in some, we're doing some testing with some customers on a AI native replenishment engine that will actually be bringing external data and situations like that into the engine to give you a forecast based on all of those things I just talked about. It's not live yet, we're working on it, but it's actually one of the things which we're doing now to solve that very problem because Nirav Shah (31:59) That's cool. Ben (32:03) and unstable world situation supply chain hasn't gone away, doesn't look like it's gonna change. So giving that to people I think is gonna be a big win. I, sorry, I on a bit of a tangent, but you're coming. Peter Nicholson (32:12) Yep. That's why I'm just going to say like we got 35 minutes into this and it's only now has someone said So well done guys. I think that's the new record. Ben (32:20) Yeah, haha. Nirav Shah (32:20) Yes. Peter Nicholson (32:24) normally me within 30 seconds. So pretty good. Ben (32:23) I thought that... Yeah. Nirav Shah (32:26) you Yeah, I like that Ben that you guys are coming out with this functionality to address external factors when it comes to planning. I think that's huge. And that's the missing link right now, I feel like, in everything that's craziness that's going on around us in the world to just get some sort of handle around which way is up when it comes to inventory control planning. So super cool, super cool. I'm going let you do the part ⁓ and Emily to talk about AI or your favorite subjects here. Emily Browning (32:49) Mm-hmm Ben (32:54) Yeah, we've got to talk about it, right? Peter Nicholson (32:56) For me, AI is always one of these things that's just at the horizon. Like we're almost there. We're almost there. Even if we just isolated, say, the LLM part of the AI stack, was first of all, Chatgpt came out And then everyone was talking about like Microsoft OpenAI and they were doing RAG. and RAG was the next greatest thing. Now we're all onto MCP and MCP is going to be the greatest thing. Like it's always moving. Like we've been shooting for almost 40 minutes. There's probably a bunch of stuff we've already missed in the AI space, but it always feels like one is moving at such a speed anyway. It's like, when do I get on the train? Like the trains left the station, but if I'm running and I can at least keep up to train, like what point do I get on before? Ben (33:31) Yeah. Peter Nicholson (33:41) I am actually going to be left behind. So in your world, are we there yet? Or is it going to, is it still another year out until we can actually leverage AI for inventory? Ben (33:52) Hmm. gosh a bunch in there. So first off to your point, the term AI is very generic and people use it to cover a whole bunch of different things, right? We have had various versions of AI for actually quite a long time. ⁓ Right? I mean, you know, we've had machine learning and, you know, various other things for a while. Peter Nicholson (34:06) decades. Ben (34:12) still exists. I think one of things that's happened in the industry is people are starting to learn the use case for the different parts of the AI tools and capabilities and where they can be used and where they can be valuable. So we are an AI first company and we've been going through this journey. So our engineering team use it to develop product. Our go-to-market team use it for various go-to-market enhancements and improvements. And we're building into the product as well as I mentioned earlier. And so for me, kind of as with any tool, it's about making sure that you're understanding your use case and what the tool, right bit of it, right version of it is for your use case. Now, if you're a small, medium-sized business, you are not going to go out and spend a year testing all the various versions of AI tools and tricks and things to see how it can help you. We are because that's the in. We've been doing that because we're in the tech space, right? It's kind of part of what we do. So, and it's, think for SMBs, broad term, but for businesses, it's quite a scary thing to a point where they will use it. So you can use chat, GPT and all that stuff, And you can use those things to you know, little apps for your day-to-day to help you with various things. Maybe it's a scheduler for your delivery trucks Peter Nicholson (35:04) Mm-hmm. Ben (35:25) You can build that on Lovable pretty quickly, pretty easily. And that's all good. Where people will run into challenges is when they get into things like the systems of record. ERP, a pretty good example of that. We're one of the core systems of record, of truth. And that's where as a business owner, that's probably an area you don't want to go and play in. You're not going software business. You're not going to go build that. It's too hard. It costs too much. And so that's where you lean on your vendors who can provide you with those tools on your behalf. So you don't need to know and understand them. And then the other thing is to know kind of the general market. Each one of these things we could spend an hour talking about, suspect, but I'm trying to give a summary. The other thing is the market. So your earlier point, Peter. It's coming, it's coming, it's coming. End of the month, AI shopping. So agentic commerce. is turned on by default for anyone with Shopify. So if you are someone who is using Shopify, then at the end of the month, it will get turned on for you. actually, everyone would have gotten a notification. It was published not too long ago. So I would actually argue that it's here and it's happening to you whether you want it to or not. You can obviously, think, go in and turn it off in your settings in Shopify. ChatGPT kind of went big on it and have walked away a little bit because they realized that it's difficult. e-commerce transactions and inventory management is hard. So they kind of stepped back a bit and they're going to kind of push it down into the layers underneath. No big surprise, that's where Shopify, others will take on. But what it means, and I think what businesses have to kind of understand is that the way the internet works and the things they have relied on like SEO for a long time will start to change. Because agents crawling the web Nirav Shah (37:03) Mm-hmm. Ben (37:06) And agents, you know, someone going into ChatGPT and say, Hey, recommend these rain boots for me. The agent does not care about graphics. does not care about romance copy. doesn't care about Google sponsorship ads. The agent will go off and make its own decisions and those are binary. So it will look at characteristics. So what becomes more and more important for businesses in the AI world that is here now is your data set. So. If you are serving your product, is the data on that product that you're exposing to the web accurate up to date? Because if not, the agent either will not find it and therefore you will not be visible to shoppers or it will ignore it. So if you are putting an inventory count of zero on something, it will not come up on the agent and the agent will learn that you are doing that and it will therefore not find you in the future because they are like water. They will take the easiest path, path of least resistance. And so as a retailer, it's really important that your data is accurate and that you are managing it well. And that is a bit of a shift, I think, for companies where it used to be more about your web copy and how your brand is showing in your website. Still important things, but you need to kind of consider some of the behind the scenes stuff more. Peter Nicholson (38:16) Yep. Ben (38:23) as AI, agentic commerce, et cetera, become more more prevalent. And it is growing, right? The growth rates on AI usage in the D2C space is huge. It's not big volume yet, but the growth is massive. complicated question with a bit of a long answer, but hopefully that gave some help. And as I say, each one of those we could probably dive into for a long time. Emily Browning (38:34) So. Peter Nicholson (38:36) No, no, that's great. Nirav Shah (38:40) and Peter Nicholson (38:41) Yeah. Emily Browning (38:42) I'd like to follow up on it because there's lots of, there's lots of exciting stuff in the AI space. We're being told to use AI more and more. We're always being asked about it. We're in a volatile world. As you mentioned earlier, I've also got a bunch of money sitting on my shelves in the warehouse because I don't physically see it. don't necessarily understand what's going on. I've got a bunch of data in different sources and I want, and I needed all of this dealt with yesterday. So as somebody working in a business, how do I begin to Ben (38:53) Okay. Emily Browning (39:10) work through all of these things. Where do I start? Ben (39:13) Yeah, where do you start? you know, the one thing that people forget to do with AI tools like ChatGPT and Claude is they forget to ask the AI tool. So actually one of the easy steps to do exactly what you just said, sit down, open ChatGPT and explain. This is what I have, and this is my problem. This is the objective I'm trying to reach. Can you give me some ideas? You can also tell it how to be used. So you can say, Hey, Emily Browning (39:25) Mm-hmm. Ben (39:39) Tell me how I should use you in this situation. And actually by going through that exercise, you start to A-learn, of course, the AI of tools, the things, the prompts that work, because it's a conversational interface, right? It's actually quite different than how we've been trained to use technology up until now. It's buttons, it's sliders, it's things that are predetermined for you. Now you have all this creativity in how you interact with the technology and that makes it hard. where do I start? It's your question. And so... You you can, you know, if you are a business using Excel, you can grab the Excel file and just drag it into ChatGPT and ask it for an assessment of where the problems are. Ask it, ask the tool itself. now with anything, you know, pinch of salt. you need to apply your own human judgment. Right? We all hear the stories of AI hallucinating and it does on occasion. one of the other kind of. guides I would give people is try not to ask predetermined questions. If you ask it, is X too expensive? You're predetermining the answer because you're going to be, the AI will want to help you and it will say yes, is. Right. So you just got to be a bit careful with kind of some of your wording. That's why you experiment. So So actually the hardest thing for someone to do when they haven't used AI before is to start using it, but obviously the easiest and best thing is just to sit down and just start typing stuff and see what happens. Emily Browning (40:58) Great advice. The future is here. Peter Nicholson (40:59) is the issue with AI. The Ben (41:01) It is, Peter Nicholson (41:02) future is here. The future is bright. The future is orange. If you get that reference, well done. You're old enough. Ben (41:06) I do actually get that reference because I grew up my sales career was in the early cell phone days in the UK, so I remember that. Nirav Shah (41:17) Hahaha Peter Nicholson (41:18) The other issue with AI as well is I'd always tell the in the prompt, the initial prompt is to say challenge me and push back because one of the things the issues with LLMs right now is as soon as you challenge the LLM, it falls apart. It goes, no, you're right. I'm wrong. I'm so sorry. You can even do this if you start the initial conversation in ChatGPT and then get Claude to assess it. Ben (41:39) Mm-hmm. Peter Nicholson (41:39) and then tell Chachi to see what Claude just said. It'll go, no, yes, sorry, I was completely wrong, you're right. And it will just do that regardless. It just falls over immediately as soon as the user challenges it. But if you put into your prompt, whether that's in the user prompt or the system prompt, if it's an agent that you're using, like no, push back, because you can lead it down the garden path. And of course, you know, and it's interacting with humans and humans are the most bias of species there is. Ben (41:59) Yeah, you can and that's what it's kind of... Nirav Shah (41:59) Mm-hmm. Ben (42:06) Oh yeah. Yeah. Absolutely. And without realizing it, right. And that's kind of the example I'm trying to give is just by the question you ask it, the way you ask it, you're already biased in the answer. And that's why I kind of said the use case, right? So one of the things that it's, you know, kind of quite good at is taking a massive data set and then kind of summarizing or, you know, finding things that you might not otherwise find as a human or be able to assess. And we found it to be pretty useful for that. I think to your point, That's why I said, when you start to get into the kind of using it to run your business, make decisions and automation, that's where it's probably good to rely on a vendor because the cost of you taking the time to build something that works well enough with AI is not going to be worth it for you in terms of what you get back from it and the opportunity costs for you spending your time doing it. When you can buy a platform like us that does a whole bunch of things that uses AI to make it more efficient and for effective for whatever, a hundred dollars a month. And so I think that's where you also need to kind of have an honest look at what you use it for and where your own personal trade-offs are with your own time, because ultimately that's the, I think, the resource that you're trying to protect the most. Peter Nicholson (43:10) Yep. And I'm to put a disclaimer out there. Me as a data guy is before you give ChatGPT or Claude that Excel file, check with your company you can do that. I don't want to get Ben (43:21) Yes, Nirav Shah (43:22) you Peter Nicholson (43:23) don't want the podcast to get blamed. Ben (43:24) no, thank Thanks for the save, Peter So yes, we have our instance where we have all the protections in place. So yes, before you do the public. That's a very good Nirav Shah (43:32) Yeah. Peter Nicholson (43:34) Here's Alright, very good. We have gone through a lot, but one final question for you, Ben, is if someone's listening to this on their commute or on their way to their desk Monday morning, what's the first thing they should do? Say something's resonated with them like, yeah, he's right, our inventory is shit. What should they do? Where do they start? How do they start this conversation in their business? Ben (43:56) Uh, that's a really good question. Um, I'll say two things. First off, I'm going to, I'm going to channel my COO who is brilliant at this. And the first thing she would tell our teams is just begin. Start. Don't sit around all day and week planning and assessing and analyzing everything. Just, just go to stop. Um, educate yourself for sure. Podcasts like this are perfect, right? You get the benefit of. you know, you guys and your experience and hopefully your guests to give you some clues and some, hopefully some insights and things that might resonate that you can go, yeah, let me go dig into in my business. Time is the resource to allocate yourself a certain amount of time every day to explore. And you know, we're all good at, very good at finding more important things or seemingly important things, more emergencies that will stop us from doing something. But as a business owner, would argue that the most, one of the most important things you can do is look to the future and how you're going to adapt to, I think what is a changing world, whether that's macro or tech or whatever it is. our customers on average across our customer base grew at 140 % last year, their revenue. I'm going to argue that's not a coincidence. Now, of course, growing businesses come to Katana. And they come to us because they come out of Excel and they need something different or better. If you're a growing business, you are going to get into a problem at some point. The question is whether you're ahead of that or not, whether it's using this or not. for you to assess, but you need to put some time into that. So that's why I said kind of Monday morning. Start - when you're walking the dog, put on a podcast like this one. Listen, get some clues. And then just start to pick at the threads. talked, you know, we had the great question earlier. How do I, what do I pick one product, pick one kind of area and take a look and see actually how far off am I with what I thought was happening? Because invariably what you think is happening, there's probably a margin of error. Nirav Shah (45:50) Yeah, would, great, great points. I also probably add, you know, start the conversation. Don't don't don't just imagine it's going to fix itself. Right? Start the conversation, take it seriously. Because, you know, once you start doing that, then ideas and, you know, solutions and everything like that starts coming out. So yeah, I think I think super, super important points there. Ben (45:55) Yeah. Right. Yeah. Peter Nicholson (46:11) think you've got to start that conversation because it's so funny. Like we were talking earlier about the chaos of Excel spreadsheets and wrangling them together and stuff. it's something about Excel is that everyone, well, I'm going to make a broad statement apart from finance people, everyone hates Excel until you try and take it away them. then suddenly Nirav Shah (46:30) Hahaha. Peter Nicholson (46:31) want it. It's so weird. Like they moan about Excel. I've got so many spreadsheets open and you go, okay, let's just get rid of them. Hang on. Ben (46:33) You know what? Nirav Shah (46:39) Yeah. Emily Browning (46:39) Thank Ben (46:39) You know, I said, was a really good point. It actually reminds me of a conversation I had have a VP of AI data and, Um, you know what a business owner should do is if you have, you know, a member of staff that's using Excel to run the business, sit down with them for a couple of hours and see what they have to do in Excel to make things work. And I pretty much guarantee you that you'll leave those two hours with one of these and you go, my God, I did not realize what my people have to do to make stuff happen. not because of the person, but because of the situation. So, so actually the kind of walk a mile in my shoes, actually get involved. Like you said, start the conversation, actually sit down with the person to learn how they're having to do things today. And I'm pretty sure you're going to kind of walk away from that going, did not realize this, did not realize this, did not realize this. Nirav Shah (47:02) Hahaha. Emily Browning (47:02) Yeah Peter Nicholson (47:25) Mm-hmm. Ben (47:25) And that kind of will then lead you to the, well, what can we now do to try and solve this? Emily Browning (47:31) I think that fits perfectly with your advice of, you know, take a SKU and do an audit of it. Because one thing that I find is really beneficial is be that SKU. Walk around as best you can and follow its journey and go to those people's desks. And that's when you're going to see, ⁓ yeah, well, then I print this out and then I scan it and email it to Claire. And then she does this and, you know, all of these things that you never knew that seem kind of crazy, they don't mention it when you ask. It's only when you're standing there that you realize how that's going. Ben (47:41) Yeah, yeah. Great question. Yeah. You know what, it's such a great point. I remember I worked in grocery for a while, and one of the things we often was talking about was pick and pack. And the biggest drain on margin with pick and pack is your efficiency of the person walking the store. And so actually one of the things we always did was we actually mapped it out because one of the things that we, you know, there was one story I went to. and they had their of their store room that the person had to walk to to get to the fridges to put stuff. And it was a single aisle corridor, which meant that only one person could walk down it at once, which meant the other person had to wait at the other end for 30 seconds every time. Doesn't sound like a lot, but you do that with five people across a whole day, add that up over weeks and months and all of a sudden, your 2 % margin in a grocery store has now just become 1 % real fast. So to your point, like walk the SKU, walk the, you know, where there's some... Nirav Shah (48:46) Yeah. yeah. Ben (48:51) Some manufacturers, some people, they still print stuff off. So the person will be at the back of the shop. They need something. They'll type it in. And they'll have to print off like a work order from another end of the shop. So then they'll walk all the way to the other end of the shop. They'll get stopped three times on the way to talk to their friends about the weekend. They'll get that bit of paper. And then they'll walk to the other end of the shop and get, you know, oh, I need a coffee. And then they'll go have a coffee. And then they'll drop the bit of paper off. And so now you just lost 15 minutes on your production flight. So to your point, like, Nirav Shah (48:53) Yeah. Yeah Yeah. Ben (49:16) Walking the experience that your own team have and obviously your customers is part of that different version of it. I think that's great advice. think that's so important to do. Peter Nicholson (49:26) Very good, I think we should leave it there. ⁓ Ben, genuinely appreciate you taking the time. Loads of great insights on this one. This is a fantastic if you're listening and you'd like to check Katana out or connect with Ben, Ben, where can people find you? Ben (49:39) Pretty easy. can Google me or just find me on LinkedIn. Just go Ben CEO of Katana or Ben Hussey Katana. Easy enough to find. So you can do it that way. But you can also reach out to us on our website as well. Just go to katanamrp.com and anyone on my team will be real happy to help. Peter Nicholson (49:56) Very good. Thank you. We have been the ABCs of ERP & Beyond a podcast all around enterprise resource planning and how it can help modern day businesses. We shoot this and release an episode every two weeks. It's completely free. We just love talking about ERP. So it does really need people who have enjoyed this. Wherever you're listening, like it. Subscribe, leave us a review, tell your friends, tell your family. I'm sure they'd love to hear about ERP. Spread the message. Nirav Shah (50:21) Hahaha. Peter Nicholson (50:22) We're on Apple Podcasts, Spotify, all of the major podcast platforms, and we also put this on YouTube as well. So search for the ABCs of VRP & beyond. Nirav, Emily, thank you once again. Ben, thank you one last time, and I'll see you guys on the next episode. Nirav Shah (50:38) All right, thank you. Ben (50:39) Thank you. Emily Browning (50:39) Thank you all and thank you, Ben. Nirav Shah (50:40) Thank you, Ben.