Days of Inventory on Hand: A Successful Inventory Management Strategy

Last Updated on November 12, 2021 by Owen McGab Enaohwo

Managing your inventory effectively is a prerequisite for a successful business operation.

Servicing about 130,000 subscribers and processing about 7,000 orders daily, Hunt a Killer adopted the days of inventory on hand (DOH) metric to keep its operations in order.

On this episode of the Process Breakdown Podcast, the host, Dr. Jeremy Weisz, engages his guest Lokesh Yadagiri of Hunt A Killer. Yadagiri talks about the impact of inventory management on business operations. 

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Show Notes

[0:26] Intro

  • Dr. Jeremy Weisz mentions some of the past guests on the show, including David Allen of Getting Things Done and Michael Gerber of the E-Myth.
  • Dr. Jeremy Weisz introduces SweetProcess, a workflow tool that helps organizations streamline their operations and empower their employees for efficiency.
  • SweetProcess offers a 14-day free trial with no credit card required.

[2:13] Dr. Jeremy Weisz introduces the guest Lokesh Yadagiri. 

[2:51] Lokesh Yadagiri talks about what they do at Hunt A Killer.

  • Hunt A Killer started as an annual immersive live mystery event in Maryland.
  • They recognized the popularity of the growing subscription box industry and went into the business. 

[4:05] Dr. Jeremy Weisz directs the listener to check out Hunt A Killer.

  • You can visit their website on
  • You can also find Hunt A Killer on Facebook, Instagram, and Twitter.

[4:30] Lokesh Yadagiri talks about how Hunt A Killer works.

  • Hunt A Killer is like a Netflix TV show season.
  • Subscribers get a mystery box every month, and each box is a season.
  • The box contains documentation from a private investigator that will help the subscriber solve a mystery.

[5:27] How Hunt A Killer started.

  • The business kicked off in October 2017 with 47 members.
  • One of their co-founders, Derrick Smith, shipped the first set of boxes out of his basement.

[6:58] Lokesh Yadagiri talks about how to manage your inventory.

  • Inventory management can either make or break a company.
  • Balancing inventory with optimum sales is key.

[8:29] How does Hunt A Killer ship its orders?

  • In the beginning, they were shipping orders once a month.
  • Now, orders placed by 2:00 PM EST are shipped the same day.
  • They ship between 6,000 to 7,000 boxes a day.

[9:33] Lokesh Yadagiri talks about the tools that they use to manage their inventory.

  • They experienced high sales in the past year due to COVID-19 and needed to streamline their processes.
  • They implemented a software called Entrepreneurs Operating System (EOS) to define their operation metrics.

[11:04] How does Hunt A Killer process its orders for delivery?

  • An order placed shows up on its shipping software.
  • The order is kitted and shipped out on the same day.

[12:58] Lokesh Yadagiri talks about managing errors in the supply chain.

  • When such mistakes happen, they learn from them.
  • They have trigger points for both the fulfillment and supply chain.
  • They leverage sales forecasts from the marketing team.

[14:15] How they use the waterfall analysis to predict subscription renewals.

[16:00] Lokesh Yadagiri talks about collaborating with other brands to increase sales.

  • They are starting a sales and operations planning team.
  • They have a monthly meeting where they discuss their marketing plans for the next six months.
  • Since their forecast can’t be 100% accurate, they have a plus or minus 10%.

[18:25] Lokesh Yadagiri talks about the visibility metrics to stakeholders.

  • They identify the seasons when they have high and low inventory and make adequate preparations.
  • They track their product performance to identify the “why” behind the performance.

[20:05] How do their subscribers make their first purchase?

  • Everyone starts at a particular season and then moves ahead to a different season.
  • They have plans to allow subscribers to start at any season of their choice soon.

[22:25] Lokesh Yadagiri talks about how they get previous seasons’ stock off the shelf to make room for newer seasons.

  • They stock up previous seasons and offer the entire season as a box set at a good discount.

[23:37] Managing inventory based on the days of inventory on hand metric.

  • It helps them to manage the fluctuating marketing metrics.
  • Managing inventory is crucial for running a successful operation.

[24:30] Lokesh Yadagiri talks about their average delivery timeline.

  • They have a baseline metric for products sourced locally and internationally.
  • It depends on their marketing metrics and the ocean freight time fluctuations.

[28:06] How do you reduce the return rate?

  • They had a double-digit return rate in the beginning but now it has reduced to a single digit.
  • The entire customer journey impacts the return rate.
  • They conduct an NPS customer survey every three months to get feedback on how to improve their services.

[29:44] Lokesh Yadagiri talks about the impact of customer feedback on improving their services.

  • They changed the storyline of their games based on customer feedback.
  • They were able to reduce their response rate.
  • They enhanced the user experience on their website.

32:01] Dr. Jeremy Weisz directs the listener to check out,, and more episodes of the Process Breakdown Podcast.

[32:19] Outro

About Lokesh Yadagiri 

Lokesh Yadagiri is the operations manager at Hunt A Killer, an interactive entertainment gaming company that designs and builds episodic and complete mystery game boxes to subscribers.

With a background in mechanical and industrial engineering, Yadagiri joined Hunt A Killer over four years ago with the responsibility of streamlining its operations.

Committed to solving complex inventory processes at Hunt A Killer, Yadagiri is the primary point of contact and liaison with the marketing fulfillment and supply chain departments in the organization.

Transcript of the interview

Speaker 1: Welcome to the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your employees all the information they need to be successful at their jobs. Now, let’s get started with the show.

Dr. Jeremy Weisz: Dr. Jeremy Weisz here, host of the Process Breakdown podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks, and giving your staff everything they need to be successful at their job. Lokesh, I always like to mention past guests, past episodes. We had David Allen of Getting Things Done, Michael Gerber of the E-Myth, and many more. On this, we have director of operations, we have chief operating officer, people who geek out on systems and running the company. So, check out all past episodes out there of the Process Breakdown. And before I introduce today’s guest, which is Lokesh Yadagiri, of Hunt A Killer. Just wait to hear what Hunt A Killer does. Okay. When I first heard that, I was like, I don’t know who is going to show up for this interview from a company called Hunt A Killer, but he will tell us about it in a second.

Dr. Jeremy Weisz: This episode is brought to you by SweetProcess, so if you’ve had team members ask you the same questions over and over again, and it may be the 10th time you spent explaining it, well, guess what? There’s a better way. There’s a solution. SweetProcess is actually a software that makes it drop-dead easy to train and onboard new staff and save time with existing staff. And when I was talking to one of the owners, Owen, not only do universities, banks, hospitals, and software companies use them, but first responder government agencies actually use them in life or death situations to run their operations. So I’m like, if it’s good enough for them, Lokesh, it’s good enough for me. You can use SweetProcess to document all the repetitive tasks that eat up your precious time, so you can focus on growing your team, empowering them to do their best work.

Dr. Jeremy Weisz: There is a free trial, free 14 day trial, no credit cards required. You can go to That’s sweet like candy, S-W-E-E-T, I’m excited to introduce today’s guest, Lokesh Yadagiri. He’s the operations manager at Hunt a Killer. His background is actually in mechanical and industrial engineering. He serves as the primary point of contact and liaison with their marketing fulfillment and supply chain departments. And we’re going to talk about and geek out on how to manage your inventory based on the days of inventory on hand metric. Which for any physical goods company is critical. Okay? So Lokesh, thanks for joining me and tell me about Hunt A Killer and what you do.

Lokesh Yadagiri: Thanks for having me, Jeremy, and that was quite an introduction. So yeah, I’ve been here at Hunt A Killer for about a little over four years. So Hunt A Killer was founded by our co-founders Ryan Hogan and Derrick Smith. So this started off as an annual immersive live mystery event here in Maryland, where we had participants try to solve a weekend long murder mystery. So we had to cap this event at like about 600 to 700 people, and we couldn’t scale because-

Dr. Jeremy Weisz: That’s a lot though.

Lokesh Yadagiri: Yeah, that’s a lot. You didn’t want to have more than a thousand people just investigating a crime scene out in the open. So, this was back in 2016. Also during that time, our co-founders saw the popularity of the growing subscription box industry. And then, that’s when we decided to pivot the business model and decided why don’t we deliver these murder mystery kits in the form of a subscription box. Make it mostly clues, evidence, physical objects and deliver to membership. That’s how Hunt A Killer subscription was born.

Dr. Jeremy Weisz: Amazing. And anyone could check it out. What’s the best website?

Lokesh Yadagiri: Yep. You can just log on, subscribe. We’re also active on social media, Instagram, Facebook, Twitter, just anywhere.

Dr. Jeremy Weisz: And just to give people a sense of the business, the boxes you’ve shipped, and I’m going to have you show a little bit of the box too.

Lokesh Yadagiri: Perfect. Yes. So typically Hunt A Killer is basically like, we compare this to a Netflix TV show, it’s like a season, but every month you get a physical box. So every box is a season. So in this, you would basically get documentation such as a letter, you would have a couple of newspaper articles, evidence such as a key or a cuff link, some swag like lapel pins, et cetera, in the box. So basically a private investigator has been trying to reach you, and he or she sends the murder mystery to you and is requesting help. So you’ll get to wear the detective hat on and try to solve the mystery.

Dr. Jeremy Weisz: Wow. I love it. So check it out. I think you have over 130,000 members of this community?

Lokesh Yadagiri: Yep. That is correct. Yeah. We started off with… October 2017, I still remember this. Derrick was, we started off at 47 members and Derrick Smith, one of our co-founders was packing all these boxes and then shipping it out of his basement, true entrepreneurship style, but then yeah, over the past four and a half year, we’ve grown; and then yeah, today we are somewhere between 125 to 130,000 subscribers.

Dr. Jeremy Weisz: I’m going to have to introduce you to the… There’s a lady who runs Chicago Crime Tours in Chicago, and I’m sure that people who take those tour would love what you guys do and vice versa. So, remind me of that.

Lokesh Yadagiri: Funny story, we actually, I had an idea of a crime cruise where we have people on a cruise boat and then that’s where probably just put a murder mystery and then let people have fun. So that’s something that we definitely had an idea for.

Dr. Jeremy Weisz: I love that. So let’s talk about how to manage your inventory, because you have a lot of stuff. You just held up a couple things there, and when you’re shipping out to thousands and tens of thousands of people, because I know you’ve shipped over… You ship millions of these things to people. There’s a lot of paper, there’s a lot of little widgets in there, keeping track. I mean, it seems simple. You get it in the mail, you don’t realize how much work goes on behind the scenes. You need all these thousands and tens of thousands of these little lapel pins. So talk about how to manage your inventory based on days of inventory on hand metrics. Where should we start with that?

Lokesh Yadagiri: So, a good point to start here would be just what is managing inventory look like for an organization, right? So inventory management can literally make or break a company. When you look at the balance sheet, one of the largest items on it is your inventory expenses. So, if you carry too much inventory and you’re always stocking, that would result in higher carrying costs. And at the same time on the opposite side, if you don’t spend too much amount of inventory and then you run out of stock, then that’s going to hurt the customer service; late orders and stuff. So, today what I want to talk about is days on hand and how this metric would help you find the middle ground or balancing inventory with optimum sales, and then also having the optimal level of inventory.

Lokesh Yadagiri: So it’s basically trying to balance these four things. So yeah, days on hand, like the name suggests, it’s days of sales and inventory. It tells us in measuring how efficiently an organization uses its inventory and also the amount that is tied up to it. So high carrying costs, more inventory, lower carrying cost, less inventory. So DOH would help us balance this out.

Dr. Jeremy Weisz: So walk me through in a given… Are you shipping them on demand? Are you shipping when someone subscribes, then they’re getting it on a certain time of the month and then every month? How does it work? How do you plan what you need for the boxes?

Lokesh Yadagiri: That’s a very interesting question. So, when we start off with Hunt A Killer, we used to ship all the orders out once a month, but we’ve heard our customer feedback and we’ve iterated the product so much that today, if you were to place your order by 2:00 PM EST, we ship your order the same day. And if your order is renewing for the second episode, we ship out the same day too. So we ship same day. And we’ve also given members the option for expediting their boxes. You don’t have to wait an entire month to get your next box, rather, you can just go and say, “Finish,” and then that’s my next box. So, on a day-to-day basis, we’re shipping out 6-7,000 experiences a day, and then that quantifies to all the production that happens in the back, and then that ties up to how much inventory you have on hand as well.

Dr. Jeremy Weisz: So, talk about some of the processes and operations that need to happen, because are there any specific software tools you use to help manage that? Like we were saying, manage your inventory based on the days of inventory on hand?

Lokesh Yadagiri: Yeah. Over the past four years we’ve been focusing a lot on growth and scaling our business. And then, after the past year, that we saw a significant high number of sales because of COVID, which we had not prepared for, that’s when now we are taking a step back and trying to put different processes in place. So one of the advantage that we have this year is we’ve implemented a new software called EOS, Entrepreneurs Operating System, which we’ve started to use from this year. So what that is helping us do is that is helped us define what operation metrics are.

Lokesh Yadagiri: And one of the main thing is your days on hand metric. Now that is tied up into our WMS, warehouse management software, our shipping software, and then that in the next couple of months, we were also implementing an MRP module, which we’ve never had. We’ve not really had the time before to sit down and then look at this metric or measure this, per se, the days on hand. Now we are getting into this and doing deep dive analysis of what does that inventory look like? What is days on hand? What’s an inventory turnover? So once we measure these and then control these variables, then that would lead to an effective, efficient operations, basically.

Dr. Jeremy Weisz: Lokesh, walk me through, order comes in, today-

Lokesh Yadagiri: Yep.

Dr. Jeremy Weisz: Then what happens? What are the next cascade of steps that… Because it will ship out maybe sometimes same day.

Lokesh Yadagiri: Yep. Correct. So for example, say you place an order today, you go to our website, you place an order today, it shows up in our shipping software, we use ShipStation. So the order’s there, it gets tagged with what season and what episode you’re going to start on, and then our warehouse has already kitted episodes on the shelf. So it’s basically like a pick and pack menu, but to get to that field, there’s so much production planning, so everything backs up. So we keep two weeks ahead of inventory based on the waterfall cohort analysis, which I’m going to get into later in the show. So yeah, we basically look at what our forecast looks like for the next month, next two weeks, next six months based on that orders are placed, it shows up in the warehouse, it gets produced, kitted, and then it’s ready be picked and shipped out the door. That’s why we’re ahead and we can ship orders the same day.

Dr. Jeremy Weisz: Got it. So it comes in to your website, goes to ShipStation, that alerts the team to basically take the pre-kitted box and ship it out the door.

Lokesh Yadagiri: Yep. So you’d have the box ready, you do just ship out a label, put it on the back and it’s ready for pickup.

Dr. Jeremy Weisz: Now, obviously you mentioned, a lot of stuff happens so that there’s a bunch of already boxed, kitted, Hunt A Killer boxes, so they can immediately send it out. So you mentioned the waterfall and forecasting. Talk about now there could… What’s the process, let’s say, someone’s picking it and they see there’s only two boxes left? Or maybe that never happens because you’ve forecasted it. Has there been a point where they box it and there’s a mechanism where they go, “Wow, it looks like we’re running low.” It’s not specifically hooked up in your brain, which is, you know the numbers, or does that never happen?

Lokesh Yadagiri: Oh, I’d be lying if I say it never happened, but you make mistakes, you fail, but you learn from it. So, how does this happen? So when you’re getting, let’s say for example, a thousand subscribers a month, so they all fall into the first cohort. So you’re getting 10,000 people into the funnel, but not everyone renews. They may or may not like the product, or because of XYZ reason, you might lose some people in the form of churn. So, over the past couple of years, we’ve seen how our seasons have performed, and then we’ve gathered data for about more than four years, and then we determine how many people are going to continue to renew.

Lokesh Yadagiri: Just say, we’re getting 10,000 people, say 10% go out, 7% go out, so let’s keep minus 7% back for episode two. And then, it’s your next four to four for every episode. So we hit on that. We have this forecast analysis that helps fulfillment determine what needs to be created. And then that’s also gets triggered by info supply chain team on how much to order. So those are the trigger points for both fulfillment and supply chain, taking sales forecast from the marketing team.

Dr. Jeremy Weisz: I love it. So, talk about the waterfall, what you were talking about.

Lokesh Yadagiri: Yep. So yeah. Say for example, let’s assume… This is just a rough example that I’m giving. So let’s assume a thousand people subscribed in the month of July. They’re on season one, episode one. And then let’s assume that my churn rate is 10%. So take out 10% from 10,000, that’s almost, what, a thousand people getting out the door for that month. So I know for a fact that in case 9,000 people that are going to renew for the month of August, who are going to be on episode two. So you round that chart down to the end of the year. So episode would be like somewhere during November, December. So I know that if every month I’m losing 10%, I know during October, December, I know how many people may renew for episode six or episode five. So, that is the waterfall based on every cohort.

Dr. Jeremy Weisz: What happens though, you go, “Jeremy, I have this amazing YouTube strategy and we may increase,” and you don’t really know what it is. Right? How do you communicate with the marketing team who may have an initiative that may increase the subscriber base? Like we were talking before we hit record, you partner with another box company, right? And if you’re a box company out there in the alcohol space, Hunt A Killer is a good partner for both of you. You could probably partner up and go, “Hey, while you drink alcohol, you should do Hunt A Killer box or Hunt a Killer box, drink this alcohol.” Let’s say, you’re like, “I have no idea how this is going to go.” You partner with this wine club and you get another 3,000 subscribers. How do you communicate with the marketing team to coordinate that?

Lokesh Yadagiri: That’s a very interesting point. Funny story, we actually did collaborate a couple of years back with this wine subscription called Wink. So we did swap order a couple of brochures and gift coupon codes. And then, yeah, that definitely did drive a lot of their subscribers to Hunt A Killer. But yeah, to your point, yes, there could be something like that. Marketing can suddenly come into a rage or COVID happened last year, and then sales went through the roof. So this year we will also have a new team, which is the sales and operations planning team, which I’m a part of. So what we do on a monthly basis, so the sales and operations planning team comes together.

Lokesh Yadagiri: So we bring in sales, we bring in fulfillment, we bring in supply chain, so together we have a monthly meeting where we discuss what the marketing plans are for the next six months at least. If the sales are not going according to plan, do we have a mitigation plan? Or we have some selling moments. For example, June, July we saw climbing, or something is just coming up. So, all those selling moments, we try to record them and then forecast. So, no one is going to be 100% good at forecasting-

Dr. Jeremy Weisz: It’s really tough.

Lokesh Yadagiri: It’s tough. And especially not knowing the marketing conditions. You can never have 100% forecast accuracy. So we try to put together a plus or minus 10% on that, and then we are prepped for that. So, once a month we come together, we look at how the last one preformed, are we on track? Do we need to make adjustments, course production? And then we have a new place in action. So this is something that we’ve been doing it this year.

Dr. Jeremy Weisz: It’s a tough one. So before we go into this topic, I want to talk about… Because you mentioned churn rate and for any box companies, subscription company, any software company, that’s the magic thing. How do you reduce churn rate? And basically there’s a number of factors there, but I’m wondering what you’ve done at a company to help reduce the churn rate. But before we go into that topic, separate, is there anything else we should talk about under this umbrella of managing inventory based on the days of inventory on hand? What have we missed so far that we should make sure to mention?

Lokesh Yadagiri: Visibility is one thing that days on hand metric provides to all the stakeholders. So basically once we do the analysis and say, we come across, the inventory team says, “Okay, for this particular season or skill, we have a lot of inventory. And for this particular season, we have very less inventory.” We compare that to how that product is performing. We take a look at the sales data, see if that product is performing really over expectations or is it under-performing, and then we provide solutions to marketing. Or marketing can come back to us and say, “Why don’t we box this up and sell this and get rid of all the inventory we have?”

Lokesh Yadagiri: So, that visibility is a crucial thing that days on hand metrics brings into the limelight. And also it helps us understand what our carrying capacity is. We have a 21,000 square foot distribution facility here in Maryland, Baltimore, so are we completely using it? Is it 80% occupied? Can we then use inventory somewhere so that we can make it 50%, so that we are prepped for Q4 during our busiest months? That’s another decision-making. So yeah, this metric would definitely help all the supply chain team. They can standardize their buys for the next six months or a year taking into account all of the shipping delays we’ve been having, the market fluctuations, ocean freight fluctuations due to COVID. So, it helps with long-term planning. So that’s pretty much what DOH is, is a user support for us, so far.

Dr. Jeremy Weisz: Lokesh, for a user experience, when they go into buy, first buy, do they start with the season one or can they choose a box based on their interests?

Lokesh Yadagiri: So everyone starts on a particular season.

Dr. Jeremy Weisz: Got it.

Lokesh Yadagiri: So everyone starts at a season and then they move ahead to a different season. Yes, we did have the option, now that we’re four years down the lane, we had like 10 different active seasons. There was a talk of, why don’t we just have people start at whatever season they want? You have four seasons. They might go look at this trailer and they want to start in this season or that season. Yes. But-

Dr. Jeremy Weisz: That becomes… That throws a wrench in your calculations then, right, because it’s hard to plan?

Lokesh Yadagiri: [crosstalk 00:20:39] Yeah. It would be hard to predict who would choose what to go in. But yeah, tech is a big factor that comes into technology, is going to be a factor. But hopefully in the next couple of months or years, we have that option available for our subscribers.

Dr. Jeremy Weisz: So right now it’s not an option yet for them to choose what season they go into. They can start with season one and then kind of go through, it sounds like.

Lokesh Yadagiri: Correct. And our most recent active season, right now everyone starts on Curtain Call and then they move onto the next season, which is [inaudible 00:21:10]. And then, so on to every season.

Dr. Jeremy Weisz: Got it.

Lokesh Yadagiri: Once we started giving our subscribers the option for binging and expediting that next box, they are cruising through every episode. They want to get the next season as soon as possible.

Dr. Jeremy Weisz: That’s great. I mean, still with that, sounds like you can still calculate your waterfall calculation based on that, because they’re just going to the next one, and you are factoring in, let’s say a 10% churn anyways. So, even if they get it now or three months from now, you’re still kind of factoring that in.

Lokesh Yadagiri: Yes. Correct. So yes, it’s definitely not 100% accurate. Like I said, it’s predicting who is going to renew or who’s going to like, or not like. It’s not that easy, but yes, we do factor in the churn and the percentage of people who would like to expedite. And then yeah, we have a blended average if possible.

Dr. Jeremy Weisz: So you mentioned, you have a bunch of inventory on a box, the season, or… What’s a solution to open up the space? Let’s say there’s something coming up that you’re going to have a big promotion for. What have you done to get those boxes off the shelves to leave room for the next next batch?

Lokesh Yadagiri: That’s a very interesting question because you can even do this in multiple ways. Right?You can either take a hit on your expenses and then just mark that as obsolete and get rid of it. Or in our case, what we did, this is a real life example from the past few years, we’ve been stocking up on previous seasons. So what we decided to do was marketing came up with a launch campaign of a retirement sale. So for a good discount, we’re offering the entire season as a box set.

Lokesh Yadagiri: So, one way of getting rid of the inventory which is indoors, and we’re also making some revenue out of it, which at other point would just sit down there. So we did an analysis and we showed marketing, okay, we can come up with XYZ amount that you can sell. They got the go ahead, put them in boxes, launched a campaign, saying it’s a retirement sale, it’s coming back from the vault, they’re never going to get it again. Boom. You have people subscribing as a box set and it’s not one episode, it’s the entire season. Right? So, that was one of the things that we did.

Dr. Jeremy Weisz: Love it. Let’s go to… So anything else on the managing inventory based on the days of inventory on hand metric, before we talk about churn?

Lokesh Yadagiri: Yeah. Business decisions, right? So the example that I just gave you, it was a strategic business decision. We looked at our days on hand, we look at our inventory and then we sat down as a team and like, “What can we do?” And then we came up with a solution. So yeah, it looks like a small terminology when I just say days on hand, but the effects of what it has on a business is tremendous, and I cannot stop saying managing inventory is so crucial for running a successful operation.

Dr. Jeremy Weisz: One of the things in that you have to factor in, is like you mentioned. If there’s a delay in ocean freight or wherever you’re getting pieces. What’s the average time span when you say, “Okay, we need 10,000 of these pins. We need 10,000 of these widgets,” for it to all come in? What’s the days that you need to order in advance to get all of that stuff, to even pack the boxes?

Lokesh Yadagiri: Correct. So that leads me to a good metric that we also have for our supply chain. So with your days on hand inventory for any given season or a skill, we came up with some metrics of, what is our baseline? Do we need to have… If it’s something that sells domestically, do we need to have 30 days worth of stock? Or is it 45 days worth of stock? If it’s internationally sourced, is it 90 days, 130 days or 120 days? What’s the point? So once we started doing these analysis on what’s our current inventory situation looks like, we looked at the ocean market fluctuations.

Lokesh Yadagiri: On an average, ocean freight has gone up by at least standard weight lists because of port conditions. And also from the point the inventory is ready for pickup to be put on a vessel, that is increased on an average about seven days. So in total, you’re looking at around 20, 22 days, additional, which would have been normal. So we are adding those days into our days on hand as, okay, instead of 90 days, let’s add those 20 days as a buffer. Let’s have at least 120 days worth of inventory. So your trigger buys are going to be, if any skew goes below 120 days, then that’s your trigger point for supply chain to, “Okay, we need to be placing another order now.”

Dr. Jeremy Weisz: Yeah, it’s a lot. Even during COVID I was talking to someone who… What’s that limiting factor? Out of the things you order is that the longest, the limiting factor product, like the longest it would take one of them… Because you can’t send… Even if you’re waiting on one product out of a hundred, you still can’t send that box out without that one product. So, it’s usually around 120 days, is that the longest cycle for you to receive something in that box?

Lokesh Yadagiri: It depends. Like we have about 2,000 different skews and our boxes are 80% paper-based goods, and then 20% of them is internationally sourced physical items. So a few of them take 30 days, manufacturing time, a few of them take 60 or even like 70 days. So you have to focus on every skew different, and then you will need to come up with the order points. It becomes a challenging situation, but yeah, we tried to take an average of at least 118 or 120, so it’s a work in progress. I do say that, okay. We have to be at 120 days. So based on how our inventory turnover is, and then looking at the market conditions, we are still trying to pinpoint what’s the right number there. [crosstalk 00:26:59] is going ahead and getting that number down.

Dr. Jeremy Weisz: And COVID throws a wrench in everything. I remember someone, they had a product that needed a cap, and they had everything, and the cap, I guess there was a shortage of caps for whatever product, and they said it was going to be four or five months, because of this one piece of their product. So, it becomes a complicated formula depending on what’s going on in the world also. So, last question I want to ask is about the churn rate. Okay? Because this is the golden question of how to reduce churn rate. Because you see, obviously there’s going to be a certain number of people for whatever happens in the universe, they’re busy, it’s not the fault of the company or the product. It’s just, people get busy or things change, but you’re always thinking, “How do I reduce churn rate?” So what are some ways as a company that you have implemented to help engage people more and reduce the churn rate of the boxes?

Lokesh Yadagiri: There’ve been a lot of different scenarios where we came together as a team and tried to solve, how do we find a solution to this problem called churn? Because when we started off, it was in double digits, but today we are in a single digit churn rate. So churn doesn’t specifically be… There could be a lot of different factors when most likely using churn, and just not the product being good or having a tremendous customer service or providing it at a cheap price point. It’s the entire customer journey, right from the point they’re on our website, till the time that they get their box, play the game, and then give feedback. So this was iterative. So every month or every three months, we tried to put this NPS survey, to find out from our customers, what can we do better?

Lokesh Yadagiri: We got their feedback, did a deep analysis, and then constantly kept iterating the product. So it’s just not the product being really fancy or marketing doing a really great job, shipping on time, they’re using the missing items already, it’s the entire journey, right from there on the website to finishing that experience. So we are trying to hit on every single nail there. So that is what is leading to the reduction in churn. But at the end of the day, you can’t always please every customer. There’ll be a couple of them here and there that may or may not like the product or because of whatever reason, cancel. We can’t hold them for that. But we are making strides in every direction that is the entire customer journey.

Dr. Jeremy Weisz: Do you remember, based on feedback or NPS, what you then did and added to the journey, because of that feedback?

Lokesh Yadagiri: Sure. So initially when, for example, the product. The product itself has changed and iterated so much over the past years. Initially when we started off on the killer, our very first season, you would get this correspondence from a fictional serial killer. So the serial killer is trying to reach out to you. Those were our first few seasons. And then as time went by, we started to get feedback from customers saying that, “Oh, I would like to be a detective or be trying to solve the case, then actually seeing what the case is.” So [inaudible 00:30:14] we changed the story line. Today you’re getting this case from a private investigator. So every time you get a box, it’s from a private investigator, so it’s much more immersive. So you get to be a part of it and then you get to solve the mystery. So, that was one thing.

Lokesh Yadagiri: And then, CSAT score, a lot of times during busier times of the year, your response rate is quite long. You don’t want people to wait. So that ends up against [inaudible 00:30:38] or people talking down. And then we may change to that. Three hour CSAT score is more than 95%. That is one thing. And then, experience. There’s also a lot of digital elements that go into solving the case. If a website is down, or if you’re not able to find a clue, then that would ruin the game experience. So making sure technology is working on having gone to sites [inaudible 00:31:00], the right information. And then also managing the community. We have a Facebook page of more than 140,000 members on there, and there our social media manager, Jill, she does a fantastic job. She reaches out to all the members. She helps them, she guides them, put them in the right places.

Lokesh Yadagiri: And yeah, so managing all of these things, we’ve done this over the course of the past four years, so that I think all of these did help solving the churn rate. But also putting this box together, it cannot be automated. You need to have a human element involved to take it and physically [inaudible 00:31:36]. So human error, say you might end up not putting a piece of paper or a evidence. That would stop people from solving the game. Like you said, if you miss something, you can’t do it. So we made a lot of QC instruments in our fulfillment and distribution facility, so we’ve gotten down the error rate, so that again, that also impacts churn. So yeah, the entire team moves the needle to get the churn rate down, basically.

Dr. Jeremy Weisz: Totally. I love it. Everyone, check out Lokesh, I want to be the first one to thank you. Check out their website, check out more episodes of the Process Breakdown, check out SweetProcess, and thanks everyone. Thanks, Lokesh.

Lokesh Yadagiri: Thank you, Jeremy. Thank you so much.

Speaker 1: Thanks for listening to the Process Breakdown Podcast. Before you go, quick question. Do you want a tool that makes it easy to document processes, procedures, and/or policies for your company so that your employees have all the information they need to be successful at their job? If yes, sign up for a free 14 day trial of SweetProcess. No credit card is required to sign up. Go to, sweet like candy, and process like Go now to and sign up for your risk-free 14 day trial.

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