How to Set Yourself up for Success in Inventory Management
When looking at how to set yourself up for success in managing your restaurant’s inventory, there are a number of key areas to examine and address to maximize your ROI. The BC Cook Articulation Committee identified five steps to effective inventory management.
- Set up systems to track and record inventory.
- Develop specifications and procedures for ordering and purchasing.
- Develop standards and procedures to efficiently receive deliveries.
- Determine the frequency and processes for reconciling inventory.
- Analyze inventory data and determine areas for improvement.
We’re going to examine each step of this process, and examine how each allows you to maximize your bottom line. To begin, you need to set up a system that not only works, but works within your organization.
When looking at step one, you need to find a system that fits exactly what you need in terms of features and capabilities. Optimum Control is one such system that allows you to track your inventory, along with many other value-generating and money-saving features. In addition to this, we offer a number of free resources to help set your organization up for successful restaurant inventory management. These include waste log templates, yield charts, daily intake value reference sheets, and more. Using these resources, a restaurant inventory management system, and provided count sheet templates, you can help set yourself up for success.
The second step is determining how you’re going to handle ordering and purchasing. This includes determining your forecasting method, your valuation method, who you’re going to purchase particular products from, and more. This step is essential to building relationships with your suppliers. By doing this, you may end up having access to greater discounts for buying in certain quantities, among other benefits. If you don’t establish your procedures and guidelines, and there is more than one person responsible for purchasing and ordering, each may have their own methods and reasoning, leading to irregularities, and potential issues. This step is key to ensuring that you order and purchase the quantities needed to maintain the optimal inventory levels.
The third step is how the deliveries are received. Do you have a standardized procedure for when your deliveries arrive on location? This includes the staff on hand to do the receiving, the location for the stock to be received in, the steps taken to actually receive the stock, and how many issues (damage units, incorrect product, etc.) will be handled and tracked to receive credit for them. Without this step, potential issues with your orders may go unnoticed, leading to shortages or overages that you may or may not have been charged for.
The fourth step is subjective, as it resolves around how often you count, and the processes that are used to conduct the counting. Whether you’re counting daily, weekly, monthly, or yearly, your counting process should follow the same steps each time to ensure accuracy and consistency are maintained. The frequency by which you count will ultimately rely on how busy your organization is, the number of staff you have available to count, the number of items to count, and more. Both the frequency and counting processes need to be consistent in order to not only purchase and order properly, but also to operate at capacity.
The fifth and final step is when you step back and examine the results of the previous 4 steps to determine where you’re doing well, and where you can improve your systems. From here, it’s a matter of overhauling of fine tuning your systems.
These 5 steps deal primarily with ordering, counting, and receiving, but how do you ensure that your current inventory doesn’t go to waste or go under utilized?
There are a number of solutions available to help reduce your inventory losses that are due to preventable causes. One of these is to ensure that your storage areas are dated and labelled consistently, whether that be when the product was first received, first prepared, or first packaged. This allows you to ensure that older products are used first, either before it goes bad or is over-ordered in the future.
In addition to properly labeling your ingredients and products, you’ll want to ensure that your storage areas are not only up to code, but to the optimal standard in order to ensure product longevity is at a maximum. This reduces waste and allows you to maximize your return on that inventory.
Another solution is to be much more analytical with your par levels, and where to set them. If your par levels are set too high, you may be ordering more product than is needed. When setting your levels, you’ll want to take into account any upcoming events or promotions, and whether you should be ordering more than your standard par levels. You’ll want to establish standard par levels for your operation to streamline your purchasing and ordering processes with the flexibility to adapt to sudden changes or new events that may pop up suddenly.
These are a few of the simple solutions available to help set you on the path to inventory management success. While there are more complex solutions available to achieve success, we found that these were easier and simpler for staff to learn and adapt to the new processes and procedures.