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Tuesday, February 21, 2006

The Art and Science of Receiving

When I think of great receiving controls, I tend to remember our top client site from my days at Boatel. The move from the old green sheets with columns for food categories, vendor information and dates to Lotus 123 spreadsheets was huge. I quickly learned the Lotus commands for lookups, data queries and string manipulation.

I entered two years of inventory history into a comparative spreadsheet. Frankly, the results did not justify the effort. There were consistency issues, lots of additions written on the back of each sheet, pricing problems and little usable data.

As I visit accounts, I see where people have taken the time to create pie charts on inventory value by category. There's nothing very exciting about the final inventory value in most cases.

All the action is in the purchasing history. Did we get hosed by a meat supplier? Why did we buy so many perishable salad ingredients on a down week? Could we have used some of our excess freezer stock more effectively? Now these are high impact issues.

Once the receiving system was in place (see Traveling Accounts Payable Clerk post), I created a weekly recap by category of the purchases by day. After entering several months of receiving history, trends started to emerge. I would look for unusual circumstances, pull the invoices and try to explain the strategy for the week. Whenever I could not come up with a decent explanation for a particular purchase, I would review the activity with our regional General Manager.

It's essential to talk about great decisions as well as poor decisions. Repeating great decisions will produce more profit and avoiding costly repeats will save money. I still like a two year history for most analyses.

Quality issues are at the heart of receiving and proper inspection is required for any commodity item. You do not have to open each jar of branded mayonnaise. However, you should open the produce boxes, the meat cases and all seafood containers. Weight is a big factor. It's good to make scales readily available. Now let's get sensory.

I used to enjoy watching receiving at a deli in New York famous for smoked fish. All of my New York clients serving smoked fish menu items used the same three top smoke houses. In addition to the big 3, many smaller specialists have high quality smoked fish. It takes training to discern great, top of the heap, creme de la creme smoked salmon or sturgeon. The process at this client was a ritual.

The delivery man would be directed over to the far end of the deli. There he would take a side of the salmon out for inspection. This fish was then smelled (deeply), stroked, prodded gently and finally tasted. Did the smoker over salt the fish? Is the texture too soft? Maybe the taste is too smoky. Normally, the answers to each question was perfect saltiness, buttery texture and just a hint of smoke. These are top quality suppliers. However, I did see rejections. Too much salt was often the reason.

These guys were true artisans. When I would visit an account which paid zero attention to the occasional purchase of smoked fish from the same suppliers, the difference was enormous. Many of the others simply purchased sliced smoked fish by the pound. You never see these guys highly ranked in Zagat's survey in the deli category.

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