Hi there,
Interesting blog you have there. I hope you have time to give me some advice. I’m the controller of a medium sized hospitality company. We operate several fast food places with lots of inventory (around 700 unique items per location). Inventory takes forever to count, and of course, the longer it takes, the less motivation on the part of the employees to count it, leading to probably inaccuracies in the numbers.
Here’s the dilemma: the owners don’t trust the inventory, or the possibility that the inventory will EVER be counted right, so they have decided to select a truncated list of items to count based on various criteria. One of the owners tells me that this is common industry practice – even though I don’t have a lot of experience in the hospitality industry, I don’t see how only counting some items could yield worthwhile numbers, but at the same time I could see the benefit of not counting certain things. It seems to me they only want to save labor dollars, to be honest. Do you have any experience you could share?
Regards,
Andrew
Controller
Andrew,
Thanks for the excellent question. As long as the short list is counted frequently and usage compared to sales, I agree. Do these key item counts weekly with a full count monthly.
Three suggestions: 1. Most QSR operations have far fewer than 70 unique items. QSR implies focused menu. If a QSR operation stocks too many unique items, it is a warning sign. 2. Analyze sales and determine which menu items need to go (unpopular) and which items are making the money (popular). Trim the losers and promote the winners. 3. You may have a thief. Many people who can't get an accurate inventory, with all the tremendous tools available, do not want to get an accurate inventory.
4 comments:
Thanks for your thoughtful response!
Hello, Andrew.
The last comment is excellent.
However, I would like to add a few suggestions to make the task workers fiendly and meet the objective of accurate reporting.
1. Right people for the position.
Once chosen, train & develop for the skills and follow-up regularly.
2. Storage room clean and organize.
Keep the place in order. Organize the items in their proper shelves with proper labels for easy location and counting. Break boxes
to check on levels, usages and space. Limit accessability to a few and keep the door lock if necessary.
3. Establish accountability and responsibility of the one in-charge of maintaining the storage room and regular inventory taking.
4. Maintain the same schedule for counting each time. Manager to double check for check and balance
and accuracy purposes.
5. If avaialable, use the POS system to monitor the usages, ending balance and on hand balance at the end of each shift.
6. Design and maintain a standard inventory checklist with prices and proper extension, using your Excel system, if avaialble. Manager in charge to double check for errors and ommissions.
Lastly, purchase method of calcuating inventory for food cost determination is acceptable, however, the actual physical invnetory taking is accurate and reliable for better operational results.
I have been in the quick service industry for many long years, I find the above exercise / system a great tool for operational success.
Thank you for allowing me to comment.
Rene Ramos.
Hello, Andrew.
The last comment is excellent.
However, I would like to add a few suggestions to make the task workers fiendly and meet the objective of accurate reporting.
1. Right people for the position.
Once chosen, train & develop for the skills and follow-up regularly.
2. Storage room clean and organize.
Keep the place in order. Organize the items in their proper shelves with proper labels for easy location and counting. Break boxes
to check on levels, usages and space. Limit accessability to a few and keep the door lock if necessary.
3. Establish accountability and responsibility of the one in-charge of maintaining the storage room and regular inventory taking.
4. Maintain the same schedule for counting each time. Manager to double check for check and balance
and accuracy purposes.
5. If avaialable, use the POS system to monitor the usages, ending balance and on hand balance at the end of each shift.
6. Design and maintain a standard inventory checklist with prices and proper extension, using your Excel system, if avaialble. Manager in charge to double check for errors and ommissions.
Lastly, purchase method of calcuating inventory for food cost determination is acceptable, however, the actual physical invnetory taking is accurate and reliable for better operational results.
I have been in the quick service industry for many long years, I find the above exercise / system a great tool for operational success.
Thank you for allowing me to comment.
Rene Ramos.
I love your 4th point Rene. Thanks for the contribution!
Joe
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