What is Inventory Management and How do I Master it?
Learn our secrets to inventory management to increase profits
If you've ever asked, What is inventory management?, This is the article you've been looking for. Learn what inventory management is and how to master it with these quick tips.
What is inventory management?
If you don't know what inventory management means, don't feel bad. It's a common question typed into search engines every day. And, it's a fairly complicated topic when trying to explain what it is, but it comes with some straightforward solutions. Before we give you our top tips for mastering inventory management, let's answer the burning question of What is inventory management?
Put as simply as possible, inventory management is your system of counting, tracking, and replacing your inventory throughout the life of your business. Some will say it's as simple as just keeping an accurate count, but we say those people are missing the real point. Of course, you do need to know how many of each item you have in stock, but you also need to be able to predict trends in sales and when the slow seasons will be. Not just the slow season for your store, but when customers slow down on purchasing specific items. Being able to predict those trends accurately can save your store time, money, and stress.
What is inventory management for restaurants, specifically?
While every retail establishment will have a few similar needs for their inventory management systems, restaurants and other food service businesses have some additional needs that should be considered. Namely, inventory management for restaurants includes purchasing perishable items, tracking spoilage and waste, and doing everything in your power to reduce that waste at every stage. Obviously, a clothing store or sporting goods store won't ever have to worry about their products going sour, so that leaves restaurants in a unique situation, and their inventory control options need to be a little beefier.
So, really, what is inventory management, and how do I do it right?
The answer is simple. Inventory management is your key to a successful, healthy, profitable restaurant. Done right, inventory control can keep your profits soaring and your waste to a minimum. That's not even getting into the details of how proper inventory control can help employees be more efficient and work with higher morale. To do inventory management right, you have to start with excellent lists, organize those lists, and have a way to use your lists for more than just counting and ordering new product.
1. Use your menu as a guide -
Use your menu to guide your main inventory list. No matter what cuisine your establishment serves, you will have some items you use more than others and some items that are seasonal or only offered during promotional times. But how do you know how much of everything you should keep in stock? Use your inventory lists to predict trends in sales and track how promotions affect your bottom line. After a few months of tracking this way, you should be able to see some clear patterns in your customers' behaviors and buying trends. A spreadsheet for each recipe and one for each promotion you run will help you look at those trends a lot faster than just one inventory sheet for the whole restaurant.
2. Use a productivity app to organize and utilize your inventory lists -
Inventory management should go beyond keeping count and buying products. If you combine the power of your lists with some modern restaurant apps, you can do some pretty amazing things. Imagine being able to compile reports of all lunch sales for the past six months, or seeing the sales trends of several different time frames, all with the touch of a finger. An inventory management app can do that for you. Filter by food type, recipe, location in the store, or meal times (just to name a few) and see where the most money comes in. Have a problem with spoiling stock? Compile a report from all the spoilage logs and see if there's a predictable lull in customer interest or if you've merely been ordering too much of one product all along. What is inventory management without powerful apps to go along with it? Keep your logs and use them to fine-tune your restaurant to peak efficiency, and you'll be maximizing your inventory control efforts.
3. Use the cloud for real-time updates -
If a count gets messed up and you're still using paper inventory lists, you may not notice the mistake before it's too late. Wasted time and money, wasted product, and stressed out employees all contribute to a negative dining experience for customers. Avoid this by staying on top of the data. By utilizing online inventory control, you can see counts in real-time, including error messages when a recorded amount doesn't match your projections. Handle the issue as soon as it pops up, and well before any mistakes in purchasing can be made. When your data is stored in the cloud, it can be accessed from anywhere at any time using a connected device. That means if you have more than one location, you can still keep track of inventory counts in all your stores, even if you happen to be across town. Try doing that with a paper list and a stack of logbooks.
4. Use your digital tools to streamline orders -
Along with product counts and spoilage reports, ordering new stock is an integral part of effective inventory management. Purchase orders used to be handwritten and mailed; then you had to wait for your order to be filled and shipped. That's a lot of time between the inventory count and the product arriving at your door. If you miscalculate the time it will take for the product to arrive, you could lose revenue through angry customers unable to have their favorite foods. When you add online inventory management to your system, consider adding software that will give you a direct connection to your suppliers and give you the power of one-click ordering. No more paper, no more mail, and no more waiting. Order your stock in real-time, and get updates on its arrival.
Inventory management made easy
It should be pretty obvious by now that using technology is your number one way to master inventory management. With today's apps and mobile devices, it's easier than ever to get what you need and keep track of what you already have. Restaurant managers, we have more tips and resources to keep you ahead of the game here.