Importance of Inventory Count
Importance of Inventory Count
Inventory count is a key and vital task that is necessary to ensure that the kitchen is under full control at all times and waste is avoided. Completing an adequate inventory will greatly assist you to understand your kitchen and your menu properly.
Why conduct inventory?
Conducting regular and scheduled inventory counts will also assist you to compile your financial statements. Inventory count demonstrates the correct Cost of Goods Sold (COGS) and highlights waste count. When using a proper inventory methodology, you can calculate the exact number of COGS and how much material you have in your storage. The formula for ascertaining the COGS percentage is:
COGS (%) = ((beginning of inventory + purchased material) - end of inventory) / Sales
Effective and controlled inventory systems help you understand your menu items better; it shows what items have been moving and more importantly the demand of these items. Understanding this movement in your kitchen allows you to utilize your material better, and where possible, know how to cross use the material in your kitchen. It will also highlight items that are not in demand and therefore save you unnecessary costs. Unused items can easily be discontinued.
Understanding the demand on the material you have will allow you to enhance your cash flow. As we all try to avoid the frozen cash in the storage areas, it is essential that the inventory is carried out on a regular, periodic basis. This also helps you create a par level for your material. Knowing when demanded stock levels are low, highlights the need to re order to ensure that the item is present and available to meet demand.
While many individuals rely solely on POS inventory count to calculate their numbers, the physical cross check inventory must be completed in line with this to get actual and correct numbers, to avoid stealing, and waste.
Let's talk about how it works.
Completing regular inventories, while worthwhile, can be sometimes time consuming especially if the menu is large and varied and therefore a lot of material in your storage area.
Our recommendation, in order to have the correct material in stock, is to complete and inventory on a regular basis e.g. monthly. Logging received items on receipt of them and then documenting what is being used saves a lot of time than doing it at the end of the month. Possible errors in deliveries are easily rectified and within a timely manner.
Initially it may seem like an arduous task, however, it will eventually be easier and faster as time goes on. A suggestion could be that the same person does the inventory all the time. This way that person gets used to the unit of measurement of everything and where they are located in your storage area. This can be double checked by a manager to ensure correct recording is completed. A manager should be aware of what is being purchased and can also check that the correct items are being delivered.
To conclude, inventory count is one of the most important tasks you need to do in your kitchen operation. Ensuring that the correct items are being both purchased and delivered to meet current demands makes for a very comprehensive and transparent kitchen. It eliminates waste items and also wasteful storage space within the kitchen. Financial records are clear and concise and should make financial reporting easier.
By: Kareem Haj Ibrahim, Director , KAZA Consult