Overview
Inventory management systems enable you to order, receive and count stock quickly and efficiently. This might be a function provided by your POS system, or it could be a standalone application.
The latest developments in inventory management are around using machine learning and AI to help you order the right amount of stock. These will take into account past sales, wastage, sales targets, time of year, weather, and even specific events (like Easter, bank holidays etc), to predict how much of each product you’re likely to sell (or even when they will be sold during the course of the day). This has the obvious benefit of saving the manager time, and can grow sales if done well. The best outcomes are typically produced when the system generates a prediction, then the manager tweaks it based on their local knowledge (e.g. a road closure, half-term holiday, festival etc that the ‘machine’ can’t predict).
Critical functions
You need your inventory management system to:
Maintain product records, particularly ingredients you buy (stock, or SKUs) and things you sell (products, or PLUs), and how these things fit together
Work with internal and external suppliers, and maintain supplier records
Raise and place purchase orders, potentially with predictive ordering (see above) and/or by EDI (see below)
Allow efficient goods receipting, requesting returns or refunds for missing items
Record and calculate wastage
Facilitate stock counts, including line checks (single items you want to check frequently, e.g. products with high wastage or theft)
Set par levels
Produce reports, e.g. low stock warnings, variance from par level, stock-on-hand days, stock variance reports, and the like
Important integrations
The principle integration for your inventory system is with the suppliers from whom you order stock. At a minimum, the system should be able to generate an email, with the relevant customer and product codes, and send it to the correct supplier. This normally needs to be manually re-entered by the supplier, leading to occasional mistakes and little feedback to the person placing the order. A better, but more technically challenging, integration is EDI, which stands for Electronic Data Interchange.
EDI enables your inventory system to create an electronic order which feeds directly into your suppliers’ production and finance software, with no human interaction required. This has big advantages for your suppliers, in terms of efficiency and accuracy. It also means your suppliers can send you information about your order electronically. So for example, an EDI connection could mean your managers get instant order receipt confirmations, real-time stock availability updates, refund credit notifications and more, vastly reducing their admin burden. Wherever possible, ask your inventory provider about EDI links to your suppliers. You may find they already exist and just need to be enabled, which is a big win for both parties.
As well as POS, you also need your inventory application to link with:
Your food database, to ensure records are kept in sync
Your finance system, to ensure invoices are paid, reconciled and accounted for
Your order ahead system, to enable out-of-stock products to be marked temporarily unavailable
Users
Your inventory management system will primarily be used by venue managers, or whomever else is responsible for placing orders and counting stock. As with many application purchases, it would be a great idea to have venue managers trial any proposed new system (or at least watch a demo) to have them comment on any particular benefits or pitfalls.
It would also be used by any head office staff to set up the system; this typically needs collaboration by finance and food colleagues, but would ideally sit in operations.
