Stock management is a business basic, but with so many different processes to manage it’s easy to get overwhelmed. Ross Bentley explains how to let software take the strain
With much to manage in terms of stock and payment, inventory software in hospitality is a central part of a broad spectrum of business processes that includes purchasing, recipe and nutrition management, electronic point of sale (EPoS), invoicing and credit note management.
“The whole inventory process is linked to a multi-channel world,” says James England, director at Fourth Hospitality, which provides end-to-end solutions for numerous restaurant businesses, including the Restaurant Group, Carluccio’s and Yo! Sushi.
“Operators buy their inventory from a range of suppliers and are selling it in an increasing number of different ways – EPoS, telephone reservations, mobile phones and self-service kiosks. And the inventory system must link into all these channels.”
For this to happen, England says operators must move to a position where they have one set of inventory “master data” across their whole estate, which will enable them to manage prices and profitability more easily and to reduce errors due to data duplication.
However, when it comes to the hotel sector, many operators remain unconvinced of the benefits of taking control of their inventory in this way, according to Nigel Allport, director of sales for hotels and resorts at technology company Agilsys.
He says: “It’s an issue of perception. Many hotels are focused on guest-facing technologies that are aimed at driving revenues and increasing guest spend rather than controlling costs through the ordering process.”
Allport says the key benefit of installing an inventory system is removing the guesswork from purchasing and basing it more on actual sales and forecasting.
But according to Mike Smith, sales and development director at Logonn, a stock control consultancy and software provider, even after a business has invested in an inventory system, a good basic knowledge in stock management is essential at operator level.
He says operators should not rely on integrated software to “tell” them the answer; instead they must learn to understand the software fully to get the best from the sophisticated packages available.
He adds: “Software is increasingly being bolted on to the EPoS hardware as an afterthought to enable in-house stock control. But these systems are usually linked directly to sales and only tell the story of what has been sold, not where to increase margins and profitability.”
As for the future, John Bailey, retail industry director at software firm RedPrairie, sees mobility as a key driver for innovation. He says that inventory software is being increasingly used on tablets and mobile devices, which will eventually result in the print-out becoming a thing of the past.
Chester Racecourse takes stock
Through implementing a procurement and stock control system, leisure and corporate hospitality venue Chester Racecourse has put effective cost management in place and cut out a number of slow, labour-intensive processes.
According to Jon Davis, head of business services at the racecourse, the venue is better equipped to deal with suppliers, food pricing and the sales information that comes from the 120 electronic point of sale terminals at the site.
The inventory and stock management technology, called Eatec, has been developed by hospitality software provider Agilsys.
Davis says: “Eatec has been fantastic in managing suppliers and stock. When our season finished, it was vital to control incoming stock so we weren’t left with a huge surplus.
“Using information from Eatec, we know exactly what we’ve paid and what we want to pay, and how to structure pricing to get our required gross profit.”
Advances in hand-helds make stocktaking easier
Developments in hand-held devices for stocktaking are making life easier for hospitality operators.
Fretwell Downing Hospitality, for example, has developed the Saffron Connect device, which links with its inventory module and allows barcodes to be produced on the go for items such as fruit, vegetables or fresh meat products. These barcodes can then be attached to shelves where the product sits or carried in a booklet format.
Global provider of mobile computing devices Intermec has designed products such as the CN70, which is made to withstand temperatures of between -20°C and 60°C so that caterers can use them in freezers or fridge trucks. Also, their wireless devices allow for instant communication and synchronisation of orders and stock updates with the main database.
The latest development in this area is inventory management through voice, which enables staff to record stock updates hands free with the use of a headset connected to the inventory system to improve mobility.
Opinion: Good inventory management can improve sales
consultant, Expense Reduction Analysts
Inventory technology in the catering industry helps to standardise profit margins, recognise training issues and waste problems – and even identify customer trends. However, to make it a worthwhile investment it’s essential that reports aren’t ignored.
Bad stock results commonly occur for a variety of reasons, from miscounting to incorrect deliveries, but inventory technology can now provide theoretical numbers, acting as a stock check list and saving time in miscounts.
The cost reductions and profit improvement opportunities from inventory stock control are now more accessible than ever. Multi-site operators can benchmark sites against each other, so there is less over-portioning and preparation costs are reduced. Menus can be benchmarked for profitability before being launched across multiple sites.
While operating the stock controls and systems for a chain of gastropubs, I unmasked a plethora of incorrectly priced meals and poor till training issues. Despite the implementation of new costings and a reprogramming of tills and staff till training, one unit still presented terrible stock results. Following numerous staff meetings and discussions, we established the problems were because of staff theft.
There may be many layers of issues that you will discover throughout your inventory journey and all will take time to resolve.
Any process of analysis and change takes time and, meanwhile, like a tap dripping, the money you are losing will soon be significant. Installing a stock inventory system and investing the time is worth it, and a focused approach to delivering every penny of profit out of everything you sell is essential. Stock inventory gadgets, such as hand-held scanners and scales can assist the process, but the real benefit comes from a truly strategic approach.
La Tasca runs on “master data”
Tapas restaurant chain La Tasca is managed using one centralised inventory database across its 60-plus UK outlets.
According to Mark Hanson, managing director of 25sevenIT, the company which runs La Tasca’s IT operation, this use of one “master database” allows offers to be broadcast across multi-channels and enables more efficient purchasing, inventory and distribution of stock across the country.
“Get the master data right and the rest of the business processes will flow seamlessly from it,” says Hanson, who has also integrated Fourth Hospitality’s Starchef software with the data to drive recipe and nutrition management across all sites.
Hanson adds: “With one master database, data duplication and administration costs are reduced. It also means that management information reports can be generated almost instantly to help with profit management.
“If the cost of one ingredient changes, this has only to be keyed in once to change the prices across all menus or to be factored in to a decisions about whether some items might drop off the menu altogether.”
University of Birmingham takes control
The University of Birmingham has installed a management information and stock system which allows managers to run reports on the performance of individual outlets or items purchased across its 35 on-campus catering outlets – from coffee shops and grab’n’go eateries through to restaurants and bars.
The system, Saffron Spice, developed by Fretwell-Downing Hospitality, has also been tailored so that users can order only from specific suppliers, thereby ensuring best practice by maintaining the preference for those suppliers where specially negotiated prices have been fixed from the outset.
An additional module allows outlets to offer information on nutritionally balanced options and calorie counts to diners.
The university’s catering systems manager, Lynne Fowkes, says: “The ability to track and audit the complete operation effectively is extremely important when every penny counts. By increasing the level of reporting we can see where there are any loopholes and take action much more quickly.”
Tips for effective inventory management
● Train staff so they have a basic understanding of stocktaking and understand the importance of stock reporting.
● Even if you have an in-house system, consider engaging an independent professional stocktaker to ensure the system is set up to achieve what you want it to.
● Learn to analyse stock results and to formulate follow-up action plans to increase profitability.
● Ensure your inventory system can connect to your host system for ordering from your main centralised suppliers.
● Forecast at the right level and with the right technology. If your forecasts are wrong, you will not be able to execute effectively and customers will be disappointed. How accurate is your forecasting technology?