There is a lot of information out there touting the benefits of a particular inventory system. But the truth is, most inventory systems perform similar functions. If you ask a particular software vendor about the benefits of their system, they’ll probably all tell you the same things. Some, in more compelling ways than others.
Let’s take the path less traveled and briefly explore several topics like whether maintaining inventory is right for you, the pros, and cons of maintaining inventory, associated risks, and important considerations.
Is Implementing Inventory Management Right for you?
So, you’re counting your bacon, lettuce, and tomatoes and you need to keep track of how many you want to reorder. Do you need an Inventory management system? Not necessarily. Here is a wildly controversial argument! Depending on your business, you very may well just need a good old-fashioned spreadsheet. Yes, that’s right! Just because you have stock on your shelves, doesn’t mean you need an Inventory system. In fact, it might be a bad idea.
The Pros and Cons of Inventory Management
If you’re a small business without the need to move large volumes of goods or the staff to manage them, you just don’t need anything other than a simple tool. In fact, implementing one can cost you more than having one. Even some mid-size and larger businesses may not need heavy software, or the liability.
Implementing inventory management creates a liability. If you spend money on stocking up, and can’t consume the products, you have a problem. Investing in the resources required to manage and financially report on inventory creates organizational costs. Think about the people, process, physical storage space, and carbon footprint costs.
In many cases, it is worth the cost to implement inventory management. Operations spread out over a large area or in difficult delivery areas benefit from inventory management, as well as organizations with a generous volume of high dollar value beverage sales. Locations catering to frequent demand, transfers, and consumption of goods between multiple outlets and production kitchens also benefit.
The decision whether to implement an inventory management system is all about mitigating risk. Small organizations without resources to manage inventory effectively can create risk and liability by implementing a system they can’t maintain or support. In these cases, the best risk avoidance strategy is most likely a simplified spreadsheet for tracking counts.
For companies who move higher volumes, a reliable inventory system makes sense to avoid the risk of not having inventory controls in place. Food has been one of the main areas affected by inflation, with recent reports revealing 8.8 percent year-over-year price increases from 2021 to 2022.
Supply chain issues, rising labor expenses, harvest disruptions, and other factors increase costs. Buying what you need now before prices increase further reduces risk and ensures you have enough goods on hand in time to meet historic demand trends.
Larger organizations can further reduce risk by properly managing goods consumption through sales and requisition fulfillment. A good system can help ensure the correct recipe production and portion sizes. This optimizes your revenue and reduces your organizational costs. Finally, shrinkage due to overpours, spoilage, and theft are the most detrimental inventory risks an organization should strive to avoid, with the latter potentially creating legal ramifications.
Choosing the Right Inventory System
Ultimately, the inventory system you choose will vary based on the size and complexity of your organization, and directly correlates to your risk avoidance needs. Is your organization small, lean and nimble? You may just need a lightweight spreadsheet. Is your organization larger with more resources and a need to have controls in place? You may only need an application that can give you controls but without requiring much setup time, administration, or configurability
On the other end of the risk avoidance spectrum, is your organization quite large and complex, requiring the most capabilities and flexibility an inventory control system has to offer? Or is your company an enterprise size or extremely complex entity requiring inventory control, logistics management, tied into third-party logistics systems (3PL)? If this is you, the good news is you have great options out there on the market that can help you navigate your complex needs.
Consider improving your company procure-to-pay maturity with BirchStreet Systems invoice management solution. While inventory management in the hospitality industry is rife with potential pitfalls and inefficiencies, this doesn’t have to be the case when you have a strong inventory management partner at your side.
By interfacing with your point of sale (POS) systems, you can gain access to valuable inventory reports and even automatically replenish items or receive alerts for items at low inventory levels. Handheld scanning, perpetual inventory tracking across unlimited locations, and multiple costing methods ensure that this solution can scale alongside the needs of your business.
To learn more, tune into our demo on-demand.