5 Key Steps to Successful Inventory Management

Having spent almost 2 decades behind a stove — I have seen just about everything there is to see in when it comes to stock and the management thereof. From elaborate ways, chefs were getting through the booze cabinet or the painstaking hours needed to manage a system with pencil and paper.

These 5 Steps were the Holy Grail for me when I was a young head chef, let’s start with…

What is Inventory Management — 

In essence, inventory management is your system for tracking what stock comes into and out of your business, and what’s leftover.

Having a good inventory system in place has huge benefits for your business and is a fantastic eye-opener into many aspects of your business. It is the quickest and most reliable way for gaining insight into the ways you may be losing money, it can help identify skill sets (or lack thereof) in a kitchen, bar, floor and it too can even determine product quality. Too many people are sending back poorly prepared dishes — costing you hundreds of pounds a week in discounts and waste. Is it the Staff or the Produce.

With granular insights into where your stock is going(a wise old sous chef once told me to look at all the stock as actual money. Try it for a day, it will change your perspective), you can start implementing strategies and policies for saving money and increasing your revenue — which is the ultimate goal in restaurant inventory management.

5 Key Steps — 

1. Set up systems to track and record inventory — This should be a process. Orders delivered — Who can sign for them? Where does the stock go once signed for? Where are the invoices kept? Who reconciles that? Has it been checked? Have we securely locked the high-value items away? You get the picture…The Stock Handling Process below is a great place to start.

Start with:

Placing of orders — I would always suggest a dedicated platform, even if orders are placed with some suppliers online or over the phone. They can then be kept and tracked in one central place.

Receiving of orders — This is a key stage. Have you received what you actually ordered for the agreed price? Is the produce in perfect order? If not it goes back. Credit notes — have a process for this. How you flag them, how you follow them up. They are vital.

Safely storing of orders — Theft is happing now. As much as we don’t want to acknowledge or even believe it. It happens opportunistically. Having your high-cost items locked away lowers temptation. Also storing the produce at the right temperature will ensure maximum shelf life reducing wastage.

Stock Rotation — Another step to help reduce waste and to ensure your ordering is done correctly. FIFO is the golden rule, First In First Out. You will have an understanding of par levels and use the produce that needs to be used first.

Reconciling invoices — This step will be made easier it the issue is flag at the receiving of the goods. but here it happens again when reconciling on the out dedicated platform. ensuring you have received what you ordered and paid what you should have.

Stock count — The first one will be difficult. But once it is done you have a closing stock figure, and this is gold. The next time will be easier & faster. I used to do it every fortnight. Once a month is a good start and if you are using inventory management software then it suffices. It will have recorded all your purchases and credit notes. All you need is that Closing Stock figure to complete the loop.

2. Develop specifications and procedures for ordering and purchasing — Most recently I have used software to do this. It cuts down the manual process and reduces the margin for error. I know a few people out there who don’t like this as they are afraid it will remove the connection between supplier and themselves. It doesn’t have too. The standard items like sugar and tin foil can certainly be done via email. But keep relationships with your suppliers. We used to order our fish at 06h15 every morning over the phone from a few day boats on the north Cornish coast. I still entered this into the system when it arrived and used the system to its fullest. Having a system and specification as to how you order is key — Start with a whiteboard. On the fridge door or somewhere in the kitchen. People can scribble down what they need and what they have taken the last of. Take this list and produce an order list. No armchair ordering(as Ross used to say). Make sure the person placing orders does a walk around with an order list and checks to see that there isn’t 16L of double cream behind the carrots. once this is complete then figure out how you will order it. Over the phone, emails or a good software solution.

3. Counting Stock regularly — I mean every fortnight, and this means everything you have purchased. Not just the few takeaway cups in the storage or the dry store. Everything. Ok ok, I see rapidly losing interest now, but stay with me and I will explain. Once a month will also be a good start. Over a fortnight you will have all the information on what you have purchased and what you have sold. That information is available to you daily. But a vital piece of the puzzle is missing, “stock holding”. It is the first step to understanding where your money is going. Are you carrying too much stock? Is it walking out the back door? Do some of your staff require more training?

4. Accurate recipes — This is a big one. Not only do they need to be accurate they need to be followed. The latter is the challenge. This is can be achieved by having regular training sessions. These are fantastic as the staff feel engaged. They feel like you are giving them the knowledge to better do their jobs. Great motivation for them and in return you get consistency. The most used C-word in a kitchen, contrary to popular belief. Consistency of methods and recipes being followed will, in turn, bring smaller variances on your month-end stocktake and you will be closer to your theoretical GP than ever.

5. Use Food Inventory Management Software — Many operators I spoke to don’t do a stock take, which when asked why — came down to three main reasons:

1. Their stock value does not change that much so why keep taking stock?

2. The job takes is too time-consuming and it involves several people and also not sure where to start.

3. The figures are highly inaccurate, especially with food, as many kitchens can have up to 30% of the stock value in pre-made recipes, bulk production and dishes.

All of these reasons are understandable when you have to take stock manually at the end of the month and the final figures are only available the next day, what use is that?

Using a good software platform, with granular insights into where your stock is going and ultimately your money, you can start implementing strategies and policies for saving money and increasing your revenue —