Inventory Mangement Plan Cafeteria

Inventory Management System

An inventory management plan can cost thousands of dollars, depending on what vendor/software is used, but the same principles can also be applied in Excel for much less. Since the cost of lost merchandise is $1,000/yr, the Excel option seems to be one that will have a reasonable return on investment, though that depends entirely on how much time is taken to keep the inventory up-to-date. ROI is important because many of the most effective inventory management systems are geared towards clients much bigger than a school concession and are thus going to cost a lot more than $1,000 per year (Burg, 2013). To truly get a return on investment might require something a little more low-tech, like stickers on inventory noting a use by date, and checks prior to menu planning to ensure that perishable goods are used swiftly.

Let's say for the sake of argument that the waste was much more than $1,000 per year. Then the concession would need something a little more sophisticated. There are a number of components to an inventory management plan. First, there is forecasting. This aspect requires menu planning, and menu planning is dependent on understanding demand. Typically, historical data will be used to estimate demand. This data should include known exceptions (for example, Thanksgiving is an exception to normal Thursday demand). The chef can design menus based on two principles -- one is the expected demand and two is ensuring that perishable goods are used. For example, bread pudding should be a staple dessert, to use up yesterday's bread.

The purchasing aspect flows from the forecasting. There will be forecasting errors, where demand either exceeds or falls short of expectations, so the important aspect of purchasing is to overpurchase on foods that are non-perishable and maybe even underpurchase on those that are -- latecomers will have to substitute dishes made with perishables for ones made without. The most highly-perishable items cannot be overpurchased if the concession wishes to avoid waste. For this reason, purchasing needs to be iterative -- there should only be standing orders at minimal levels for critical items that experience very stable demand levels.

Storing of inventory needs to incorporate the fact that this inventory needs to be entered into a database. The chef should have access to this information, knowing everything that is in the inventory at a given point in time. Thus, all goods will be entered when they arrive, and amounts of those goods deducted based on planned production for the day. The chef should be able to sort goods by expiry data, and even receive alerts for goods that must be used by the end of the next business day. Such searches/alerts will allow for better day-to-day menu planning.

In a kitchen, inventory usage is not going to be perfectly according to plan. There will almost always be variation, so it is important for audits to be conducted regularly. Where perishable goods are concerned, the audits should be frequent, at least twice per week. For dried goods, audits can be less frequent. The audit will evaluate the actual amount of a good in inventory versus its expected level. This helps detect fraud, and it also helps the chef to know exactly how much of something perishable exists. This is an essential component of managing inventory, because it allows for better day-to-day production planning, and better ordering. There should be resources (people, money) specifically set aside for audits, and they should be done according to a regular schedule. Audits, especially physical counts can help defend against loss, especially where there are specific people or shifts responsible for most of the losses (Accounting Tools, 2015). Just knowing that there is proper inventory control makes people think twice about taking food.

Utilization of inventory is essential. Fortunately, in this environment, the chef has the ability to have daily specials that can help to use up inventory. Thus, there is considerable flexibility. Also, it is important to have techniques to use up perishable inventory. For example, old bread turns into bread pudding and old rice into rice pudding. Excess kale can be turned into kale chips -- same for many other items, like root vegetables. Old veggies are turned into stock. By using these techniques, inventory turnover is maximized, and waste is minimized. Alerts with respect to inventory that has been sitting too long will help to minimize obsolescence as well, as the chef will have a repertoire of dishes to make that use each ingredient.