How Food Businesses Do Inventory

Photography by Canyon Twin

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When you start a business, nitty-gritty details like how you are going to manage your inventory are often the last things on your mind. After recipe testing, marketing strategies, financial plans, and dealing with regulatory authorities, who has time to think about something so seemingly insignificant?

Unfortunately, in order to move your business forward, this is something you simply cannot ignore for long. Having the right amount of product and materials in stock at all times is the only way to ensure your success. If you run out of stock prematurely, you lose out on sales. On the other hand, if you have too much inventory, it ties up the precious cash you need to pay all the other bills.

While nobody would argue with these points, the actual need for a solution is often hotly debated. Adding a new cost where the incumbent system has no direct cost is a tough pill to swallow, especially in an industry where the margins are so slim.

However, we’re here to argue that these ‘free’ systems are not actually free. Although they may not appear as a line item on your profit & loss statement at the end of the month, relying on patched-together, ‘Band-Aid’ systems is probably costing you more than you think. Here are a few ways that small businesses manage their inventory, and how you can do better. Remember, most small businesses are leaning on funky, strung-together solutions to this problem— thoughtful consistency will always put you at a competitive advantage!

 

Shopping List-Style Inventory

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Making a list before going grocery shopping is a beautiful practice that can make any of us feel like the responsible adults we strive to be. That being said, simply eyeballing your stock and making a quick list of what you need is not the same thing as taking inventory.

Without counting your stock and keeping those records you can’t actually know for sure how much of anything you need. You’ll be completely relying on your gut feelings, which takes energy and bandwidth. Accurate ordering requires a mixture of data and foresight, and skipping out on the data puts you at a severe disadvantage. To compensate for this, companies who use shopping list-style inventory tend to rely on one particular person to do it every week, which puts a lot of pressure on that individual and takes up valuable brainspace.

Pros: Quick, no direct cost, seems easy

Cons: Inaccurate, requires a lot of invisible labor (bandwidth/brainspace), usually requires one person to be responsible for inventory

Spreadsheet-Style Inventory

Companies who finally get fed up with running out of some things while being overstocked with others (which is what happens when you solely rely on shopping lists) will often move to a spreadsheet system. A spreadsheet is definitely an upgrade from a shopping list, but it often will not do as much as you want it to do.

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Before you get defensive about what your spreadsheet can do, please know that you are preaching to the choir. We love spreadsheets for things like cashflow projections, but we don’t love them for operational tasks like inventory. Why? An effective spreadsheet can quickly become unwieldy, and they also take up too much time to maintain.

Yes, you can set up spreadsheets that stretch on for miles and have tens of thousands of tabs. Spreadsheets with color coded conditional formatting, formulas that round up or down and CONCAT what you want them to CONCAT.  Building such a spreadsheet can give you the warm, fuzzy, self-satisfied feeling that you get when you’ve solved a problem for yourself. However, aren’t there bigger (and, frankly, more interesting) problems you could be solving instead?

Pros: No direct cost, infinitely customizable

Cons: Massive time suck, big learning curve, annoying to use for daily operations

 

Printed Spreadsheet on a Clipboard

Fact: When (CEO) Lucy Valena ran Voltage Coffee & Art, this was the inventory system that was used. There was an excel spreadsheet that would get printed out and taken into dry storage on a clipboard that had a pen tied to it with a piece of string. Several months of printed-out spreadsheets were kept on the clipboard in hopes of discovering patterns which would help predict needs for future weeks. You can’t make this stuff up.

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Clipboards are great— we would never knock a clipboard. And having a printed-out list of everything you need to count is a giant leap from the shopping-list style inventory we saw above. However, unless you take the clipboard back to your desk and actually enter that data into the spreadsheet, you’re going to lose that data (and if you do enter the data into the spreadsheet, you’ll lose that time).

Pros: Quick, easy, feels organized

Cons: Time suck, data loss, unwieldy

 

Conclusion

These are a few of the ways that we’ve seen inventory get done in specialty food businesses. As the business develops, so do the systems. Although we know there are a thousand other things that seem more important on any given day, inventory is the backbone of your business. Treat it with respect, but don’t let it suck up your time.

Want to leapfrog over some of these awkward, patched-together phases and just get a system that actually scales? Our inventory management web app requires minimal data entry, has two different workflows to echo how things actually happen in your particular operation, and can be set up very quickly. With Raveler, you can count stock in multiple locations. It can add them all together and even sync to Quickbooks if you like! Want more information? Get in touch with us here.

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