August 15, 2006
Volume 2 Issue 74

Food Software Can Help You Save Money

   As we said in the last issue dead inventory is problem for just about everyone. The best way to handle it is to ACCURATELY look at the inventory turnover rate, we covered this in Issue 71 but in summary, Inventory turnover is the Total Cost of the Product Sold (1 Year) ÷ Average Monthly Inventory Investment (over 1 year). The key word here is ACCURATE. Without ACCURATE information any analysis of your inventory is completely pointless and could end up costing you a lot of $$$. A great way to help with ACCURATE measurement of your inventory is to look into food software package. A Food oriented software system along with a support staff that is dedicated to your business can help you know your real turns and Higher Turns = Higher Profits. Without the right support staff to help you learn and grow in the food industry your software will ultimately fail and you will have wasted a lot of money for nothing. Always remember that a Food Software Package is only as good as the support that it comes with. 

   Many people today are stilling doing inventory manually just because they don’t like change. This is completely fine but just be warned that doing Inventory manually leaves a lot of areas open for mistakes. Lets look at the difference between a company that handles inventory manually and a company that handles inventory though a Food oriented software system:

   From the chart, you can see that the company that does inventory manually has a lot more chance for human error and mistakes cost $$$. 

·          Purchase Order Entry (Entry into Inventory)

When an item comes into your inventory it needs to be recorded somewhere. In a company that tracks inventory manually, it has to be physically typed into a computer. This heavily contributes to errors with mistyping the amount or product. An item could be priced wrong, miscounted or for some food guys weighed wrong, or unreadable on the paper. The company that uses the computer software does not have that problem because they have a bar code scanning system. With this system you scan the barcode of an item coming into inventory and that’s it. Depending on the system, that data can go wirelessly into your system or be docked and downloaded into your system. This takes out any error that may arise from physically typing it in, plus it is enhances your employee efficiency and productivity levels.   

·          Picking

Picking is a crucial part of getting your items out the door and can be the time where a lot of time is wasted and we all know Time Is Money. In the manual inventory system, people are running all over the place looking for the items. Then when they come back they found out that they missed a piece or got the wrong item or wrote down 3 items but only brought back 2. These problems cost precious time and money. When an order comes though the software system a pick ticket is printed out with the order, not only does the ticket have exactly how many cases or eaches but it also shows the picker the best way to go though the warehouse. This alone can save countless hours of fixing mistakes.

·          Accuracy

 In recent studies, it is found that that an average person makes a mistake once every 300 times a letter or number is written. And what can I say these numbers don’t lie. Luckily, many of these simple errors can be caught in time, but the fact remains that these errors exist in your warehouse and will ultimately cost you money. A computer on the other hand makes a mistake once every 3,379,000 letters or numbers. As you can see that is a huge upgrade in accuracy.

·          Tracking

In today’s world that moves at an extremely face pace tracking inventory by hand can be very risky. To try and track when an item came in, where it is in the warehouse, how many you have in the warehouse and shipping it out all by hand takes a lot of paper and a lot of chances of mistakes. A software program would track everything for you. All you do is scan the boxes and then the computer tracks it though the warehouse and out the door. This again saves time and is more accurate. 

   The only way to truly understand which items are the dogs of your inventory is to make sure that all of the numbers are ACCURATE as can be. With all of your items ACCURATELY accounted for you can start to run important reports such as re-order reports, usage reports, and sales reports to see exactly how, when, and how fast an item is moving though your warehouse. As we have said in past issues the faster an item moves though your warehouse the more $$$ you put in your pocket.

ACCURACY IS KEY TO KNOWING YOUR REAL TURNS AND REDUCING COSTS

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