Managing Your Inventory

One of the hardest things to do is to accurately monitor your inventory. There are so many variables that go into what is left on your shelves at the end of the month and it can be difficult to determine why your count is off. The idea of determining your costs seems so simple:

Starting inventory + purchases – ending inventory = Cost of Goods Sold

But what about waste, transfers to other departments, theft, unusable items, inaccurate counts? Where do those things factor into the equation? There are a multitude of ways to try to control these factors but I am going to focus on one in particular that is an easy place to start.

In order to control theft (or shrinkage as it is more commonly referred to) there are several different strategies you can employ. Take for instance your liquor, beer, and wine inventories which are more likely than other things to get up and walk away.

As much as possible try to keep the bulk of the inventory located in a central storage room with a lock. The only items that should be kept outside of that main storage location are the items that bring your bar locations up to par levels. Depending on the level of business you are doing your par level may vary from one bottle to three or four.

You want to make sure that your bartenders aren’t constantly running to the storage room to get more bottles but you also do not want unneeded bottles sitting around as those are more likely to appear to employees as if they are unattended which makes them more likely to not be there the next day.

Make sure that only 1 or 2 people have the key to that storage room and they understand that anything that leaves needs to be recorded on the sign out sheet. The keys should never be given to anyone except for the people who are in charge of them. It is amazing how quickly giving a key to one bartender in a crunch can turn into 3 or 4 people handling it every day and that negates the idea of having a secure room.

The other important factor is doing accurate bar breaks so that every bottle that is taken out is recorded and if an unused bottle comes back it must be checked back in. Tied into this procedure should be test counts throughout the month. 30 days leaves a lot of time for things to go off track so testing an item every day or two is a good way to catch issues early. Once you get the final month-end count, it is very difficult to go back and find when an issue started.

Overall, the key is to create a sense of accuracy and security so that everybody in the business sees that every item is being counted. It is also much easier to monitor the 2 or 3 employees who have keys than it is to watch all your employees. People are very smart when it comes to theft and they pick up on opportunities to take items when they feel no one is watching. If employees feel like the controls are tight and the likelihood of getting caught is high than they are less likely to try anything which means you keep more of your product on the shelf.

What are some controls your company uses to prevent shrinkage?