Expert Advice on Hospitality Topics

General Inventory Procedures

Minor overall changes can result in major cost reductions. Take a fresh look at your existing inventory system. In every establishment, there is general room for improvement. For minimum effort, you can get maximum value out of your stock.

• Timing. Move all drinks to a designated storage area as soon as they arrive. Don't let stock hang around. Drinks (and wine especially) need to be stored in an ambient environment, or their quality can deteriorate rapidly - and so can your profits! Also, unattended drinks, languishing in receiving areas, present a great temptation. Liquor is high on any thief s hit list.

• Faulty goods. When receiving merchandise, look out for cracked and chipped bottles, mislabeled boxes, outdated or cloudy beer, correct type and vintage of wine, raised corks, leaking and weeping bottles, damaged labels and wrong-size bottles. Contact the supplier immediately about any dis­ crepancies.

• Storage area. Your storage area must be fit for its purpose. Poor storage conditions can result in poor quality, breakage and escalating costs.

• Security. Basic, but obvious. A good security system removes temptation and reduces the risk of external break-ins.

• Rotate stock. First in, first out. This is important and avoids wastage, overstocking and running out. Pay special attention to beers: their shelf-life is limited. Most beverages, also, have no longer than a month before the sell-by date.

• Control. Large or small, every drinks outlet needs some form of control procedure. Track your products from the moment they arrive at your premises to when they are sold. While this doesn't have to be complicated, the key to any good control system is to make sure that all the liquors, wines and beverages are located in the right place at the right time and are being rotated properly.

Make the Most of Your Storage Areas

• Location. Define storage areas. Are you using the most convenient areas for storage? Rethink. Centrally located storerooms and walk-in coolers make ideal storage areas. Easy access saves time and money.
• Other storage areas. "Storage" means more than an area for dumping received goods! Storage locations include shelves, workstations, reach-in refrigerators and behind the bar. Keep all these areas accessible and clutter-free. It speeds up your operation and reduces breakage.
• High-value wines. Consider separate cellaring for prestige wines, somewhere away from the busy "shop floor" environment. As turnover of such wines is slower, accessibility is not top priority. More important is security and perfect storage conditions (even vibrations can affect the quality of good wines!).
• Extra security. All drinks should be stored in a secure area. Organize the layout of storage areas to offer maximum security for liquor and high-value wines. Only personnel who need keys should have them.
• Quantity. Drinks can be stored in bulk in the main storage area. Drinks in general storage areas, such as behind the bar, are better stored in the units or quantities in which they are sold.
• Environment. Know your product and store it accordingly. Maintain proper temperatures, humidity and ventilation. Wine is particularly sensitive to environmental influences. It can easily absorb odors from nearby food storage areas. Poor storage practices can quickly reduce the quality of stored inventory - and nothing affects profits like quality!

Keep Purchasing Procedures Simple

Whatever the size of your operation, certain repetitive purchasing procedures are unavoidable. At the very minimum, a buyer has to complete a purchasing requisition, a purchase order, a shipping instruction, a receiving report and carry out some form of quality control. Purchasing procedures, however, exist for a good reason. Save time, effort and money by simplifying them.

• Change your attitude. Instead of viewing purchasing procedures as an irritation, think of them as a support system. Accurate documentation in this area has rescued many a business  from the jaws of liquidation.

• Concentrate on basics. Buyers should always have adequate purchasing procedures in place. The key, however, is to avoid overkill. If a certain procedure in the buying cycle is irrelevant to your establishment, get rid of it. A written requisition, for example, may not be necessary if you regularly "call off stock ordered on a contract basis. Adapt and be flexible.

• The purchasing requisition. Save time. Establish a pared-down requisition procedure that identifies ongoing requirements and automatically triggers the purchasing cycle.

• The purchase order. No skimping here! The purchase order is a legal contract between purchaser and vendor. Even in small organiza­tions, the purchase order needs to be put in writing. Get it right. It can save time, hassle and money in the long run. A computer-generated purchase order considerably reduces human error.

• The shipping instruction. Keep it simple. This piece of documentation is merely a confirmation of instructions from the buyer to the seller. Whether handwritten or computerized, the shipping instruction needs only to contain simple information. It should include the purchase order number for the shipment, and it, too, should be numbered for record-keeping purposes.

• The receiving report. Again, simplify. Although an important document in the purchasing cycle, it only needs to contain basic information: the quantity and condition of the merchandise, whether the merchandise tallies with the original purchase order, a record of stock shortages, the recipient's signature and the date of receipt.

Define Your Purchasing Duties

It is all too easy to get bogged down in the day-to-day activities of purchasing. Remind yourself, occasionally, of your areas of responsibility. It helps you to focus on doing a good job.

• Don't lose sight of your overall goal. Your responsibility, as a purchasing manager, is to maximize value so that your establishment gets the most for its money. No more, no less.

• The cycle of duties. Always bear in mind that a purchaser's areas of responsibility cover an entire cycle of activities: identifying the needs of the establishment, planning, sourcing merchandise, purchasing, receiving, storing and issuing.

• Control. Effective management and control of the purchasing cycle, with a constant eye on costs, is your number-one duty.

• Dealing with vendors. The purchasing department (even if you are a one-man band) is responsible for all external dealings with vendors. The purchaser should be able to handle all vendor-related queries.

• Avoid taking your purchasing problems onto the "shop floor." Front-of-house personnel will not appreciate interruptions while they are trying to please customers. Apart from emergencies, keep all purchasing queries for later.

• High standards. It is the purchaser's duty to make sure that all merchandise purchased is fit for its purpose and of a consistently high quality. High standards = good value.