How to Choose Inventory Software for Restaurants and Bars

What is Inventory Management?

Inventory management is the process of determining the right stock level to maintain and meet customers' needs. An effective inventory management system will help ensure that a company's stock levels match current demand and projected sales, while reducing excessive inventory that can tie up working capital and become costly to store.

Inventory management is a critical aspect of any business that sells products. It includes the processes and systems used to track inventory levels, identify required stock, and replenish supplies as necessary. An effective inventory management system helps keep operations smooth by ensuring that products are available when customers need them.

While inventory management is critical for any business, it is especially important for food and beverage industries where products have limited shelf life.

Mismanaged inventory management can have disastrous consequences for bars and restaurants. Poor stock control can lead to a shortage of ingredients, leaving customers disappointed and leading to a loss of revenue. In extreme cases, it can even force businesses to close their doors permanently.

Why is Inventory Management Important?

Effective inventory management can improve customer satisfaction by ensuring that products are available when needed. It ensures that inventory levels are appropriate and helps avoid stock-outs and excess inventory. Additionally, good inventory management can help reduce inventory costs, such as storage and transportation costs. Let's dive a little deeper to understand why inventory management is important-

1. Accurate inventory levels ensure that you don't run out of stock, which could lead to lost sales.
   
2. Adequate inventory levels also help to avoid potential stock-outs, which could disrupt your supply chain and adversely affect your reputation with customers.
   
3. Inventory management can help reduce carrying costs, such as storage fees, insurance, and shrinkage (loss due to theft or damage).
   
4. Having the right inventory level can improve your cash flow by freeing up working capital that is otherwise tied up in excess stock.
   
5. Appropriate inventory management can also help streamline order management and take advantage of supplier quantity discounts.
   
6. Good inventory management practices can help maintain accurate financial records and avoid potential audit issues.
   
7. Effective inventory management can provide valuable insights into customer buying patterns and related trends that could inform strategic decisions about product mix, pricing, etc.
   
8. Properly managed inventories can help businesses enable Just-In-Time inventory processes and other lean initiatives to reduce waste and increase efficiency throughout the business.
   
9. Businesses can minimize their environmental impact by optimizing stock levels and reducing superfluous shipments (and associated packaging) while still meeting customer demand.
   
10. In some industries, like restaurant businesses, effective inventory management may also help businesses comply with government regulations (such as food safety) around handling certain material.
    
11. Good inventory management ensures that popular products are always available, leading to happier customers returning to the business. It is especially important for businesses with many repeat customers or whose products are time-sensitive (such as food).
    
12. By analyzing past sales data inventory management helps businesses accurately predict future customer demand patterns and order accordingly.
    

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What is Inventory Management Software?

Inventory management software is a program that helps businesses track their inventory levels, orders, and sales. It can also be used to monitor stock levels and create reports. The software can help businesses by providing accurate information on the available inventory, eliminating the need for manual counting, saving time and money, and reducing the risk of error. Additionally, the software can provide insights into trends and patterns, helping businesses make informed decisions about their inventory levels.

Overall, inventory management software can help restaurants by automating the tracking of inventory levels and orders.

• Real-time inventory tracking helps improve demand planning and ensures that businesses have the optimal stock available to fulfill orders.
  
• When inventory management is automated, it cuts down on the need for excess funds to cover errors, leaving a business with extra funds that it can pump into other verticals like employee payroll, product development, and other business functions. Fewer errors also require fewer resources to be spent on damage control, allowing them to be allocated elsewhere.
  
• Businesses can improve forecasting accuracy and optimize processes by leveraging machine learning and artificial intelligence (AI), usually integrated into modern inventory management software.
  
• Automated inventory management can also speed up tasks like barcode scanning and data transfer between different departments.
  

Features of Good Inventory Management Software

Most inventory management software these days has a host of features designed to make managing inventory easier and more efficient. In addition, modern inventory management software is designed to be user-friendly and easy to learn. So even if one is not tech-savvy, these solutions are easy to use without difficulty.

Let's understand this with an example. While wine may seem like a relatively simple product, managing a wine inventory list can be quite complicated. There are several factors to consider- the type of wine, the vintage, the vineyard, the region, and more. Inventory management software can help track inventory levels so the bar can keep popular wines in stock. It can also help with ordering new wines by keeping track of what needs to be restocked and when. In addition, some inventory management software programs include tools for managing wine tastings and other events, which can further help promote the bar's selection. It gives patrons more choices and improves their chances of finding a wine they love.

Here are some of the common features of inventory software-

1. It is cloud-based, which means managers can access it from anywhere in the world with an internet connection. It helps if you have a distributed workforce or need to manage inventory while traveling.
   
2. Most systems come with built-in reports that offer valuable insights into businesses. For example, one can see which products are selling well and which aren't moving. Advanced algorithms can analyze past patterns of demand to predict future trends.
   
3. It automates many tasks associated with inventory management, such as reordering products when they reach a certain level or sending alerts when stock is running low.
   
4. Some software systems also integrate with Pos systems and accounting platforms. This allows businesses to seamlessly connect their inventories with their financial records for greater visibility and accuracy.
   
5. The best inventory management solutions include order tracking capabilities, making it easier to see exactly where each order is in the process. There are no surprises when it comes to deliveries -- everything is transparent and under control.
   
6. Order optimization algorithms can identify opportunities for consolidating multiple small orders into a larger shipment, minimizing transportation costs while still meeting customer delivery expectations.
   
7. In addition to knowing what products need to be replenished, modern inventory management systems also track where items are located in the warehouse (and even designate pickers for specific tasks), making fulfilling orders more efficient.
   
8. RFID tags and barcodes can automatically collect inventory level, location, and movement data. It reduces the need for manual data entry, which can be error-prone.
   
9. Most solutions also offer lot tracking and expiration date management. Perishable items often have strict lot tracking and expiration date requirements that must be followed to ensure quality control. Modern inventory management software includes features to help businesses track these items and ensure they are properly managed throughout the supply chain.
   

How to Select Inventory Management Software?

Choosing the right inventory software for restaurants and bars can be daunting. There are many factors to consider -- price, compatibility with existing systems, features, and more. However, first and foremost, it's important to find a solution tailored specifically to the food-service industry. Off-the-shelf options may work for other businesses, but when managing perishable goods and constantly changing menus, it's best to go with a specialist.

Then, some solutions offer basic reporting and tracking capabilities, while some have advanced features like recipe management and purchasing integration. It is always good to make a list of "must-haves" and "nice-to-haves" before starting your search to be sure of what you're looking for.

Consider the option for scalability as well. As a business grows, it needs an inventory system that can scale accordingly. Choose a software solution that can easily expand and accommodate additional users and locations.

Selecting an inventory system that seamlessly integrates with your other business applications is important. It will save time and minimize disruptions during implementation and ongoing use.

Finally, choose a vendor who offers value for money and comprehensive support, including training, troubleshooting, and upgrades. This will ensure that a business gets the most out of their investment.

Top Inventory Management Software

Zip Inventory
Developed by veterans from the food-service industry, this software solution helps restaurants organize and streamline inventory management. It integrates with sales data to provide insight into ingredient usage, on-hand inventory levels, and supplier delivery schedules. The software also sends regular prompts to straighten the loopholes in the ordering process. This helps businesses sustain optimal inventory levels and reduce food waste.

Zip Inventory makes inventory counts easy. With shelf-to-sheet counts, waste tracking is a cinch. It also generates Variance and Cost of Goods Sold reports to help users track food costs and cost fluctuations over time.

Upserve by Lightspeed
This is a point-of-sale (POS) system with built-in inventory software. Since it combines the two most important software solutions used by businesses, it is an excellent way to control software costs. Upserve automates tasks like ordering and receiving supplies. It sends automatic alerts when inventory depletes and generates orders, ensuring that a business always has what it requires.

It also has advanced features to generate detailed reports that can provide businesses with food cost and ingredient usage, and optimize menus with a click.

Inventory Management FAQs

1. What are the three popular inventory management techniques?

Economic order quantity (EOQ), just-in-time (JIT), and materials requirements planning (MRP) are some of the most common inventory management techniques. EOQ is a technique that determines the optimal order quantity for a company to purchase, based on factors such as the costs of ordering and holding inventory. JIT is a lean technique that seeks to eliminate waste by reducing or eliminating the need for surplus inventory. MRP is a planning technique that uses a bill of materials and schedules to create purchase orders and dates for when specific raw materials should be ordered.

2. What are the four common types of inventory management in restaurants?

Restaurants typically use one of four inventory management systems- manual, recipe-based, par-level, or decoupled.
Manual inventory management is the most basic type, and usually only works for smaller restaurants with simple menus. In this system, the chef or manager creates a list of all the ingredients they need to make each dish on the menu and updates it every time they use an ingredient.
Recipe-based inventory management systems are similar to manual systems but include specific recipes for each dish on the menu. It helps reduce human error by ensuring that everyone in the kitchen uses the same ingredients for each dish.
Par-level inventory management systems help chefs keep track of how much of each ingredient they need on hand at all times (the "par" level). It ensures that there are always enough ingredients to make popular dishes without food waste.
Decoupled inventory management systems are the most complex and are typically used by larger restaurants with more complex menus. In this system, different software programs are used to track different aspects of inventory (such as ordering and sales). It can be expensive and time-consuming to set up, but it provides restaurants with enough data that can be used to improve their operations.

3. How is inventory control different from inventory management?

Inventory control and inventory management are both processes that aim to ensure that a business has the right stock level. Both methods use similar techniques, such as barcoding and tagging products to keep track of inventory levels. Inventory control is a sub-segment of inventory management that deals with physically counting stocks, tracking inventory levels, monitoring warehouse inventory movement, identifying slow-moving or obsolete items, and reconciling discrepancies.
Inventory management is more complex and involves planning, organizing, and controlling all aspects of managing a business's stock. It takes a wider view and considers factors such as stock turnover and lead time to optimize inventory levels and meet customer demand.