Full Inventory Guide - Advanced
Tracking the inventory you use to make the products you sell is an important step to understanding and controlling one of your restaurant’s biggest costs. Effective
inventory management can help you maintain consistency in food preparation, identify problems with theft or misuse of product, better manage your purchasing,and give you a better understanding of how to price your products.The Phoenix Inventory Module is a complete tracking system that will precisely measure the amount of each ingredient which should be used based on your sales. It will help you create purchase orders for your vendors and track receipt of product. With accurate physical inventories, you will soon see how your actual usage compares to your ideal food cost, and be able to identify ways to reduce food costs. Even with a computerized inventory system, setting up and managing inventory tracking does take time. Start out by deciding what items you wish to track. If you choose to inventory every ingredient, it will take you longer to set up the system, but you will have a great deal of data to work with. If you decide to track only your high cost items, you can get started quickly and gain some control over the most important cost factors. This guide will walk you through the process of setting up the inventory program and using it on a daily basis. Before you start, it is a good idea to decide what items you wish to track.
Entering Ingredients
- The first step is to enter information about each ingredient.
- Ingredients can be anything you purchase from a
- vendor, or anything you make to use in several recipes.
- Before you start, you will want to gather some information:
- A list of your vendors, including address, phone number, and your account number.
- A list of ingredients you will be entering.
- For each ingredient, you will need to know:
- The preferred vendor & the vendor’s ordering #
- The purchase unit (i.e. case, bottle)
- The usage unit (i.e. ounce, slice, each)
- How many usage units are in one purchase unit
- The amount you normally purchase
- The most recent purchase price
- The warning level—how much should you have left to trigger another purchase
- Where the item is stored in your restaurant
- How much you currently have on hand
Here is a worksheet that you may want to use to gather information about your ingredients before you enter them into the system.
Purchased Ingredients
Now you are ready to enter your ingredients into Phoenix.To access the Inventory Manager, go to Manager Home and click on the Inventory Icon. You will see a list of ingredients. Click on the “Add Ingredient—Purchase” button at the bottom of the screen to add your first ingredient. Now you will enter the information you have gathered on your worksheet. A few things to consider:
- Ingredient Name: Use any name you like. Many screens show ingredients alphabetized so if you prefer to see meats, vegetables, paper products etc. grouped together you may wish to start the name with a code letter.
- Ingredient Number: How you number your ingredients is up to you. If you have multiple stores, you may want to use the same number throughout for consistent reporting and management.
- Preferred Vendor: You will be able to order this ingredient from any vendor, however the preferred vendor will be the one that the warning level triggers a purchase order for. Go ahead and enter a new vendor if needed.
- Vendor’s Number: Enter any catalog or item number for the vendor.
- Typical Purchase Quantity: This will be the default quantity which appears on purchase orders when you order this ingredient.
- Purchase Unit: Select the unit of measure in which you buy this ingredient (I.e. case, gallon, pound). Go ahead and add a new unit definition if needed.
- Yield: How do you divide up the item when it is used in recipes? If you purchase by the pound, does 1 pound yield 16 ounces? Enter the conversion ratio here.
- Usage Unit: Select the unit of measure which corresponds to how you use and sell the ingredient. It can be the same as the purchase unit if there is a 1 to 1 ratio. For example, if you purchase by the “each” and sell by the “each”.
- Last cost: Enter the last price paid per purchase unit (per pound in this case)
- Average Cost: This read-only field will automatically calculate
- Reorder Point: Enter the level at which you wish to be warned of reorder. If you do not want to be warned, enter 0.
- On Hand: Enter the amount you currently have on hand. If you don’t know, you can enter 0 for now, as you will want to do a physical inventory count immediately before you start using the inventory program anyway.
- Physical Inventory: For each ingredient, you can choose how often you plan to physically count it. Some high cost ingredients might be counted weekly while others maybe just once per month. This will control what items print on the physical inventory counting worksheet.
- Location: This field lets you organize your ingredients by where they are stored in the restaurant to make it easier to count them in order. Go ahead and add a new location if needed.
- Category: This field lets you categorize your ingredients for reporting purposes. For example, some people like to summarize reports by meats, cheeses, vegetables, paper products, etc.
Don’t forget to save your entry! Then it is on to the next one. Keep entering all the ingredients that you purchase directly from your vendors.
Recipe Ingredients
Now that you have entered all your purchased items, you may wish to enter “Recipe” ingredients. These are ingredients which you make from other ingredients, and then use as part of items that you sell. These are ingredients which you might make up in advance, and may have on hand during a physical inventory count. For example, if you make your own sauce, you may want to enter Sauce as a recipe to track its ingredients. We’ll be associating ingredients with the items you sell later, so you don’t have to create recipes for every pizza or every sandwich quite yet. Just think of those things, like sauce, or your special cheese blend, which might be ingredients for many of your items. From the main Inventory page, select Add Ingredient— Recipe. Many of the fields are the same as for purchased ingredients. The different ones are:
- Recipe Makes __ Usage Units: When you make up a batch of sauce, does it yield 64 ounces? Select the usage unit and quantity here.
- Select Ingredient: Here you choose ingredients that you have already entered which make up this recipe. So for sauce, I might first choose Tomatoes—Canned.
- Quantity / Measurement: For the ingredient, select how much of it is used to make one batch of the recipe.
- Calculated Cost: This is a read only field which will display the cost of the recipe based on the ingredients you’ve selected
Don’t forget to save your recipe!
Review Ingredient List
Now that you have entered several ingredients, let’s take a closer look at the main Inventory screen which lists all the ingredients. Ingredients are alphabetized on this screen and display
their on hand quantity as well as on hand value and vendor. Clicking on any ingredient will let you edit that ingredient. Keep in mind, you can not edit the purchase / usage ratio. The only way to change this is to delete the ingredient and re-enter it. You may want to double check that you have entered the proper ratios before moving on to the next step. The on hand value (and most cost calculations throughout the program) is calculated using the FIFO method of accounting. This means First In, First Out. It assumes that you are using the oldest ingredients first. For example, if I bought 3 pounds of pepperoni at $1.50 per pound, then I bought 2 pounds at $2.00 per pound, my total on hand is 5 pounds at $8.50. Now if I use 2 pounds, the cost of those was $3 total, and my on hand is now 3 pounds at $5.50. Ingredients listed in GREEN are below their warning levels. Ingredients listed in RED show a negative on hand value. This may be because you have not yet entered a receipt of additional inventory. If all your ingredients look correct, it’s time to start associating them with the items you sell.
Understanding Items
Before we get started setting up the inventory for the items you sell, there are some important things to understand about the way items are set up in Phoenix.
The Department/Category/Item Hierarchy:
Take a look at the Configuration / Items screen. This is where items are set up. They are organized into main departments. Within the department, there are one or more categories. Within the categories are the actual individual items. Click on the + signs to expand the tree and see this structure. This is important for inventory set up because you can set default ingredients at the CATEGORY level. So if all your sandwiches start out with the same amount of bread, lettuce, mayo and tomatoes, entering these ingredients at the category will save you time.
Items vs. Menu Buttons
Your items are set up independently from the menu buttons. This means that one item may be on the menu in multiple places. Every menu item that charges a price is somewhere in this hierarchy.
Understanding Sizes & Styles:
Some items have multiple sizes, and even multiple “styles” such as crust type. When we set up inventory for these items, we will be working with each possible size & style combination. These will appear as abbreviations across the top of the screen so it is helpful to understand how they are organized. Click on the department name of a department which has multiple sizes, such as pizza, and select Edit. Go to the “Size” tab and you will see the sizes and styles. When you
click on an individual cell, the abbreviation will be shown below.
Setting Item Ingredients
Now it’s time to start telling the system which ingredients to deduct when a menu item is ordered.
Let’s start with a simple item example. Choose an item which does not have a size option. Perhaps an appetizer—we’ll choose “Breadsticks”. From Configuration / Items, expand the department hierarchy until you see the name of the item, touch it and select “Edit”. Select the link for “Ingredients”. You will now see the ingredient matrix for this item. Now you can select each individual ingredient and indicate the amount to deduct when “Breadsticks” are ordered.
Don’t worry about the “Base Item” field for now. You’ll see as you select ingredients and enter quantity, the total item cost and item margin information is calculated.
Save the ingredient screen when you are done!
Setting Category Defaults
Now that you understand how to enter ingredients for a basic item, it’s time to consider setting some defaults at the category level to make all this set up more efficient. You can edit the category by selecting the category name and choosing “Edit”. Any ingredients you add at the category level will automatically appear for every item currently in that category, or any new item added to that category. You can then edit the individual items to add new ingredients, delete a certain ingredient, or change the quantity of any ingredients. If you edit the ingredients at the category level, those edits will be reflected at the item level also. However, if you previously changed the quantity at the item level, that ingredient will no longer be tied to the category and will not be updated.
Understanding Sizes
Now let’s try setting up ingredients for an item or category which has various size and style options. As explained on page 10, the size and style options are configured at the Department level. Here’s an example of how “Gourmet Pizza” is set up—with 3 size options and 2 crust options. Now, the inventory ingredients screen for the “Specials” category within this department
shows a column for each size and crust combination. The “Abbreviated name” is used for each size and style. For example, the first cell “SM:TK” refers to a Small, Thick crust pizza. Then we have SM:TN (Small Thin), MD:TK, MD:TN, LG:TK and LG:TN. Setting up the ingredients is simple. Just select from the drop down list and enter the quantity for each size/ style combination. Don’t forget to save!
What is a Base Item?
The “Base Item” field is used to indicate that certain ingredients are only used if the item is considered the “Base Item” in the order. This is related to “make your own” items which use toppings and fractional orders. This concept is best explained through an example. Let’s look at the item ‘Pepperoni’ which is in our pizza category. Pepperoni is considered a “Topping” item which means it can be added to a specialty pizza OR ordered alone. The ingredients for Pepperoni are defined below. The ingredients Cheese, Dough, and Sauce have the “Base Item” checked. This means they should only be deducted if Pepperoni is the base item of the order (i.e. a Pepperoni Pizza). They will not be deducted if Pepperoni is added to another item (like a Combo) since the Combo presumably already has Cheese, Dough and Sauce. In general, when setting up items which are toppings, or when setting up items which can be ordered as 1/2 and 1/2, you should check the “Base Item” box for everything but the topping itself.
Inclusions and Requirements
Understanding Inclusions:
Many items in your system are set up with “Inclusions”. This causes other item buttons to light up on the screen when ordered. For example, your “Combo” pizza may include Pepperoni, Onions, Salami and Mushrooms. If the inclusions are defined for a specialty item, you do not need to add
these ingredients in the inventory set up. As long as “Pepperoni” has its ingredients defined,
the proper amount will be deducted whenever Pepperoni is included on your specialty pizzas.
Thus, for most of your specialty pizzas and sandwiches, you will only need to set up the base item ingredients such as dough, cheese and sauce. To change how much Pepperoni will be deducted, you can click the “Inclusion Usage” button. It will default to the “normal” amount, but you can modify it to be more or less here.
Understanding Requirements
Requirements are the pop up boxes that allow the user to make a choice when the item is ordered. For instance, if your Salad has a choice of dressing, it is using a requirement. Just like inclusions, if the requirement choice is an item with inventory ingredients defined, the proper deduction will be made based on which requirement was chosen. Requirements pop ups can also use messages, which do not result in an inventory deduction. So if you want to deduct inventory for your salad dressing, you’ll need to make sure that the requirement pop up is linked to Salad Dressing items and not messages. A good indication of this would be that the Configuration/Messages list does not include any salad dressings, whereas the Items hierarchy
does. If you aren’t sure about this, contact Technical Support for assistance.
Control by Topping Count
One of the unique challenges of developing an inventory tracking system that works for pizza items is that in many cases, ingredient usage depends on the total topping count of the pizza. For example, a Pepperoni and Sausage pizza (2 top) may have 60 slices of Pepperoni, but
a 5 topping pizza may only have 45 slices of pepperoni. With Phoenix, you have the ability to specify the detailed usage by topping count of each ingredient. Just click on the “Set Topping Count” button when your cursor is in the cell of a Size/Style ingredient usage. Specify the usage for 1 to 10 toppings You can also control the base topping count for your specialty items. For example, if your Combo pizza uses pepperoni, sausage, onions and green peppers at the 5 topping level of those inclusions, set the “Topping Count for Ingredient Usage” (top of the inventory screen) of the Combo to 5 toppings. Then you don’t have to modify the Inclusion Usage amount for each topping. If a customer adds a topping to the Combo, it will now be considered a 6 topping pizza and ALL ingredients will be used at the 6 topping level. If a customer removes a topping from the Combo, it will not reduce the total topping count—the other toppings will still be used at the 5 topping level. If a customer substitutes a topping, it will not affect the total topping count—the other toppings will be used at the 5 topping level. Some items may be set at 0 topping count if they do not affect the usage of the rest of the ingredients. For example, if “Extra Cheese” does not count as a topping as far as reducing the use of other toppings, then set it as 0 topping count in this area.
Control by Order Type
Some ingredients such as boxes and packaging may only be used on a to go order vs. an in house order. To manage this, just press the “Set Order Type” button at the bottom of the screen whenever your cursor is in any cell for that ingredient. Just uncheck any order types for which you do not want this ingredient deducted. This will apply to all size/style combinations for that ingredient line.
Finalizing Set Up
Congratulations! Once you’ve got all your ingredients defined for each item you sell, you are ready to start tracking your inventory usage. Before you begin, you’ll want to do a complete physical inventory to make sure that your On Hand values are correct process.
Security
You may also want to check the security settings for your Inventory functions. Look in Configuration / Security to determine what groups of employees have the ability tomanage inventory functions.
Inventory Weight Printing
Phoenix has the option to print inventory weights on the production ticket for any item which has inventory ingredients set up.
To turn this feature on:
- Navigate to Configuration / Items. Select the Category or individual item you want to print weights for. Click Edit, and select the link for Printing at the top. Check the box for “Print Inventory Weights”. You may have to check the “override category defaults” box if you are modifying an individual item.
- Navigate to Configuration/Printer Ticket. Check the box for Print Inventory Weights. Weights will now be printed on the ticket.
Ready to take some orders? The inventory tracking feature of Phoenix will work invisibly in the background. As an order is saved, the inventory deduction immediately occurs. You can test your ingredient set up by taking an order, then going to the Inventory main list - you’ll notice that the quantity on hand has been reduced. As you take orders, the “on hand” quantity can become negative. The system will not prevent you from ordering items even if your ingredient level is negative, as it assumes you have not yet recorded the receipt of new ingredients.
Voids
When you void an item or an order, you must tell the system whether that item was “Made” or “Unmade” for inventory purposes.
- If you select “Made”, the ingredients will remain deducted.
- If you select “Unmade” the ingredients will be credited back.
- If you void the entire ticket, your choice of “Made” or “Unmade” will apply to all items. If some have been made and some not, you should void the items individually.
- If you “unvoid” an unmade item the inventory deduction will re-occur.
A Purchase Order is a list of items you wish to purchase from a particular vendor. Phoenix can automatically populate a purchase order based on the warning levels of your ingredients. The Purchase Order function is not required to manage your inventory effectively, but it can be a helpful tool in quickly generating orders for each of your vendors. To create a purchase order, select the Inventory icon from your Manager’s Home page. Select “Create PO”. Select the Vendor from the drop down list. If any open (not yet received) purchase orders exist for that vendor, you will have the option to select one to edit, or create a new one. At this point, if any ingredients are below their warning levels for that vendor, you will have the option to generate the PO based on warning levels. Add more ingredients by selecting them from the drop down list. If the vendor # is blank, this is not the preferred vendor for this ingredient and you will need to enter a new number. You can also change the quantity and the purchase price. When complete, be sure to SAVE the PO. Then you have the option to E-mail it to the vendor or Print it.
Inventory Receiving
When you receive inventory in your restaurants, you must record it in Phoenix to update your on hand quantities. From the main Inventory page, select “Receive”. Select the vendor from the drop down list. If you have open purchase orders from this vendor, you may select to receive off one of the purchase orders. Enter the vendor’s invoice number at the top of the Receive
screen. If you wish to modify the receive date, you can edit it. However you can not set a date prior to your last physical inventory, as this would cause the physical inventory adjustments
to be incorrect. Then, if you are receiving off a purchase order, you can double check the quantity received and edit the cost, if needed. You can also select additional ingredients to receive. At the bottom of the screen, “Other Costs” allows you to record delivery fees or other expenses associated with this invoice. Also you can record taxes. Don’t forget to “SAVE” the invoice. You should notice the on hand quantity is updated. If you need to edit a prior received invoice, select it from the “Review Prior” list.
Making Inventory Adjustments
Periodically, it may be necessary to make an adjustment to inventory. This lets you quickly record waste, spoilage, transfers, and other changes to your on hand quantity. To make an adjustment, select “Adjust” from the Inventory Main Page. Select the ingredient from the drop down list. Phoenix allows two types of adjustments. Either enter the new “quantity on hand” or enter a + or - adjustment amount. For either type of adjustment, select a reason, and type a note if desired. For negative adjustments, the cost of the adjustment will be recorded using the FIFO method— i.e. the oldest purchase batch will be the first to be deducted. For positive adjustments, the value of the adjustment will be the most recent purchase cost of the ingredient.
Physical Inventory
Conducting regular physical inventory counts is an essential part of maintaining accurate inventory records. The system will tell you what you should be using; your physical inventory will tell you what you ACTUALLY used so that you can analyze where you may be off. To record a physical inventory, select “Physical Inventory” from the Inventory main page. Select the inventory cycle you wish to record. This allows you to specify that certain ingredients must be counted more often (weekly, for instance) while other can be counted less often (monthly). The cycles “roll up” so that your monthly count includes all your weekly and daily items as well. Once you select a cycle, the ingredients will appear sorted by location and then by ingredient number. You can print this worksheet on your report printer to carry around and count with. When you have counted the items, enter the actual amount counted for each item. Be sure to change the measurement unit before you enter the amount. The system will show a green check in the adjust column if your count matches the system on hand quantity. If not, a + or - adjustment will appear. Once you have entered all the counts, press the “POST” button to save your changes and update the on hand quantity. The most recent inventory posting can be edited by selecting
the “Edit Last” button (with proper security). However once you post again, the previous posting is permanent.
Inventory Reports
Inventory On Hand: This report lists the on hand value of each ingredient. Negative quantities are listed in red, ingredients below their warning level are listed in green.
Inventory Warning: This report lists all ingredients which are at or below their warning level.
Inventory Adjustments: This report lists any adjustments made.
Inventory Purchases: This report summarizes purchases for each vendor.
Inventory Ideal Usage: This report summarizes the “ideal” or “theoretical” usage based on sales for each ingredient, and compares it to the “actual” usage based on your most recent physical inventory adjustments. Check the variance column on this report to find problem areas in your operation. You will see your total average food cost % for the period at the top of this report.
Item Sales Report: This report summarizes your sales by item, and shows the food cost of those items.
Food Cost Graph: The first graph on your Manager’s Home page will show labor cost and food cost compared to sales by hour.