Overview
The Inventory tab provides a clear overview of your current and incoming stock levels, item usage, and also allows you to set PAR levels and decay rates. These tools are designed to give the most accurate view of your inventory between counts, so that you can make faster, more informed ordering decisions. This tab is one of your most powerful ordering tools also. It helps you add items to your cart at the correct quantities, which will reduce waste, save money all while ensuring you’re properly stocked.
Each column in the Inventory Snapshot table has three sections:
The top section with the enlarged number indicates the chosen or winning number that the system will use in order to make order recommendations. If you’re currently using our recommended number, it will show up as blue. These blue numbers are dynamic and will change over time based on your item's consumption history.
Below that we give you a place to put a manual entry if you wish to override and “hard code” a different value.
Lastly below that, we show you the system's recommended values that you can help use to make order decisions, and have more insight.
Here is a column by column overview.
Current/Adjustments Column
This is our best guess for your current inventory level for what you should have in your possession ready to deploy. If set up properly, this can become very accurate. This value is automatically affected by three variables, received inventory, sales, and decay rate. If your Recipes are set up correctly and your POS is connected, then when items are sold, they are automatically deducted from your this value.
The items are ordered intelligently by how low stock they are - more specifically, the ratio between inventory level and PAR level. Therefore, by skimming the top items in your inventory snapshot, you can quickly see which items need to be ordered next.
The accuracy of the Current Estimated Inventory is affected by, how long it has been since the last manual count, how careful you are when checking quantities when receiving inventory, and the accuracy of your decay rate. See Decay Column for more information.
As time goes on, the estimated inventory will drift from reality due to real world waste, spillage, spoilage etc. How long this takes depends on many factors but eventually, you will need to do a manual count.
Counting Inventory
A count is defined as anytime a user manually adjusts the inventory. To do a count, press the pencil button and enter the correct number of units. Make sure to take careful note of the pack size when you’re counting. This is a good opportunity to take note of the difference between the estimated and actual and see how close they are.
In addition to scheduled inventory counts (at a frequency that makes sense for your business) we recommend making counts as you receive inventory, or when inventory reaches a state that is easy to count (one entire jug, exactly 2 pallets, etc.). This means better accuracy and less items that need to be counted during your scheduled counting days. We also recommend counting and manually adjusting your carry over inventory when receiving new orders. See receiving new orders section for more information.
You can see the last time an item was counted/edited by looking at the “last count date”. Here you will also see the “Last received date” which is the last time you received fresh inventory.
Incoming Column
The main number in this column shows you how many units have been ordered and are on their way (and not yet added to the current inventory count). You can also expand further to see the current orders for this item.
PAR Level
The PAR level is the minimum quantity of an item that should be present at the start of an order cycle to ensure it meets demand for the days to come. It should take into account:
- The ordering frequency of the item
- The consumption rate (sales rate + decay rate)
- The desired safety buffer/factor (which in turn is based on the variability in the consumption rate, and or the importance of the item)
We use the PAR value to figure out the amount you should order, so that you don’t run into shortages and without over ordering.
When in the inventory tab, and you hit the button, it will add the recommended amount to make sure that when it arrives, you are back up to the PAR level. The formula for the recommended order is:Order quantity = PAR - On Hand + (Amount You’ll Consume While Waiting) + [TotalSafety Safety Factor]
= PAR - On Hand + (Consumption Rate x Order Frequency) + [Recommended Safety Factor + Manual Safety factor]
The recommended safety factor is really our secret sauce and an incredibly valuable number to ensure the perfect PAR (and thus order) quantity. See the Safety Buffer section for more information here.
Consumption Column
Your consumption rate, in simple terms, is how fast you consume this item. It is a function of your average sales rate from your Point of Sale (denoted as POS in the consumption column), plus a decay factor. This factor is to take into account non sales based consumption (spoilage, waste, spillage etc.) or other usage not able to be tracked by your POS.
If you want to fix this number for something that is not connected to your POS, such as toilet paper for example, then you can simply enter in a number.
Your average sales rate is based on the sales of this item in all of your recipes over the last two sales cycles. Your decay rate is in the decay rate section below.
In this column also, we give you a value CV which stands for Coefficient of Variation. That is just a fancy term for how stable or unstable your sales are from order cycle to order cycle. Mathematically, it’s the ratio between how much your sales vary, and your sales itself. Example: your average sales are 5 units/day, but on the biggest sales days you sell as much as 9. Your CV would be the variance (9-5)/5, or ⅘ or 80%. Said another way, you might sell 80% on top of your average sales, on a big sales day.
Decay Column
Your decay rate is in the consumption columns of your inventory snapshot. It is an incredibly useful number which can be key to helping you save money and reduce waste.
Depending on your business, setting your Decay Rate can be vital to keep your inventory in sync. This can work in concert with your sales numbers or in some instances replace it.
Most often, your sales cannot account for all of an item's consumption because there are other factors at play. Your decay rate is there to account for this.
These factors could be:
- Spoilage due to expiry dates of perishables
- Incorrect allocation during the creation of your recipes
- Other predictable waste that are not a part of your recipes
We compare the difference between your actual consumption and your sales to recommend a decay rate for you. This recommendation is found under your consumption number called “Decay Rec”. This value is the percentage of your stock that will decay/be consumed or otherwise not be usable on any given day. Because it is based on a fraction of a shrinking number, it assumes you lose most early in the cycle and less later on. You can choose to use this recommendation or set your own.
This number might take time to tune/calculate based on inventory corrections over time. If your decay rate is high, you might consider evaluating your recipes, talking to your staff to better understand how waste is occurring, ordering more frequently, improving storage, or other strategies to shrink this number. Almost all consumption not connected to revenue should be minimised after all.
Lead Time
Here we ask or display the lead time for that particular item from that particular supplier. We display this so that anyone using this screen can better understand your order cycle. We utilize this number to ensure that we can set the correct date for estimated receipt of inventory. When you receive order confirmation information (via email for example) and lead time information is included, we automatically update that value here. If you prefer, you can override this with a manual entry.
Order Frequency
Most businesses order at a regular interval, the number of days between orders is your order frequency. This value is critical for our PAR recommendation (and thus the add to cart order recommendation). A longer
Safety Buffer
We give you two safety factors in order to adjust your PAR amounts to the correct level. The two are recommended safety factor and safety buffer.
The recommended safety factor is set by choosing your coverage confidence and the manual safety buffer is controlled by the safety buffer number.
The recommended safety factor is really our secret sauce and an incredibly valuable number to ensure the perfect PAR (and thus order) quantity. It is based on your sales volatility, order frequency, and desired order coverage (coverage confidence) to statistically calculate how much you should order to cover what percentage of order cycles. Setting the confidence to “balanced” means that, on average, 1 time in 20 cycles you might have to do a rush order to meet a demand spike. This is a good mix of safety and economic efficiency.
The manual safety buffer allows you to add an additional fixed value to boost your recommended order quantities for important items.
Last Order
This is the date the last order was made for this item. We also provide a link to that order, the quantity that was ordered, and the status of the order below as well.
Add to Cart and Add to List
We use your current inventory estimate and your PAR level to add the appropriate amount of this item to the cart. When you go to make your order from your supplier, these items will be there automatically. If some time has passed since you added these items to the cart, the quantities may need to be adjusted based on the latest information.
For web portal suppliers (suppliers that only accept orders on their third party storefront and not via email) you will instead see an button. This will allow you to create a smart shopping list for you to execute on the third part website.
By using supplier carts together with lists, you can have a workflow when you first make your ordering decisions, and then quickly execute on those orders in both the orders tab and the supplier's website (if necessary).
Inventory Aging Over Time
Underneath the inventory snapshot you will find
Incoming Inventory Sub Tab
This sub tab, at the top of the main Inventory tab, shows all the incoming inventory from existing orders not yet received.
Receiving inventory properly is important to making sure that your inventory levels are accurate. We recommend counting both the amount received, as well as doing a count of existing items to carry over. This ensures that your inventory and consumption levels are up to date. After doing this counts, double check the date is correct (in case it had arrived on a previous day) and then hit .
If the amount received differs from the amount ordered, a “partially received” status will be put on the order, alerting the person managing the orders to communicate with the supplier and figure out if the inventory is still pending, or if there is a change to the order. It will also be a reminder to communicate to the accounting department on whether a credit note needs to be issued etc. The rest of the inventory will remain in the Receiving Inventory sub tab until either it arrives or the order is edited to agree with the smaller number.