Why There’s No Substitute for PHYSICAL Inventory

Why There’s No Substitute for
PHYSICAL Inventory

Your POS ( Point Of Sale ) system is an excellent tool for handling many functions in your operation. Where most POS systems fall short, however, is in the crucial area of physical inventory.

Although many POS vendors and pouring control systems will tell you they handle physical inventory just fine, in reality you get one of two flawed options:

  1. Inventory based on the perpetual inventory that is provided by the POS or pouring system. That is a theoretical inventory calculated from the sales that are rung on the POS. In other words, the system takes the five bottles of Absolut it thinks you sold and subtracts that from the seven bottles it thinks you had on hand and tells you your inventory is two bottles.
  2. If you purchased the POS’s inventory module, it will allow you to print up count sheets that help you write in the inventory amounts for your items. The count sheets must then be painstakingly filled out, and later entered into the computer by someone.
Either of these methods are loaded with difficulties and error potential. For instance:

  1. Theoretical inventory is just that: Theory. It doesn’t reveal overpouring, theft, or comps until it is compared to a physical count. Only then can you tell that what the POS says you should have on hand doesn’t match what you actually have on hand. In other words, when used alone as a tool for understanding and controlling your losses, theoretical is all but worthless. Do yourself a favor and take this concept to heart: Theoretical inventory is NO SUBSTITUTE for regular, accurate physical counts (as any accountant will tell you). If you’re relying solely on theoretical inventory, your staff is probably taking advantage.
  2. Partial bottles are counted the old way, by “guestimating” what remains. No two people get the same results, so you will always have to take your results with a grain of salt. What you need is a liquor inventory system that removes that guesswork from the equation (such as AccuBar).
  3. Manual data entry is required at several points. This naturally leads to human error and takes more time than you can spare.
There is a great deal of misunderstanding in the hospitality industry about food and liquor inventory, but it’s really quite simple: In an industry plagued by the theft and waste of its main revenue-generating products, the only way to keep tight controls is to implement a thorough, consistent inventory system. Technology has addressed many of these issues, so instead of settling for unreliable theoretical inventory processes, you should consider investigating alternatives. The issue is too important to be left to chance.

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