One of the most crucial components to building an efficient inventory management system involves understanding ordering and receiving best practices. Last week, I presented a high-level overview of why proper inventory management procedures are so key to achieving excellence within your school nutrition operation. If you haven’t read that post yet, I highly recommend giving it a look, because we will dive a bit deeper into the ordering and receiving aspects of inventory management in this post.
Inventory Turns Keep the Money Flowing
If there’s one thing that you really dislike as a nutrition director is money that simply goes down the drain. In food service, money can take lots of forms – the milk that sits in your cooler, the ground beef that got delivered two days ago, or the cans of tomato sauce sitting in your storeroom. They are all examples of financial assets to your operation.
A common method of inventory flow is that of FIFO (first-in, first-out). It simply means that an item which entered your inventory first should subsequently leave your inventory before items that entered after it. Practicing FIFO ensures that your inventory fully turns over in a reasonable amount of time, diminishing the amount of food that spoils while waiting to be served and prevents money needed to run your operation doesn’t get tied up sitting on a shelf. If you were to have several schools holding excess inventory in reserve, that money tied up in inventory becomes a drain on your nutritional operation district-wide.
According to the National Food Safety Management Institute (NFSMI), most school locations should turn over inventory 2-3 times per month, depending on their delivery schedule. More frequent deliveries mean fewer days of retained inventory. The reverse also holds true. Every nutrition operation is unique, so only you can decide how many projected inventory turn overs are right for your district and its schools.
Just-in-Time Orders Through Production Planning
Just-in-time ordering is characterized by the shortest possible turnaround time between vendor delivery to a site and the subsequent production of the menu item. It is important to be cognizant of the lead time requirements that many vendors have. The vendors themselves need to plan their inventory stock correctly, making sure popular products don’t run out, and allowing enough time to add specialized items into their inventory. In some extreme cases of just-in-time ordering, a food delivery may not spend any time on a storage shelf whatsoever, as it will simply go from pallet to prep.
Many schools have been practicing just-in-time ordering for quite some time, as it is common for many sites to not have the capability to store surplus amounts of food and serving items. Ordering your inventory items through the production planning process is a common just-in-time ordering practice for many schools and districts.
As I’m sure you’ve experienced when planning out menu cycles, lots of strategic scheduling and logistics go into the production planning process. You must ensure at time of production for any particular menu item, your site has the proper quantity on hand (QOH) of all ingredients to make said menu item. What you expect to have after all menu items are produced (at the end of a week, for example) is your projected quantity on hand (PQOH). Keep in mind that you should always have enough inventory on hand to cover emergencies, such as delayed deliveries.
Good Receiving Practices
Most important when analyzing your current inventory ordering and receiving situation is to ensure that the unit price recorded for an item delivered matches what was quoted. In larger districts, even small discrepancies of one to two cents per item can add up to thousands of dollars in sunk costs.
Additionally, count the items when they are delivered, versus tomorrow or later in the week. Getting an accurate count at time of delivery ensures that all missing items are documented for re-delivery, safeguarding that your production schedule is not interrupted due to absent ingredients.
While counting items, be sure to have the site manager verify that all items have arrived in appropriate condition. All items should be double-checked for damage, expiration dates, and, if applicable, proper temperature (such as meat and milk).
Finally, regardless of the type of inventory management system you employ, it is imperative that items be entered into the management system the day of delivery. Extra lag time in between delivery and system entry can lead to confusion and cause ordering headaches down the road. Un-entered items are essentially invisible to your inventory system and can skew your perpetual inventory numbers.
Sound Off Below — Are there other “best practices” you use in your nutrition operation when it comes to ordering and receiving items for your inventory? Let us know in the comments below, so we can incorporate them into future articles!