Restaurant management

Inventory management with quality data and automation | modern restaurant management

Accurate inventory management is critical to business success, as it directly impacts a business’ bottom line and is key to maximizing profits. Having accurate inventory management allows a business to become more resilient and know what they can sell and when they can sell it, which helps mitigate out-of-stock scenarios.

At one time, inventory management was a meticulous, time-consuming and manual process for the Independent Purchasing Cooperative (IPC), an independent cooperative owned, managed and governed by North American Subway franchise members, which is responsible for approximately 24,000 Subway restaurants.

“Completing an inventory would take two to three hours per restaurant per week, assuming there were no errors,” said Rick Buttner, senior director of supply chain operations at IPC. . “Franchisees had to pull prices from their last invoices and add up all the dollar figures. If the cost of their food was very high, they had to go back and find the mistakes. It was a painstaking effort.

A standardized approach

With Subway franchisees spending tens of thousands of hours carrying out inventories, IPC was looking to not only automate their inventory management, but also improve efficiency across the business to save time and the money. More than 10 years ago, IPC began adopting GS1 standards in conjunction with GS1 US, the non-profit information standards organization. IPC laid the foundation for traceability by leveraging these standards, which included identifying products with Global Trade Item Numbers (GTINs) and locations with Global Location Numbers (GLNs) to accurately identify restaurants, distribution centers (DCs), suppliers, products and factories so that items could be visible and tracked anywhere in the supply chain.

They have also embarked on a journey of sharing product master data through the Global Data Synchronization Network™ (GDSN®), the largest product data network in the world. IPC asked suppliers to leverage the GDSN to share key product information. This investment in global standards, quality data, and supply chain visibility would be the company’s cornerstone in automating its inventory management process.

“Everything in our supply chain is based on GS1 standards. Our suppliers and distributors all adhere to the requirements of our GS1 standards. It became the foundation of how we do business,” Buttner explained.

Inventory automation

However, it took marrying an application, GoVentory (white label for IPC as SubVentory), with GS1 standards to have a real impact on inventory control. Built by a former Subway franchisee, GoVentory automates the inventory management process using GS1 standards to achieve optimal supply chain visibility. Communications in GoVentory are two-way, with distributors providing ordering guides and invoices, and restaurants placing new orders through the app and uploading inventory to the Subway POS.

For example, when pack sizes are published on the GDSN, accurate information is obtained on product volume, which sheds light on the consumption rate of Limited Time Offer (LTO) items. Freshness is vital for any catering operator. When a GS1-128 barcode is scanned, product delivered outside of optimal shelf life with impending expiration dates is flagged, so that appropriate action can be taken. Comparisons between the quantity ordered and the quantity invoiced are also greatly improved when the order arrives at the restaurant. The invoice is already in GoVentory and the restaurant can validate the delivery against the invoice, a process that now takes minutes, not hours. This approach maximized savings by reducing waste and resizing inventory. IPC estimates that labor efficiency alone exceeds $70 million each year in cost avoidance in North America.

“Without visibility into restaurant inventory, we’re flying blind,” Buttner added. “When restaurants order more than they should, it does two things: they provide misleading data about what is being bought, which has a ripple effect on future orders, and the franchisee may have leftover inventory. which are wasted.”

GoVentory also provides alerts when operators are notified of product withdrawals or recalls. Operators can acknowledge the alert and enter the affected inventory by scanning the GS1-128 barcode or entering the information. IPC can also contact franchisees from the app to send notifications to their mobile phones.

While GoVentory manages inventory, orders, forecasts, and recall notifications, another legacy platform called QualityNet is used for quality claim management. If the lettuce arrives looking wilted, QualityNet routes the complaint to the appropriate distribution center and supplier for credit. Barcodes contain encoded date and lot information that helps CDs and franchisees access the information needed to better manage expirations and shelf life.

Benefits are realized

Relying on data quality and leveraging the power of standards with automation has led to tangible benefits for IPC. Team members working in the restaurant can now focus on customer experience, rather than spending hours on manual inventory.

By using barcodes containing encoded date and lot information, fulfillment centers can be more accurate and efficient in their inventory rotation, avoiding deliveries of expired or short-lived products and unexpected costs. Leveraging the GDSN, CDs reference a single, consistent data source for shelf life and storage temperature information, ensuring proper food handling. Additionally, GoVentory has saved franchisees tens of millions of dollars through increased labor efficiency and maximized savings through reduced waste and minimized theft through the proper stock size.

Looking ahead, with support from Avery Dennison, a GS1 US Certified Solution Partner, developers are exploring the introduction of radio frequency identification (RFID) technology at the case level, as well as the introduction of artificial intelligence (AI) in their inventory management program. . By leveraging RFID and AI powered by global standards, IPC should save on additional labor costs and be able to increase accuracy and traceability by further automating the inventory process. .

Inventory management is the key to operational success; however, the process can be cumbersome, especially for a franchise business. With the right technology and the right unique identification and data sharing standards, operators like Subway franchisees can get back to what they do best: serve customers.