Efficient Food Systems: Your Inventory, Purchasing, and Food Production
August 25, 2021
You can tell how stressed a food business owner is by how much food waste they produce. Some waste is inevitable, but filling up the back garbage every night doesn’t only indicate that there were leftovers.
It’s a clear sign of a deeper, more serious problem: an in-house supply chain that can’t keep its costs down.
Unsold food means someone didn’t plan for the right level of demand. It means someone miscounted inventory. Someone accidentally purchased too much food. There were more cooks in the kitchen than necessary.
It means resources and labor were wasted, food margins were cut down, and the business owner is stressed because the numbers don’t seem to add up.
The Last Three Pillars Of Efficient Food Systems
Ineffective back-of-house systems shutter the doors of food businesses that should be successful every day. They disable your business from converting your assets—like raw ingredients, labor, and equipment—into a finished product efficiently. They hold you back from greater profitability (and lower stress levels).
The sad thing is, the operational chaos that generates wild levels of food waste and lost margins is currently the default in the food industry.
Thankfully, there’s another way forward that doesn’t leave you wondering where all your resources went: building an interconnected in-house supply chain that’s self-updating, self-optimizing, and labor-efficient:
This is the final article in the Efficient Food Systems series. If you haven’t already, make sure to read the first two articles:
- An Introduction To Efficient Food Systems: Rethinking Operational Chaos In The Food Industry
- Efficient Food Systems: Your Recipe Catalog And Planning Methodology (Pillars #1-2)
Let’s discuss the three major systems every food business needs to maximize resources—the output pillars that take the core food data from your recipe catalog and planning methodology and turn them into efficient, nearly-automated workflows: Purchasing (#3), Inventory (#4), and Food Production (#5).
Pillar #3: Your Purchasing Workflow
Purchasing food, for most businesses, is a guessing game based on two questions: When is the optimal time to buy an ingredient, and how much should I buy?
Even the most simple and predictable menus have dozens of variables to consider to answer these questions, such as:
- Lead Time — How long does it take for the ingredient to arrive?
- Shelf Life — How long will it be sellable? (Pillar #1)
- Quality — How long will it remain high-quality?
- Inventory — How much do I already have in stock or transit?
- Demand — How much can I reasonably expect to sell?
- Trim Yield — What percent of the ingredient is unusable?
- Production — How long does it take to turn this into a sellable product?
- Pricing — Have prices changed, and should I buy from somewhere else?
And when you’re working with hundreds or thousands of ingredients from dozens of vendors, it’s no wonder why buyers have a hard time keeping the cost of goods sold down.
Most food businesses operate on a Level 1 system, where purchasing is fully manual. You take a look at the storage room, write down what you’re low on, and send PDF orders to vendors. Level 5 purchasing workflows are better, with orders logged in a spreadsheet so you can try to discover trends on what leads to over-purchasing.
But a Level 10 system is where the magic happens. Imagine an AI-powered platform that looks at your inventory, historical sales, real-time vendor pricing, your recipe catalog, and dozens of other variables. It then automatically creates purchase orders that are fully optimized—all you have to do is approve them.
Three Reasons A Lvl 10 Purchasing Workflow Is Essential
An optimized purchasing workflow can have dramatic impacts:
- Lower cost of goods sold. An AI-powered platform can consider more variables at one time than a human buyer, enabling purchase orders that are optimized for your business down to the ingredient.
- Reduce the labor burden. Creating purchase orders can take hours each day. With an interconnected hub that creates orders for you, you can save dozens of hours per week.
- Minimize food waste. Optimized orders result in less unnecessary food and less waste.
All three of these benefits lead to less waste and higher food margins. And the best part is, an AI-powered system like this gets more accurate over time—so the benefits keep adding up.
Pillar #4: Your Inventory Workflow
Your inventory is the go-to ledger for all your raw ingredients. It’s an essential hub of data for both your purchasing and production workflows, including:
- What’s stored in-house
- What’s arriving soon
- What’s spoiling soon
- What’s being converted into a final product
A Level 1 inventory system is simply a daily count of ingredients stored in the back. A Level 5 system enables you to manually track incoming and outgoing ingredients in a spreadsheet.
A Level 10 inventory workflow, however, automatically integrates with your purchasing and production workflows to ensure you’re always up-to-date on inventory in real time. It can even alert you when an ingredient is going to spoil soon by drawing shelf life data from your recipe catalog and allow you to make notes on why an ingredient is unused and spoiled.
Three Reasons A Lvl 10 Inventory Workflow Is Essential
When you have an inventory ledger that’s never a day—or even an hour—behind, you’re capable of things that are impossible otherwise:
- An always-accurate source of truth. No sending someone to the back to see how you’re doing on pasta sauce. No wondering how many days ago you got those squash in stock. All your questions can be answered at a moment’s notice.
- Track ingredient usage down to the hour. With an inventory that tracks exactly when foods arrive and are used in the kitchen, you can see precise trends on how demand changes over the course of a day, week, or month.
- A fully connected in-house supply chain. Your production plan is created based on the ingredients that are in-stock. Your inventory informs the purchasing workflow what ingredients to buy, at what time. Purchasing restocks your inventory so that the production plan can be maintained—and the cycle goes on and on.
With a Level 10 workflow that can be incorporated directly into your existing processes for receiving and producing food, experiencing these benefits is easy for both you and your team.
Pillar #5: Your Food Production Workflow
The final stage of every food system—where raw ingredients become finished products—is organized by asking a single question: What’s the optimal way I can manage resources (inventory, labor, ect) to maximize output and minimize waste?
Building a realistic production plan, however, requires that you ask dozens of other questions:
- How long does it take to turn x ingredient into y product?
- What’s the best way to order tasks across recipes for maximum efficiency?
- Where can I batch production to reduce the time required?
- How do I ensure I’m not planning to use more tools than I have at once?
Skilled chefs can think through the workflow, accounting for most of the questions—but translating the complex instructions to line cooks? That’s where things start to fall apart.
This is where most food businesses operate: Level 1. The chef makes the plan for the day, service, or event and leads the entire kitchen. Inevitably, line cooks will mishear instructions, order steps incorrectly, or forget certain tasks. Even the chef will misplan from time-to-time. You end up with a stressful back-of-house, fewer dishes than you expected because someone wasted too much of an ingredient, or an excess of food because the demand planning wasn’t realistic.
A Level 5 food production workflow implements a more detailed guide for each line cook: chop 10lb of potatoes, boil 20gal of water, boil potatoes for 20 minutes. Everyone knows what’s ahead, but when things go awry, there’s no way to tell what exactly happened.
A Level 10 production workflow, however, is where production becomes automated.
Imagine an AI-powered platform that looks at your inventory, recipe steps, and menu for the day, then creates a detailed production guide—including each step for every station—automatically. You did the prep work to automate inventory and purchasing, you filled out your recipe catalog, and you made a menu plan for the next week. Now the platform can find the most optimal way to execute efficiently—you just have to follow the guide.
Six Reasons A Lvl 10 Food Production Workflow Is Essential
When you interconnect all five pillars to enable a constant flow of real-time data, you can achieve a level of production efficiency that was never possible before.
- Optimize every step. Discover the most efficient ways to order tasks across all recipes, team members, and tools—including batching tasks—to achieve a successful service.
- Minimize resource waste. Produce just the right amount of food in record time to save on labor and food resources, raising margins.
- Guide every person clearly. Use real-time task tracking software to ensure every cook has clear, organized instructions and reduce kitchen chaos and confusion.
- Discover new insights. With task tracking, you can see the precise labor cost of any task. For example, if it takes six labor-hours to chop 500lbs of onions, you can identify the real cost of that task to improve the accuracy of your recipe catalog.
- Find the bottlenecks. See what tasks take longer than expected, which cooks can’t keep up the pace, and where most food waste is being generated with granular data.
- Stay ahead of regulations. With unrivaled traceability from raw ingredients to final product, you can comply with any future regulations, like HACCP, the rising star of the food safety world.
These three systems, when integrated into each other, allow you to take your core recipe catalog and planning data, and transform it into real-time, nearly-automated, actions that optimize all your resources.
And you can tell when a business owner has integrated these pillars into their business…
- Their team doesn’t produce tons of food waste
- Their kitchens aren’t consumed by chaos
- They have unbelievable food margins and higher profits
- And the owners aren’t stressed out of their mind.
They’re free to think bigger. They’re free to invest in different areas of their businesses. They’re able to step back without everything falling apart.
We build Galley to help you get there, too. Our platform enables you to implement all five pillars of an efficient food business at Level 10.
Our users see a +3% food margin boost on average and find that they’re able to work more in their business, not just on them, now that they’re not stuck doing repetitive tasks.
You don’t have to settle for disorganized, low-margin chaos.
To see how Galley can help you move forward, click here.
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