Being part of back end processes and hidden behind the glitz and glamor of the hospitality industry is Inventory Management. A rather important module, inventory management lets managers automate the process of tracking rooms, and food and beverage consumption in the hotel. I am sure many inventory managers will agree that manually filing cash memos and getting clearance from finance department to pay vendors was a nightmare and a huge waste of effort. With the arrival of hospitality technology solutions, automation of the inventory system means lesser work and greater visibility into stock, automated reminders as stock levels diminish, faster decision making on which vendor delivers what, at what price point and thus greater efficiency on stock maintenance in the hotel.
A hotel ERP or property management system (PMS) simplifies inventory management to a large extent and makes tracking of purchase and sales accurate. There are numerous operations in inventory which happen simultaneously, these include sales through point of sale terminals, room service, purchase of food, beverages, other room related consumables and durables. Tracking all these activities can be difficult and if not tracked adequately can result in revenue leakage, wastage, and theft. A good inventory management system helps a hotel predict demand and supply rate with great accuracy and reduces the chance of error, it also helps a hotel access business intelligence, plan expenditure and keep a tighter control on profit. Besides all this, inventory management also facilitates vendor management and provides information such as:
Vendor Performance – Allows hotel managers to choose better performing vendors by tracking information such as time of delivery time, accuracy of delivery, cost effectiveness etc.
Vendor Accountability – Ensuring a vendor delivers the right shipment and hotels. An integrated inventory management system allows hotel managers to pinpoint errors in delivery with great accuracy and make vendors accountable for their own action.
Order Management – to prevent bothoverstocking and stock outing situations
Data obtained from inventory management system can be advantageous to increase the efficiency of a hotel. To begin with inventory management maintains a database of all buying, selling and consumption trends and thus acts as an incredible source of business information as it pinpoints areas of concern and helps minimize fraud.
Functions of Inventory Management software
Here is a quick glance at some of the functions of a good inventory management software.
- Stores creation – sub store and main stores can be created with rate calculation like weighted average, last price and last in first out (LIFO)
- FSN can be defined and analysis reports are available
- Quotation analysis can be done with vendor analysis, tender forms, comparison sheets and auto generation of purchase order is available
- Purchase requisition, purchase orders, indents can be mailed, printed and two levels of authorizations are available. Also available is a standing purchase order
- Service work order is available
- Item stock levels like minimum, maximum, and reorder level and reorder quantity can be defined with recording of Batch#, Consignment#, Capital goods etc
- Vendor master with vendor analysis, tax deduction at source entry applicable
- Reports on stock levels, consumption summary by cost centers/ departments, spending pattern based on the last year average consumption in comparison with current year
- Audit reports for transactions, PO, SPO, indents and purchase requisition is available
- Value added tax (VAT) reports can be accessed
- Budgets can be defined and budgets vs. actualization is available
- Physical stock entries can be made for a month end process and reports on physical stock, store balance, negative variance reports are available
- Access to efficiency reports
- Reports on reorder levels and reorder quantities and option to update reorder levels
- Lookups on stocks, consumptions and authorization status for PO, SPO, indents and purchase requisitions, vendor selection based on lat price and last received date
An inventory management system is a must for the smooth functioning of any hospitality property but while choosing, a hotel needs to review its size and requirements. Do ensure you have an in-depth demo and check out all the features of the system before you make an application.
One of the better known inventory management software providers is IDS NEXT (www.idsnext.com). The hospitality technology provider has 25 years of domain expertise and provides solutions that are robust, well tested and constantly being improved.