Optimize Your COGS-Well Benefits
Overview:
If you have implemented the core features in COGS-Well such as scanning and uploading invoices, regularly entering inventory counts, and creating recipes, then there are many more options and features in COGS-Well that you can use to optimize your benefits.
Optimize Inventory Control:
The most important inventory control features are scanning and uploading invoices and entering inventory counts. However, there are ways to make counting more efficient and there are other inventory control features that can provide added benefits.
Inventory Storage Locations: If you have a large inventory, storage locations can make it easier and faster to record inventory counts. This video shows how to Set Up Storage Locations and this video shows how to Assign Items to Storage Locations. You can attend our online Inventory Counts class to learn how to set up Storage Locations.
Count Inventory Using a Tablet: Using a tablet instead of an Inventory Count Worksheet is very efficient. It eliminates the need to print worksheets, write down the counts, and then re-enter the counts. COGS-Well works with IOS or Android tablets. Please click this link to learn more about Counting On a Tablet.
Export to Accounting: If you did not enable this feature upfront, COGS-Well can export invoices (with images) to your accounts payable system and inventory extensions or adjustments to your general ledger in credit/debit balance. These features can automate your accounts payable process, save time, and increase accuracy. Please click this link to learn more about our Accounting Integration.
Please notify our support or implementation team if you would like to use COGS-Well's accounting integration. We will set up the integration for you and you can then request a free one-on-one online training class for accounting exports.
Ordering: COGS-Well includes an option to suggest and/or enter inventory orders. Suggested orders can be based on Par Levels and/or Projected Usage. Orders can be emailed to vendors and for some vendors, they can be exported to the vendor's ordering system via EDI.
This article on Ordering Options - FAQs should be helpful if you want to learn more about orders. You can request a free one-on-one online training class if you would like to implement orders.
Receiving: It is easy to overlook the Receiving Reports in COGS-Well because the Receiving process (the import and audit of invoices) is automated.
The Receiving by Item Report enables you to monitor or analyze what inventory items you are buying, from what vendors, in what quantity, at what cost, and over any selected date range. This information is important for comparing vendors, selecting vendors, vendor negotiations, menu planning, etc.
The Cost Alerts Report captures changes in the cost of an inventory item (in dollars and as a percentage) that exceeds your cost alert trigger percentage. Cost Alert Triggers default to 3% and you can reset them at the Inventory Department, Category, or Item level. Knowing when significant cost changes occur helps with ingredient strategies and menu planning.
The Item Cost Trend Chart graphically displays the cost trend for an inventory or combined item over a selected period. It can also be run for Combined and Recipe Items.
Transfers: If you have multiple locations or a commissary and you transfer inventory between locations, and if you have not implemented Transfers already, COGS has great features for requesting, fulfilling, and approving transfers.
This article on Transfer Options - FAQs should be helpful if you want to learn more about transfers. There are also training videos for Transfers. You can also request a free one-on-one online training class for transfers.
Inventory Groups: Inventory Groups are used to organize Inventory Items into groups that simplify data entry or enhance reporting (or both). An Inventory Item can be assigned to multiple Inventory Groups. Examples of inventory groups are "Weekly Count Items", Dairy Items" or "Transfer Items". Please use this link for more on Inventory Groups.
Waste Tracking: COGS-Well's Waste features enable you to record, track, and report the quantity of Inventory or Recipe items that you have "known" waste for. Examples of known waste are spoilage, accidents, overproduction, etc. There is an option to configure and require entry for "Waste Reasons".
This article on Waste - FAQs should be helpful if you want to learn more about waste. You can request a free one-on-one online training class if you would like to implement waste.
Production: COGS-Well includes an option to track production (how many batches of a prepared item recipe you make). The purpose of tracking production is to track the usage (beginning inventory + amount produced +/- transfers - ending inventory = usage) of a Production Item Recipe like Chicken Salad.
This article on Production - FAQs should be helpful if you want to learn more about production item features. You can request a free one-on-one online training class if you would like to implement production.
Commissary Features: Commissary features add the ability to transfer Recipe Items from a Commissary Site to a Restaurant Site where the transferred item's recipe ingredients will be deleted from the Commissary (theoretically) and the transferred item will become an Inventory Item in the Restaurant Site.
Commissary features also enable items transferred from the commissary to include a labor cost and/or to have their cost marked up. Transfer costs, including labor or other markups, can be exported as adjustments to a general ledger.
This article on Commissary Features - FAQs should be helpful if you want to learn more about commissary features. You can request a free one-on-one online training class if you would like to implement commissary features.
Optimize Recipe Costing:
If you have added recipes, there are options and features to expand your use of recipe items.
Count Prepared Recipe Items: Do you have a lot of inventory tied up in "Prepared Recipe Items" such as sauces, pre-prepared meat or seafood portions, salad dressings, etc.? If so, the cost of these items is expensing to your food cost even if you haven't used them yet.
In COGS-Well you can build recipes for a Prepared Item such as a batch of Chili and flag it to be counted along with your other inventory items. You will then get credit at the end of a period for the value of the prepared items that are unused and still in stock.
Recipe Versioning: If you have created recipe items then consider using COGS-Well's unique Recipe Versioning feature. Versioning enables you to track changes in your recipes and adjusts theoretical usage when recipe ingredients or portions change.
This article on Recipe Versioning - FAQs provides more information. Training for recipe versioning is included in the Recipe Items class and this training video for Recipe Setup.
Include Labor Cost: COGS-Wel provides an option to include labor costs in recipes. This enables you to calculate the "Prime Cost" (inventory and labor) for a recipe item. This article on Labor Cost in Recipes - FAQs should be helpful if you want to learn more about including labor costs in recipes.
Added Measure Classes for Ingredients: If you buy and use onions by weight (Wz) in some recipes, but also use them by volume (cup) in other recipes, and use them by count (each) in other recipes, then you can add measure classes to an ingredient so you can use different measure classes for different recipe items. This article on Measure Classes provides more information.
Add Preparation Instructions: Prep Instructions enable you to add a description, create preparation steps, attach a picture, enter the prep time, list the required preparation equipment, and assign a prep station to a Recipe Item. You can create one "Recipe Book" for both costing and preparing Recipe Items. For more information, please see this article on Adding Preparation Instructions.
Item Cost Trends: The Item Cost Trend Chart graphically displays the cost trend for an inventory item, combined item, or recipe item (sold or not sold), over a selected period. For recipe items, the cost trend for each ingredient is included via drill-down options.
Perform Menu Analytics:
Your POS system can tell you how popular a menu item is based on how well it sells, but it can't tell you how profitable it is or how that profitability compares to your other menu items.
If you have created recipes for your Sales Items, COGS-Well provides several reports that help you evaluate the effectiveness of your menu offerings. This is accomplished by combining the cost/profit for each menu item with its popularity (based on the sales mix imported from your POS).
Theoretical Cost of Sales: The Theoretical Cost of Sales Report determines what your inventory cost of sales should be (theoretically), based on the recipe cost and quantity sold of each Sales Item, over a period. This report can be run in detail (includes each Sales Item) or summary (summarizes costs by Inventory Category).
Theoretical Profit from Sales: The Theoretical Profit from Sales Report determines what your total theoretical profit from sales should be, and what amount of that profit is coming from each Sales Item, based on the quantity sold and the recipe cost for each Sales Item, over a requested date range.
Menu Engineering: The Menu Engineering Report ranks the popularity and profitability of each Sales Item based on its recipe cost, price, and quantity sold. It shows you your best, medium, and poor-performing sales items based on their contribution to total profits. For example, a Sales Item that is high profit and popular is ranked as a "Star". A Sales Item that is low profit and not popular, is ranked as a "Dog".
Implement Variance Analysis:
It is one thing to determine if you are profitable, but it is even better to know if you are as profitable as you could be.
If you have created recipes for your Sales Items, COGS-Well calculates what your inventory usage and cost should be (the "theoretical") based on the ingredients and quantity sold. COGS-Well also calculates your actual inventory usage and costs based on counts and purchases (the "actual").
Theoretical costs and usages are compared to actual to determine Usage or Cost Variances. This process is called "Variance Analysis". Variance Analysis lets you know whether you are performing as well as you should be. Variance Analysis is also not easy because it requires very accurate recipes for all of your Sales Items. There are two primary Variance Reports
Cost of Sales Variance: The Cost of Sales Variance Report compares your actual cost of sales by Inventory Category to your theoretical cost of sales by Category and determines the variance. The report can be run in detail or summary (by Category, Department, and/or Sales & Cost Class) and it can consolidate sites or report multiple sites on the same report.
Usage Variance: The Inventory Usage Variance Report compares actual inventory usage (based on counts and purchases) to theoretical inventory usage (based on Sale Item recipes and the quantity sold) and determines variances. Variances are reported in quantity and dollars. Variance values can be sorted (highest to lowest) and there is a multi-site version of the report.
Key Items Only: Variance Analysis is easier if you start by focusing on high-cost or usage inventory items, or items that are easier to monitor (typically items with predictable yields or 100% yields). For example, wines are expensive, they have simple recipes (one bottle or glass), they have 100% yield, and they do not easily spoil. If you report a variance for a wine it is reliable versus something like parsley.
An easy approach to creating Key Item recipes is to use the Recipe Item Tab that displays when you view or edit an inventory item. The Recipe Items Tab can be used to add the item you are viewing to multiple recipe items at one time. You can add the item, the portion size, and the yield for each recipe item. This is normally faster than adding an item as an ingredient in multiple Sales Items.
For example, if you want to track theoretical usage for Ahi Tuna and you use it in several Sales Items, you could view the Ahi Tuna inventory Item, go to the recipe item tab, and then quickly select the Sales Item that Ahi Tuna is used in, and add the quantity (portion size).
Summary:
We believe job #1 in COGS-Well is to continually scan invoices, regularly enter inventory counts, integrate with your accounting system, and create recipes for some or all of your Prepared and Sales Items. These 4 basic processes can reduce your costs as a percentage of sales from 3 to 5 percent.
Once you have mastered the basics, there are many additional features you can use to provide additional benefits. The added inventory control and recipe costing features reviewed above are relatively easy to add.
The Menu Analytics and Variance Analysis features require more work, but if your menu is relatively stable, and you have the resources to maintain accurate recipes, then the added control and insights resultant from Menu Engineering and Variance Analysis can be significant.
If you have questions or other needs, please don't hesitate to reach out to suppor@cogs-well.com or log in to our Help and Learning Center. We also have Tips & Tricks articles that can help you discover more ways to optimize your benefits.