Why It's Time to Retire Your Legacy Inventory Management System

Priyanka Bhadani11/22/2022

What is inventory management?

Inventory management is the proactive process of controlling stock levels in order to ensure that businesses can meet customer demand. This includes activities such as forecasting future demand, setting target stock levels, and reordering inventory when necessary. An effective inventory management system is crucial for businesses that sell physical products, as it can help to avoid stock-outs, keep costs down, and ensure that customers are happy.

What is Inventory Management?

Chad, the heir apparent of Las Colinas, one of the most sought-after resorts in Acapulco, Mexico, wakes up one night realizing he has forgotten to reorder coffee for the resort. This, even after a reminder from the staff that it will run out soon. What follows is a night of chaos. Despite many calls to the resort's coffee supplier, he cannot procure it. And finally, in a desperate attempt to refill the stock at the earliest, he runs from pillar to post, trying to have enough for the morning so that the guests are not disappointed.

This is a scene from Apple TV's comedy series -- Acapulco. But it could well be the reality of any restaurant, cafe, or hotel where the inventory isn't managed well.

Inventory management is one of the most crucial tasks of running any hospitality business. It involves planning, tracking, and controlling inventory levels to ensure that businesses have enough stock to meet customer demand.

Businesses must carefully track their inventory levels, keep an accurate record of what they have in stock, and plan for changes in customer demand to avoid having too much or too little inventory, which can lead to lost sales or increased costs.

However, inventory management for restaurants, bars, resorts, and hotels is complicated, with too many requirements. For example, restaurants must track food, beverages, and other supplies like disposable cutlery for takeout. Similarly, bars need to track alcohol, mixers, garnishes, and glassware. Keeping track of different types of products can be difficult.

There is also the issue of perishable items. Since these items have a limited shelf-life, a business needs to have real-time records to make sure there's enough to fulfill demand, while also ensuring that surplus stock doesn't go to waste.

Then, there's the issue of seasonal fluctuation. For example, many restaurants and bars see a spike in business during summer months due to tourism. It means they must stock up on supplies to meet increased demand. For bars, there is also the issue of keeping track of all the different types of alcohol they serve. It can be especially challenging if the bar offers many cocktails.

Restaurants and bars need to keep a close eye on their inventory levels so that they can reorder products before they run out. This will prevent disruption in service. Additionally, managing inventory effectively can help save money by preventing waste and reducing the need to place emergency orders.

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Why Your Legacy Inventory Management System Needs an Upgrade

Your legacy inventory management system may be working just fine, but there are good reasons to upgrade it. Technology has come a long way in the last few decades, and your current system might be missing out on important new features. To make up for these, your staff might have to find workarounds. An upgraded system can eliminate the need for those workarounds and make everyone's job easier.

Let's consider why an upgrade to your legacy inventory management system is important.

  1. Outdated inventory management systems can no longer keep up with the demands of today's businesses. To stay competitive, businesses need to have a system that can track inventory levels in real time and provide accurate data to make decisions and plan according to demand.
  2. Your business has likely outgrown your current system. An outdated system can't keep up, especially if your system was implemented when your company was much smaller before. It is likely that such a system can only meet some of your needs. As your business grows and changes, so do your inventory requirements. Today, customers have multiple channels to choose from -- dine-in, drive-thru, and delivery. They expect a consistent experience regardless of how they interact with your brand. A traditional system may not be equipped to provide real-time visibility into inventory levels across all channels, which is necessary to meet customer expectations.
  3. Over the years, there have been many advances in inventory management technology, and you're likely missing out on the advantages of new technologies because of an outdated system. By upgrading to a new system, you can take advantage of real-time tracking and automatic reordering to make better decisions about stocking levels and ordering patterns. Moreover, it will help you accurately predict demand and reduce costs associated with overstocking or stock-outs.
  4. Most important, older systems are often more expensive to maintain due to increased support needs and the need for specialized staff with deep knowledge of the older technology. You can reduce these costs by upgrading to a newer system and freeing up resources for other areas of your business.

What's a POS System?

Traditionally defined, a point of sale system is a cash register for recording and processing sales transactions. It is designed to be used in retail environments like restaurants, grocery or other retail stores, cafes, bars, and hotels. Businesses use this platform to take orders from customers and process payments.

However, a modern point of sale terminal goes beyond a cash register. The new terminals contribute to many other tasks. For example, they enable managers to access real-time sale and purchase data, which helps hone business decisions. Most POS systems have inventory management features, report generation, and customer tracking as well.

A POS system can also process sales and is designed to be used with cash payment as well as electronic methods of payment like credit cards, mobile payments, debit cards, and so on.

The best restaurant point of sale systems also helps with multi-channel order processing, real-time reporting and analytics, and other useful features. Fortune Business Insights predicts the POS market valuation to reach $26.61 billion by 2028 (compared to $9.95 billion in 2021) globally.

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How Can the Modern POS System Improve Inventory Management?

For most retail businesses, especially in the food and beverage industry, managing inventory effectively is one of the key components to surviving and thriving. However, depending on the size of the business and the number of stock-keeping units (SKUs), it can be difficult and complex. A point of sale system with robust inventory management features can automate and simplify this process for big and small businesses. It is important to note that small business inventory management is trickier than a large business with support systems at many levels.

It is easier for businesses to get real time insight into inventory with a POS system. For example, when a salesperson scans an item at the POS terminal that is out of stock, the POS can trigger a restock alert to the person in charge of inventory.

If implemented effectively and with all the new updates, a point of sale system can automatically reorder products from suppliers when inventory levels are low, which can help streamline the inventory management system and make it more efficient. It helps in minimizing stock-outs and lost sales. The POS system can also track sales data to help businesses identify products that are selling well and need to be ordered in larger quantities.

A Cloud-based POS System is the Solution You Need

Cloud-based POS systems are becoming increasingly popular, because they offer increased flexibility and scalability compared to traditional on-premise POS systems.

If your business is expanding and you need to keep track of multiple locations at once, a cloud-based POS solution is your answer. It is especially important in current times when innovations in businesses are a regular affair. For example, a restaurant business may want to offer online ordering and delivery and give customers the option to pay upon delivery. A cloud-based POS system would make it possible.

In addition, a cloud-based POS system can provide businesses the ability to track sales and inventory in real time, access customer data, and manage loyalty programs.

A cloud-based POS system can also be installed quickly and easily and accessed from any internet-connected device. With a cloud-based system, businesses can add or remove users as needed without worrying about complex hardware installations or upgrades. In addition, cloud-based POS systems often come with built-in reporting and analytics tools that can help business owners track sales data and understand customer behavior patterns.

What to Look for in a POS System

Most POS systems will have basic features like the ability to take orders and track inventory, but if you are upgrading your system or installing a new one, you need to look for a few key features that can make a big difference in the efficiency of your operation.

Saves time and money- The most obvious advantage of an efficient POS system is that it streamlines many processes, including inventory management. As a result, it can help save businesses time and money. Businesses can track stock levels swiftly and know when to order more supplies with inventory management apps integrated with the POS system. In addition, with every important piece of information in one place, it is easier for businesses to avoid duplication and optimize storage.

Menu management- The ability to easily add, delete, and edit menu items are crucial for any restaurant POS system. You should be able to update prices and descriptions as needed without going through lengthy processes each time.

Order taking- Most restaurant POS systems will have touchscreen capabilities, which makes order-taking much faster and easier than traditional methods. Look for a system with an intuitive interface that your staff can quickly learn how to use.

Table management- If you operate a busy restaurant, table management features can be extremely helpful. These allow you to keep track of parties seated at each table, as well as their order status. In addition, some systems allow customers to place their orders from their tables using a tablet or smartphone, further speeding up the ordering process.

Kitchen display screen- A kitchen display screen (KDS) can help improve communication between the front of the house and the back of the house by displaying orders as soon as they're placed. It helps chefs prepare food immediately instead of waiting for printed tickets. KDS typically come integrated with most modern POS systems, but if yours doesn't have one, it may be worth investing in one separately.

Government-regulated compliance tools- In many countries/states, alcohol is a heavily regulated product with drastic consequences if sold incorrectly. Cloud-based till systems offer quick and easy ways to ensure that drinks are served correctly with ID checks and age verification prompts.

Staff access- Be sure your POS supports multiple user types, such as managers, supervisors, waitstaff, bartenders, etc., so you can only give them the access they need.

Cloud-based or server-based? A cloud-based POS system will be more expensive, but it offers some advantages, such as accessing your data from anywhere, and receiving automatic updates. A server-based POS system is less expensive, but you'll need to keep up with updates and ensure the server is secure. In addition, the best POS systems allow easy data export into cloud-based services like Google Analytics, dropbox, etc., so your history is always at your fingertips.

Support for multiple languages and currencies- If you have customers from all over the world, you'll need a POS system that can support different languages and currencies.

Easy-to-use interface- You want your staff to save time trying to figure out how to use the POS system. Look for one with an intuitive interface that's easy to use.

Compatibility with third-party software- If you're using other software programs at your restaurant (such as accounting or loyalty programs), make sure the POS system you choose is compatible with them. Down the road, it will bring order and symmetry to your business.

High-security standards- With all the sensitive customer data stored on your system, choosing one with high-security standards is important to protect against hackers and data breaches. Make sure your service uses SSL encryption for all data traffic and offers 24/7 monitoring of its servers.

Offline mode- Even if your system is cloud-based, there should be an offline mode available so that you can still process transactions if there's an internet outage. No one wants their work stalled during a busy shift.

Top POS Solutions for Restaurants

An expanding business must have compatible software solutions to simplify and organize operations. PlumPOS is an intuitive system that bridges the gaps in operations and is extremely easy to use. With minimal set-up time, this POS system has efficient inventory management tools to help with inventory control. It also facilitates easy and faster payment processing, and has a mobile app that gives staff the flexibility they need to serve customers better. Plumpos enables businesses to integrate touchscreen, self-service kiosks, digital menu boards, and table-side ordering systems with open-source APIs. It is an all-in-one point of sale system that is easy to integrate with other software solutions via the app Any Connector. This cloud-based system enhances business efficiency by providing better communication channels between staff and management, making the customer experience exceptional.

Square for Restaurants
Square for Restaurants, a cloud-based point-of-sale system, is apt for businesses of all sizes -- large or small. With reporting and tracking features, it helps with efficient inventory management, alerting you daily on low-stock or out-of-stock items. Square POS can support thousands of stock-keeping units (SKUs) for reordering and shifting inventory between locations. It also works well for businesses with relatively simple inventory needs. This POS system integrates seamlessly with third-party software solutions. In addition, restaurants can enter their floor plans to facilitate food delivery to tables quickly and easily add menu items with descriptions and photos as their business grows. It also helps create new orders, assign orders to tables and individual seats without hassle, and can cancel tickets.