To be educated you need to know the numbers of your business. What revenues do various product groups contribute to total sales? What net profit is derived? Where are the weaknesses? How does your theoretical profit margin differ from your true profit margins? How much are you losing?
It’s easy to become overwhelmed by details so you need to know your “KPI’s” (Key Performance Indicators). KPI’s are snapshot measures of specific values, expressed as percentages, ratios, and $ values to indicate current performance. They can be customized, and indicate how things are running at that moment and how it compares to a benchmark.
Among these KPI’s are:
“Slippage” – Defined as a product drawn from inventory that failed to become revenue, expressed as a % of volume used.
This value directs you where to focus your efforts for the greatest immediate return. As your process evolves they will continue to guide your efforts.
“Yield” – Defined as the percentage of drawn inventory that converts to revenue and a measure of success in capturing revenues.
“Variance” – Defined as the percentage of drawn inventory that failed to convert to revenue and a measure of what did get past you. The Slipped Volume can be restated as a $ value, and becomes a critical value in directing investment.
A critical aspect of success is the User Mindset. Investing financially is a start but without a disciplined management process that embraces technology the effort can be compromised. For the process to work to its best it must be used and maintained.
This decision is guided by your management style. If yours is a passive approach, a good system will provide root information for manual reconciliation. If you embrace technology you can maintain a razor’s edge on control with ease. The key to success is to know your management style, decide what will work best for you, and buy to match that.
A successful management process is a chain of relating details. If link is strong the overall process is strong, but only as strong as the weakest link. Deciding on a Beverage Control process is one of those links, and has links of its own.
As always, if you have questions, give me a call.