The Menu Management Variance Report is a tool to help you identify the cause of a variance in your inventory items (products). A variance is the difference between what you should have used and what you did use. Are the inventory items being sold? given away? wasted? This report uses physical inventory counts to determine what was actually used, and compares that with what should have been used based on sales, known waste, and promo.
The Variance Report is not designed as a costing tool for financial reporting. It does, however, take the amount of unexplained usage (variance) and multiplies it by the average cost to tell you how variances affect your bottom line.
Troubleshooting a variance
report is not so much a matter of “what’s wrong with the report?” as it is
“which number seems wrong?” Each of the columns can have a direct impact on the
variance for an item. Generally, there are only two figures you need to check,
the POS Usage and the Actual Usage. This document tells you how to find
problems on the report, and explains three ways to troubleshoot a Variance
Report, by printing a:
· Calculations Log
· POS Usage Report
· Actual Usage Report
A glossary of terms used in
the Variance Report is included at the end of this document. You may find it
helpful to review these terms before beginning a thorough investigation of the
Variance Report, both to understand the report more clearly and in talking to
your RTI Client Services representative.
When doing calculations for
the variance report, the date range you specify is critical to getting useful
information. The beginning date must
be the first day after a full inventory is taken. This tells the system the
amount of product on hand at the beginning of the period. The ending date must coincide with an ending inventory count, as this provides
the amount of product on hand at the end of the period. In between, ALL purchases, transfers, product mix,
waste, and promo information should be accurately recorded. Errors in any of
these will result in unreliable figures on the report.
For example, a purchase not
recorded will result in an understatement of actual usage. The product that was
received was consumed, which increases POS usage, waste or promo, or will show
up in ending inventory, making it higher then expected. So it is very important
that if you don’t believe the numbers are “right,” you examine the report and
identify likely causes.
The first thing to do when troubleshooting a variance (especially if it is for several items) is to run a Calculations Log. This report shows the information used to generate the numbers on the Variance Report: the date of the beginning and ending inventory counts used; the number of purchases and transfers; and the number of days of hourly readings, report sales, and product mix information.
This report can quickly
identify obvious problems. For instance, if you are using the date range of
5/1/00 to 5/31/00, the calculation log might show only 26 days of product mix
information. If that is the case, your Variance Report is unreliable. So, if
several items seem to be off or the variance is high, first print the Calculation
Log and review it looking for problems.
1) On the RMS Reports Menu, select On-Demand Reports, and then select Calculations Log.
2) Select Print.
3) The log will print from the last set of calculations performed by your system. So if you have run reports since the Variance Report, first run the Variance Report again. Then print the Calculations Log.
4) Review the log for problems. The inventory dates should coincide with the date range of your report. The beginning inventory date should be the day before the variance report begins. The ending inventory date should match the ending date of the variance report. The number of product mix, sales, and hourly readings days should all be the same, and should be for the number of days in the date range.
5)
If the Calculation Log indicates any information is
missing, check and enter that information in the system. This includes entering
missing purchases, adding product mix or any other missing data. Then run the
variance report again.
The POS Usage Report will tell you if the number of items sold is correct. If you suspect the POS Usage figure on the Variance Report is incorrect for an inventory item, print the POS Usage Report to see exactly how the POS Usage figure was calculated.
Review the POS Usage Report and identify the problem. Look for one of these reasons why the POS usage may be wrong:
· One or more days of product mix is missing.
· The Product Mix Lookup Table is incorrect.
· There is a data entry error on the product mix (e.g., the quantity sold or promo’d).
· The usage set up in a recipe is incorrect.
If the
product mix information is wrong, do one of the following:
1) Edit the product mix for the menu item. On the RMS Processing menu, select Product Mix. Highlight the store to work in and select Enter. Enter the date. If you know what the correct total is, you will only need to change one day. Add or subtract to one day to get the correct total. (For example: The Quantity Sold should be 2500. It currently shows 2250. Go to one day in the date range and add 250 to the quantity sold.)
2) Review your Product Mix Lookup Table and verify that the menu item is linked to the correct POS code. (Refer to Chapter 2, Maintenance, in your RMS User Guide.)
If the recipe
usage is wrong:
Go to RMS Maintenance menu,
select Menu Management, and then select Menu Items and Recipes. Highlight the item, select Change, and change the Variable Usage.
(Refer to Chapter 3, Maintenance, in
your Menu Management User Guide.)
The Inventory Item Usage Summary shows how the Actual Usage figure on the Variance Report is calculated by inventory counts: [Opening + Purchase +/- Transfer- Close = Actual Usage].
If you suspect the Actual Usage figure on the Variance
Report is incorrect, print the Inventory
Item Usage Summary for the same date
range as the Variance Report and review it to identify the problem. There
are several reasons why the Actual Usage may be wrong:
If you have a
Variance Short (Shortage) If you have a Variance Over (Overage)
|
A purchase was recorded twice. |
A purchase was not recorded. |
|
A transfer out was not recorded. |
A transfer in was not recorded. |
|
A case count increase was not recorded. |
A case count decrease was not recorded. |
|
There was an inventory miscount. |
There was an inventory miscount. |
If the
Purchases figure appears to be wrong, do one of the following:
1)
Print and review the
Detailed Inventory Item Usage Report. It will list all purchases recorded for
this inventory item. If several items seem to be missing a purchase, it is
likely the purchase was not keyed in, or not transferred from EDI. You may
transfer the invoice from EDI, or key in the purchase.
2)
It is also possible that
only one or two items did not have a purchase recorded. Perhaps they were not
entered correctly, or the vendor reference number changed and went undetected
when transferring invoices from EDI. To correct this, enter the purchases for
the inventory item, on the appropriate dates. If you use EDI, you may also need to verify that the vendor reference #
is correct for this item.
If the store is missing a Transfer In/Out:
Print and review the
Detailed Inventory Item Usage Report. If a transfer in or out is missing, enter
it for the date the transfer occurred. You may want to verify the amount of the
transfer, and make sure it was recorded for both stores (one is a transfer in,
one a transfer out). The Detailed Item Usage Report shows all transfers.
If the raw waste or raw promo is incorrect:
This could result from a
data entry error or the incorrect number being provided by the store. Check the
inventory count from the store for the date, and make any necessary changes.
Þ If after checking all the above, a large variance still exists, there is likely an error in the inventory count information, or the case count changed during the date range. Refer to the Detailed Inventory Item Usage Report to determine how many units were purchased and counted for the beginning and ending inventory.
If the case count changed in the middle of the
inventory period:
Refer to the Detailed
Inventory Item Usage Report. Each purchase displays how many units were
purchased. Identify when the change occurred. If you have not already done so,
change the inventory item to reflect the new case count (Refer to “Inventory
Counts” in Chapter 1, Processing, of
your Menu Management User Guide.)
Purchase history will be changed to modify the new case count. Finally, change
the purchases to reflect the correct count information.
If there was
an inventory miscount or data entry error:
Edit the inventory count to
correct any miscounts or data entry error.
· POS Usage - The amount, in units, of an inventory item used due to menu items being sold, or given away (menu item promo). If a hamburger is sold, one patty is consumed, one bun and one of any other item in the recipe. This number uses the product mix total for items sold and promo that is keyed in or transferred from Communications.
· Actual Usage - The physical amount of the inventory item used. This is determined by reconciling purchases, transfers and inventory counts.
· Difference - This is the POS Usage minus the Actual Usage. It does not include known waste or raw promo.
· Menu Waste - The amount of an item thrown away (wasted), as part of a completed menu item. If a completed hamburger is thrown away, one patty, one bun and the other ingredients are included in menu waste. You may need to enter this number, since some registers do not transfer this number.
· Raw Waste - The amount of an item thrown away before it is included in a menu item. If a hamburger patty is dropped and then thrown away, it is considered raw waste because it was never part of a completed menu item. You must enter this number in the inventory count field.
· Raw Promo - The amount of raw inventory items given away. A case of burger patties given to the Scouts, for example, is considered raw promo. This number is also keyed in with inventory counts.
· Variance - This is the amount of an inventory item (product) unaccounted for in other columns. It is the Difference + Menu Waste + Raw Waste + Raw Promo. A variance short or variance over is a dollar figure to provide clues about food costs, and why they might be high or low. A large variance short (shortage) is an opportunity to improve food cost (usually). Whereas, a large variance over (overage) is always an indicator that one of the numbers is incorrect. (It is not possible to use more product than you had on hand.)
· Cost per UOM - This is the average cost of the inventory item over the date range of the report.
· % of Actual - This number is the amount of variance as a percentage of the Actual Usage of an item. It is used to help you identify those variances that are very large but have a low dollar variance due to a low average cost.
· Report Sales - Report Sales are obtained from the RMS Sales/Misc. information. This number is a result of data entry or sales totals transferred from the Communications program.
· Product Mix Sales - This is a sum total of each menu item sold multiplied by the price for the date range. This information is acquired from the product mix information keyed in or transferred from Communications. To check this number, you would check the product mix total for Items Sold for each day in the report range.
· Highest/Lowest - Identifies those items that are among the 5 highest overages or 5 lowest shortages in dollars or percent of actual--in other words, those impacting you the most in dollars or volume.