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If only your inventory system did this…

September 13, 2010

I’ve been chatting with roasters lately about inventory, which we’ve said all along was the next major thing we’d be working on. Turns out that the roasters I’ve spoken with all have a few struggles handling inventory in just they way they’d like. “Affordable” off-the-shelf inventory software just doesn’t work for specialty coffee, and the cash outlay required for a system that can meet the needs of specialty roasters is prohibitive.

Imagine, if you will….

As the head roaster at Roast-O-Rama Coffee Purveyors, which has two roasting facilities, you arrive at work in the morning, login to roastlog.com and see the main inventory page, which shows a graphic that gives you a bird’s eye view of your green coffee inventory for your entire organization:

  • what’s in each roastery,
  • what you have sitting in your importers’ warehouses,
  • the rate at which you are roasting each bean – and therefore a projection of when you’ll run out,
  • Cost of Goods Sold – a total figure for your whole organization along with the current COGS for each bean at each location.

Presumably, one of the first tasks of the day is to figure out how much of what to roast and in what order for each of your facilities.  First thing, select some beans from your inventory and tell the system the quantity of roasted beans which you’d like to end up with. RoastLog suggests a roast queue for you – it knows your target profiles and the average percent of mass loss.  Blends?  Let the computer do the tedious math.  You adjust and reorder the queue as you need to. Done. When your roasters start their shifts and login to the RoastLogger application, the queue is waiting for them.  Every time a roast is logged by your roasters, your inventory is automatically updated…you now have a near real-time view into your coffee inventory.

Next, The Office calls. “How are things going?” they want to know. Since this is a web based application any user on your RoastLog account can login to see what’s going on in inventory.  Depending on your role in the organization the inventory system might show you:

  • Bean history – from the time you took a position to roasting the last batch, including delivery dates and charges, storage fees and manual adjustments with notes that employees made to the inventory of that bean
  • Patterns – see a graphic that shows the rate a bean was roasted last November when you were slammed with orders and could barely keep up. If you expect to be that busy again, plan ahead based on some concrete numbers instead of anxiety-ridden memory
  • Look at how inventory changes between 10:00am and 6:00pm, which was your newest roaster’s shift. Did they get everything done? Was timing on target or was something erratic? Get even more detail by having a look at the profiles roasted during that shift.
  • Roastery owners, see how your run rate compares to your capacity. Maybe now is the time to start sourcing a new roaster? Maybe a night shift is in order?
  • It’s a web-based application – the view of inventory changes with each roast. They day plays out in almost real time on your screen. Can’t walk the floor as often as you’d like? Have a laptop or and iPhone? Check the web site.

But wait, there’s more…

Do physical inventory less often. When a physical inventory is done, enter a simple adjustment with a note for any bean that needs an adjustment. Look at manual adjustments history by bean, time frame or across your entire organization. Does one location make more adjustments than another? Find out why and improve your operation.

Generate reports and use web-based tools that help you with ordering. Go ahead, play a little. Given the position you took in the Guats last year and the rate at which you’re roasting them now, play around with projected sales growth and get comfortable with the position you’ll take next year.

Get help with pricing. Given a really accurate COGS, price things exactly how you need to. Does $20/lb. retail for a micro lot really give you an acceptable margin?

In short, our inventory system will change the way you run your business, having a larger positive impact on your bottom line than anything else out there except perhaps more rabid coffee lovers, and cheers to them. Thoughts? Doubts? Wanna argue? Let’s hear it!

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6 Comments leave one →
  1. September 17, 2010 3:29 pm

    Sounds great guys!

    I just spent an hour this morning updating my dumb “roast calculator” excel spreadsheet to crunch the numbers on a few new coffees we got.

    Perhaps an “Orders” section would be helpful so that we know who/what we are roasting for: that is, have a button that takes one to an order entry page. After all of the orders are entered, have another page that consolidates all (or some) or the orders into one roast order. It’d also help for our our baggers know how to split up the batches into bags after they’re roasted… perhaps a printable summary page with all of the orders listed would do that well. If all of that ties in with the inventory, it’d be a dream!

    OQ Coffee Co. is still a tiny roastery, but we’re counting down the days until we can afford a tool like this… its coming soon!

    Like

    • Ryan Brown permalink
      September 23, 2010 10:32 am

      Thanks for the comment, Evan.

      An orders section is a great idea and one I’ve pondered myself. It’s a very logical step to take and I totally get how nice it would be to have everything hooked up so that it’s clear all the way to the baggers. We have a lot of work to do!

      Like

  2. Sam permalink
    September 19, 2010 9:43 pm

    I love the inventory component. Yours sounds very complete and logical. I can still kick my bags and guess to within 5 pounds, but I would love the control that this new system will provide. How are you addressing the blends? I’ve worked with a system that uses a percentage system. So, Esp1= 40% Brazil, 20% Indo and 20% African. Every time you roast 10 pounds of Esp1 the inventory is adjusted. It seem like an easy fix, but I’m no programmer.
    I start roasting with your system in place starting tomorrow. I cant wait!
    Sam

    Like

  3. Ryan Brown permalink
    September 23, 2010 10:37 am

    Thanks for the comment, Sam.

    The way you describe handling blends is pretty much exactly how I was thinking of it. I’ve heard from many roasters that they’d like an easier way of working with blends. This is classic case. Doing these calculations *should* be done automatically by a computer, but for a lot of people the furthest they have taken it is to a calculation in a spreadsheet. I’m pretty excited about what cool things we can do with a more sophisticated system running in the background. Maybe we should think about trademarking Blend Heaven or BlendEaze, or BlendBliss or…. 😉

    Cheers,
    Ryan

    Like

    • Bryan Joslin permalink
      September 26, 2010 8:02 pm

      Hey guys, Sounds like your really got your thinking caps on! The other thing that would be nice to see on the current format of roastlog, for a small roaster like myself, would be a way so when you are at the end of a bag, you could go to the inventory section, and see a detailed summary of every roast performed from that lot. You can do that now through the search feature for your roasts, but it would be nice to have it neatly attached to that bag or lot on the inventory page. It would also really help at the end of the year when the USDA inspector shows up and says,”Let me see every roast for lot #123-98″. It be great to just go to your inventory section, click on a lot you had used six months ago, and BAM! All the information is right there.

      Like

      • Ryan Brown permalink
        September 27, 2010 10:17 am

        Bryan,

        Excellent suggestion. An important component of the Inventory system, one which I didn’t go into any detail about in the post, is reporting. Frankly, I have a rather thin idea of what sort of reports will be the most useful, but what you suggest, at least in my mind, could work well as a report. Looking at the report online gives you quick access to all the roast profiles as well as details about the bean. A printable format that shows the correct info might make those USDA visits almost, dare I say it, pleasant.

        Like

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