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Stock Project Update: First-in, First-out (FIFO)

By Genevieve Fontanilla |

In our quest to provide ever deeper insight into the operational aspects of your business, our engineering team have been working on a complex replacement to the existing Kobas stock system, designed to provide our clients with the capacity to record multiple pack sizes of the same ingredient, as well as an all-new First-In, First-Out (FIFO) stock control system.

This FIFO system will control every aspect of the ingredient life cycle from the point of delivery through to its usage at the point of sale. This fully automated system will provide accurate costings every step of the way and ensure that your reporting is using the most precise figures that it possibly can.

This blog will detail exactly how this system will work, using example ingredients and costs to demonstrate how this new process will provide incredibly accurate costings figures.

But, before that. What’s FIFO?

First-in, First-out accounting is a practice whereby the oldest instance of an inventory item is recorded as sold before any newer items; ensuring that your costs are accounted for in the order that they were paid for.

With that in mind, let’s see how it works…

Ingredient Set Up

ingredient set up for Lager

This ingredient, “Lager”, comes in one keg size: 50,000mls. Our default supply comes from our main supplier; we have an alternative supplier, but this comes at a premium of £1.20 per 1000mls, instead of the usual £1.

Delivery Stage

Click image to enlarge

On Monday 3rd December, we received two 50,000 ml kegs of beer from our default supplier, ready for a beer festival on Friday 7th December.

On Wednesday 5th December, after hearing of a large booking, we order another keg, but from our alternative supplier.

We now have three kegs in stock, the third being a different price to the preceding two, but Kobas will correctly “use” each keg in turn until it is empty and then move onto the next one, attributing costs in a chronological order.

Sales Stage

sales stage
Click image to enlarge


Our beer festival has arrived and we have old 100 1L cups of Lager! Whilst that might not be a legal measure in the UK, it does make things much easier for this example.

As you can see from the snippet from the Daily Sales by Order report above, our FIFO processors have rightly decided that each of these litres cost £1 worth of ingredients. We have now used up our first two kegs, and with the beer festival over, we have no need for the final keg.

Transfer Stage

Click image to enlarge

We’ve transferred our final keg back to Head Office for now, and after a brief processing time, our FIFO system has found the final keg and used the correct price when transferring over to that venue. Head Office now has a theoretical holding for this ingredient and we’ve used everything up at our main venue.

Conclusion

This simplified example demonstrates exactly how the system will work, but the real value comes in real-world applications. Venues that regularly see their ingredient prices change due to “market prices” need not worry about price fluctuations on Kobas analysis, as our processors know exactly which parsnip is which.

Perhaps you have an expensive vintage whiskey in stock that’s rarely bought. As the years go on, your supplier’s price might change, but Kobas will always know the price of a dram, based on your historical purchases and usage.


That’s all for today, but as you can tell from these images, we’re getting very, very close. Stay tuned after the Christmas period when we’ll be back with more updates. Don’t forget to follow us on Twitter for more live updates.

About Genevieve Fontanilla

Moved to London from Vancouver, Canada. Left the rain for more rain. Fuelled by spicy food, tequila and travelling. Passionate about Beyoncé and learning about beers.