Utilizing KPIs for Inventory Management - School Nutrition · Be able to utilize the KPI resource “Essential KPIs” for SN program evaluation ... Inventory Management: Case Study

© COPYRIGHT 2017 SCHOOL NUTRITION ASSOCIATION | #ANC17 | ATLANTA, GA© COPYRIGHT 2017 SCHOOL NUTRITION ASSOCIATION | #ANC17 | ATLANTA, GA

Utilizing KPIs for

Inventory Management

© COPYRIGHT 2017 SCHOOL NUTRITION ASSOCIATION | #ANC17 | ATLANTA, GA

Presenters:

Sandy Curwood, PhD, RD

Director, Office of SNP

Virginia Dept. of Education

Keith Rushing, PhD, RD

Research Scientist

ICN, ARD

Hattiesburg, MS


Learning Objectives:

Participants will:

▪Be able to apply KPIs for inventory management decision making

▪Be able to utilize the KPI resource “Essential KPIs” for SN program evaluation

▪Be able to utilize the KPI resource “Essential KPIs” for SN program decision making



THE PURPOSE OF THIS RESOURCE

•Straight-forward

•Easy-to-use reference

•Applying Key Performance Indicators (KPIs)


WHAT ARE KEY PERFORMANCE INDICATORS (KPIs)?

• Measures of performance

• Rigorous / Numbers-oriented / Objective

• Provide standards

• Identify where to invest resources

• Track major initiatives


HOW THIS RESOURCE WAS DEVELOPED

• Assistance of many 25 SN professional

• 2-years

• National Survey -usage & perceptions of KPIs

• Think Tank– general topic areas

• SN MGT/FSM Textbooks – draft content

• Electronic/face-to-face work group - shaped content

• Electronic review panel – content and face validity


CHAPTER 1: General Areas

•Meal Counts & Participation

•Financial & Inventory Management

•Productivity & Labor


CHAPTER 1: Subsections for each KPI

▪ Description

▪ Why Calculate

▪ How Often to Calculate

▪ How to Calculate

▪ Sample Calculations


CHAPTER 1: Subsections for each KPI continued

• Where to Capture Data

• How to Use

• Industry Standards

• Factors that Influence

• References


CHAPTER 2: The Case Study

• Background Data

• Meal Counts and Participation

• Financial and Inventory Management

• Productivity and Labor


CHAPTER 3: Utilizing KPIs

• Benchmarking

• Trend Analysis

• Developing Action Plans

• Communicating with Key Stakeholders


Appendices

• SMART Goals Action Planning Template

• Statement of Activities Report

• Step-by Step Calculations for Meal Equivalents


Inventory Management: Case Study

Sandy Curwood, PhD, RD, SNS

Director, Office of SNP

Virginia Dept. of Education


Inventory Management: Case Study

Inventory Management

• How to calculate inventory rate

• How to apply inventory turnover rate

for decision making


Inventory Management:Case Study

INVENTORY TURNOVER RATE

Description: Inventory turnover is a measure of inventory

efficiency. Specifically, it is the number of times inventory is utilized

in a period. It can be used to determine if an operation is holding

too much inventory.

• Why Calculate: The financial goal of inventory management is

to control food and supply investments. Inventory turnover rate

provides an indication of an SN program’s ability to control

inventory levels.

• How Often to Calculate: Monthly and annually.



Where to gather data:

• Actual inventory – record monthly

– Set up storeroom according to inventory form (or vice

versa)

– Use vendor order for to take inventory

– Enter quantities and use spreadsheet to calculate totals





Compare previous month dollar amount to current month.

• Cost of items purchased = Beginning Inventory

• Conduct end of month inventory and cost valuation

• Average Inventory Value = (Beginning Inventory

+ Ending Inventory) ÷ 2

Calculation(s) for a month per school:

• Beginning Inventory = $ 6,600

• Purchases During the Month = $11,400

• Ending Inventory = $ 5,400



• Monthly purchases minus remaining inventory divided by average

inventory value

($6,600 + $11,400) – $5,400 = $12,600 / $6000

= 2.1

• Average Inventory Value ($6,600 + $5,400) ÷ 2

$6,000

• 2.1 = The number of times inventory turned over or was used up

and replenished in a period.

• Industry Standards: 2-3 times a month (National Food Service

Management Institute, 2012)



• How do you interpret the information?

• Based on the 2.1, is this a reasonable turnover level?



• Yes!

• Industry Standards: A school that receives a weekly delivery for

most products should have a turnover rate of once every 7-10

days or 2-3 times a month (National Food Service Management

Institute, 2012)



• How to use the information?

• This school is adequately managing inventory.

• If not, what other evaluations could be use?

– Items left on shelf, not on menu

– Expired items



• Factors that Influence:

• Forecasting

• Inventory loss due to waste, theft, spoilage, and other product loss

• Secure and safe storage practices reduce inventory loss and ensure shelf life is maximized

• Frequency of deliveries

• Storage space

• Use and number of weeks of cycle menus

• Minimizing menu substitutions

• A large bid

• Order procedures (centrally placed orders allow for review and revision)

• Meals and meal counts

• Meal service interruptions where there is a loss of food service opportunity (i.e. snow days)

• Non-compliance with regulations


Inventory Management:Example

School Division Inventory Management by

School Site:

• Tracking spreadsheet

• Completed Document

• Required report from cafeteria manager to

field supervisor


Inventory Management:The Case StudyFairfax County Public Schools

Supervisor: Rahul Nooniwal

Inventory Worksheet

School BF

Count

Lunch

Count

Total

Equivalencies

ADP

Monthly

Target October November December

Current

Status

June 2017

Target


Inventory Management:The Case Study

Fairfax County Public Schools Supervisor: Rahul Nooniwal

Inventory Worksheet

School BF

Count

Lunch

Count

Total

Equivalencies

ADP

Monthly

Target October November December

Current

Status

June 2017

Target

Brookfield ES 175-200 550-575 613 $5500 $4324 $3914 $4354 Good $900 or less

Bull Run ES 125 425-450 522 $4500 $4169 $3167 $3310 Good $700 or less

Centre Ridge

ES 200-225 500-525 577 $5000 $5630 $4931 $3902 Good $700 or less

Centreville ES 100 425-450 527 $4500 $3625 $3833 $2678 Good $700 or less

Centreville HS 200 950-1000 1307 $10000 $10651 $13614 $7568 Good $1500 or less

Colin Powell

ES 40-50 475-500 552 $5000 $4938 $4000 $3315 Good $600 or less

Cub Run ES 25-30 275-300 318 $3000 $3884 $3478 $3351 High $600 or less

Deer Park ES 75 300-325 354 $3000 $2977 $4000 $2666 Good $500 or less

Eagle View ES 55-60 325-350 405 $3500 $3985 $4100 $2559 Good $500 or less

Green briar

East ES 110-120 475-500 563 $4500 $4059 $4746 $2930 Good $650 or less

Green briar

West ES 50-60 350-375 458 $3500 $3864 $5210 $3487 Good $600 or less

Lees Corner ES 25-30 300-325 371 $3000 $3068 $5383 $4011 High $500 or less

Liberty MS 55-60 450-475 576 $5000 $8753 $7066 $5507 High $700 or less

London Towne

ES 125-150 500-525 587 $5000 $6522 $7770 $7786 High $800 or less

Poplar Tree ES 5-10 200-225 301 $2500 $3855 $3516 $3003 High $500 or less


Inventory Management:The Case Study

Chantilly Pyramid - January 2017

Managers’ explanations for not meeting monthly inventory targets

Canterbury Woods

I have high supplies inventories that carry over from September such as $292 for all sandwich and hot

dog bags and $287 for pink towel and soap pad. I use sandwich bag for PB&J and cookie to reduce the

inventory level. In January, the level went down to $216 for bags and $209 for towel and soap pad (still

high but I’m working on it)

In November, I had Thanksgiving turkey and chicken & waffle served on Veteran Day left that made

inventories level very high but I served them all in December.



• Chantilly HS

“As per our conversation on 2/3 about the high inventory level at Chantilly, we all have been

working diligently on lowering any excess inventory. I personally mini inventory the freezer and

stockrooms before placing any pending orders .We have lowered our paper ,drinks, and any

excess produce as we are able to add needed items if needed in an emergency . To date there

is visible reduction .Our goal is to meet our target

I received your email with the inventory tracking chart. Woodson may have temporarily higher

inventory levels occasionally depending on timing, the main reasons being:

• 1. Due to two week order/delivery schedule of Dori Foods for our school, we tend to stock two

weeks' worth of items in our inventory.

• 2. High schools tend to have many events (i.e. special programs/events, field trips,

standardized testing, etc.) that cause breakfast and lunch sales to fluctuate much more

dramatically.

• 3. Our school has excellent a la carte and snack sales. It is important to keep our par levels to

meet demand.”



• Annually review inventory turn over rate

• Can be used to evaluate manager’s performance

• How well menu being followed

• Menu evaluation – products used adequately on cycle


Questions

© COPYRIGHT 2017 SCHOOL NUTRITION ASSOCIATION | #ANC17 | ATLANTA, GA© COPYRIGHT 2017 SCHOOL NUTRITION ASSOCIATION | #ANC17 | ATLANTA, GA

PROFESSIONAL STANDARDS CODE

• This session provides one (1) CEU

– Key Area: Administration - 3000

– Professional Standards Code: 3340

Documents

Utilizing KPIs for Inventory Management - School Nutrition · Be able to utilize the KPI resource “Essential KPIs” for SN program evaluation ... Inventory Management: Case Study