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Accurately Analyzing Your Cost of Goods: The Importance of Inventory Points

Updated over a month ago

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In Inpulse, positioning yourself between two inventory points is essential to obtain a reliable real cost of goods (COGS) and correctly analyze stock variances.
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Without both a starting and ending inventory, stock variation cannot be calculated, and the COGS displayed will be highly inaccurate.


1/ Why position yourself between two inventory points?

Stock variation is at the heart of real COGS.

Real COGS is not limited to purchases made during a period.
It must reflect what was actually consumed, taking into account the evolution of your stock.

Direct consequence:
If stock variation is missing:

  • Inpulse only displays purchases

  • Actual consumption is misestimated

  • Real COGS is distorted


2/ How to identify inventory points in Inpulse

In the analyses, green dots ๐ŸŸข indicate the dates when an inventory was recorded.

For reliable analysis:

  • Select a period that starts on a green dot (starting inventory)

  • And ends on another green dot (ending inventory)


3/ What happens if you are not between two inventories?

Case 1: No inventory during the period

  • Real COGS = purchases only

  • No stock variation calculated

  • Data not usable

Case 2: Only one inventory (start or end)

  • Stock variation cannot be calculated

  • Common situation when new items are launched mid-period

Case 3: Items without a starting inventory
Even with an ending inventory:

  • If a supplier ingredient was created mid-month

  • And no initial inventory exists

๐Ÿ‘‰ Stock variation cannot be calculated for that item.

Solution: Create an initial inventory at 0 on the date of the last existing inventory.


4/ Best practices

Inventory frequency:

  • Minimum: one complete inventory at the start and end of the month

  • Ideal: weekly or bi-monthly inventories for higher accuracy

Managing new items:

  • For every new supplier ingredient:

    • Create an initial inventory at 0

    • On the date of the last existing inventory

Key takeaways:

  • Without two inventories โ†’ no stock variation

  • Without stock variation โ†’ no reliable real COGS

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