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Stock control in a Pub! - Continuous improvement Article
The article entitled: "Stock control in a Pub!" is in the Continuous improvement Articles section of Operations Management Papers area...
ARTICLE DESCRIPTION: The visit to the Man & Scythe at Bolton, late January was no ordinary meeting, nor an excuse for improving the stock turn on John's product. With a current stock averaging 1.6 weeks, this is a well-managed business from the sales and marketing aspects to inventory management.
MORE INFO: Stock control in a Pub! The visit to the Man & Scythe at Bolton, late January was no ordinary meeting, nor an excuse for improving the stock turn on John's product. With a current stock averaging 1.6 weeks, this is a well-managed business from the sales and marketing aspects to inventory management. The juxtaposition of modern brewery technology in 900 year old stone cellars (which were originally part of a tunnel connecting the church to the Inn) sounds incongruous - but works very well. John Jewitt has created a bustling historic pub in the heart of Bolton by applying operations management best practice. Lean Supply - find what customers require - there is a wide cross section of people being attracted to the pub. This is a place where both old and young, male and female can feel comfortable. John says it's not about selling drinks - it's about having fun. Those of us fighting to keep customers happy and costs reduced could reflect on this - we really like it, let's admit it. There is a real buzz when we have met the plan, or achieved the impossible - it is just that sometimes it does get too much. Lean Supply - bottlenecks and simplification - John has identified that a bottleneck process is the till - identifying the drink on the till and giving of change to the customers. As a result he has simplified the keying (backed up by the Pareto principle) and avoided complicated costs that require change in coppers. Inventory Management - the demand profile for the stock is seasonal, perishable rapidly, subject to fashion, and very variable in volume. Give up and guess? No John has gradually developed spreadsheet solutions which model the demand and are the basis for replenishment. Using the standard deviation, the safety stock is calculated and from this John has a reorder level (strictly an 'order above level'). The classic SD calculation is upset by big swings at Christmas, and so there are some developments to the formulae in practice. The result is a high level of availability with a low level of inventory and very little excess stock to get rid of. (Pity!) One surprising application of inventory management is the control of stock of cash. The pub is a net user of change (not copper), and to run out of change is a serious problem (with beer at 95% service level means that occasionally the customer has to drink another brew). The same system used for the drinks can of course be used for the change. Stock Recording _ like any retailer, the normal formula Change in stock = purchases - sales is difficult to apply. This is because of unrecorded issues and waste, (issues that the rest of us have long since solved!!?). John says that most 'stock control' systems in the pub trade concentrate on avoiding theft, and miss out inventory management, just having the old concept of 'max-min' which is input by the licensee! The systems at the Man & Scythe are light years ahead of all these. The unreliability of the stock formula forces the drinks trade to do weekly stock counts, and introducing much more sophisticated monitoring system is the only way to avoid this. Lean Supply - continuous improvement - there is some activity on most nights, (from live musicians to faith healing!) requiring a different mix of products. The challenge is now to model the drinking habits so that the seasonal mix variation can be modelled along with the different drinking habits at different events (Christmas revellers are bottle drinkers, whereas the crowds at the recent Bolton 750 year anniversary were cask beer drinkers). By providing a wide range of more unusual drinks (as well as the cider for which the pub is traditionally known), the stock turn is reduced but customer appeal increased - again this is a common situation facing most of us.
PUBLISHER: Institute of Operations Management
Page number: 6 Word count: 655
Vol 29 - No 02 - March 2003
The article can be downloaded in full from the publisher's site i.e. the Institute of Operations Management.
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