Inter department transfers, pricing
updates and the impact on COG’s
As we all work through weekly
financial reporting, weekly inventories as well as accurate forecasting I felt
it would be a good idea to remind our TEAMs of some “sleeping” expenses that
can have an impact on your overall COG’s. Whether you are in a Fee or PL
account these sleeping costs can hurt your budgeted financial performance.
Most prices are updated through the
My Orders system to help insure that you inventory your purchased items at last
price paid.
Unlike the automatic updates in the
My Orders system, updating “tracked items” costs is a manual process that
should be completed every 90 days at a minimum. Below is a quick step
process to help you better understand ‘tracked item” price adjustments
- Review your Nourishment, Floor Stock and Supplement item list in eMorrison
- Print off each list of items tracked
- Pick 6 items form each list for a cross reference to your most recent SYSCO invoice
- Upon audit, update the six items as soon as possible
- Complete this ‘quick audit” at least monthly
- Set 90 day target dates for a cost update to your tracked item file
An example of the impact that these
items have to your COG’s can be substantial.
If you are tracking an item such as
fresh whole fruit and the price on your tracking sheet is $.55 each and you
distribute 500 pc throughout the month, you would calculate a
reduction/transfer in food cost of $275. This expense would be charged
off to another department or a Floor Stock budget line item.
Upon your “quick audit” you
update your whole fruit price on your tracking sheet to the current price of
$.72 due to recent increases in the produce commodity, you would realize that
your actually hurting your food cost by $85 as the new calculated cost would be
$360. This is just an example of one of the six items that could have a
variance. Without effective and timely pricing updates to your tracked items
you would not be able to capture that variance through a department transfer
and the additional expense could fall to PBO.
The calculation equation
New price less Old Price =
variance. Variance multiplied by distribution of tracked item = $$$ lost.
$.72 - $.55 = $.17 x 500 pc
= $85
This is just a simple example on one
of many sleeping expenses that can have an effect on your COG’s