how an expanded menu leads to an inventory management problem
One of the many assets that a company or corporations enjoys is inventory. Inventories form an essential part of the business. It contributes to the success of the industry as well as the satisfaction of the customers. A popular measurement of managerial performance is a return on investments. (Wild, 2017). It is arrived at after dividing the profit, excluding taxes by the total assets that the company has. As earlier indicated, inventory is part of company assets. Therefore, stocks can lead to losses if not well managed. A problem with managing inventory arises from having expanded menus to cover a wide range of dishes, especially for fast food companies. Many corporations have been expanding their menus to include a wide range of meals, as well as increase competitive advantage. However, expanding menus leads to a challenge in inventory management. This paper focuses on how an expanded menu leads to an inventory management problem. It also seeks to address the solution best suited for the challenge.
Operation managers have a hard time estimating the exact amount of raw materials needed in case the menus are expanded. The raw materials used in most of these fast-food restaurants are perishable. They have a short shelf-life. They are having an expanded means covering a wide range of raw materials to order. Due to the perishability of these materials, the operational manager faces a challenge in estimating the quantity needed. They try to avoid inventory overage or inadequate inventory.
Similarly, the operation manager faces the challenge of determining the right amount of raw materials required to serve the customers daily. These restaurants are visited with customers in varying numbers. The frequency of customers is not often consistent. Therefore, expanding the menu to cover a wide variety of dishes is a significant challenge for operational managers. Moreover, the profitability of the business is not always hampered. It is mostly focused on the most profitable item. The item that brings much profit could not be consistent. These items tend to change daily, depending on customers’ preferences. Therefore, the operational manager does not have an exact quantity of raw materials to order, which shall amount to be the most profitable. In a sense, expanding the menu of fast-food restaurants brings a challenge to inventory management. Operational managers cannot make informed decisions regarding raw materials.
However, this problem could be solved, although the challenges in inventory management, expanding the menu offers a company a competitive advantage. A restaurant gets to have a variety of meals to provide its customers. As such, more clients shall be attracted to visit restaurants. Therefore, an operational manager needs to have detail research on the customer’s preferences. The most preferred dish could have a higher priority regarding the raw material.
On the other hand, the meal that is occasionally eaten could have a lower priority. On the new dishes, the operational manager could ensure that what is prepared equals half the number of estimated customers daily. This makes new recipes available in the right quantity, to avoid significant losses.
Overly, inventory management is one cause of success for a company. If the operational manager is not able to make accurate estimates daily, the business could end up in losses. The expanding menu gives a company a competitive advantage. However, it leads to challenges in inventory management. Therefore, operational managers need to strategize precisely to mitigate the difficulties caused by expanding menus.