For wineries, inventory management is vital
Originally posted by our partner, VineSpring
Efficient winery management is more important now than ever — if 2020 has taught us anything, it’s that owners must set up their businesses to survive the most unexpected issues. Even with the height of the chaos past, change will continue as states move through phases of reopening and potentially even go back to lockdown if major outbreaks recur.
But beyond the unexpected, it’s important to track your business activity accurately to ensure you have the information you need to make sound business decisions. As a winery, it all starts with inventory — whether you begin with grapes from your vineyard, juice from another vineyard, or bulk wine, you have to track your process from inventory all the way through the income statement.
Lean business management is all about efficiency. During times of crisis, it’s important to have complete visibility into your business performance so you can make quick, informed decisions. Consider the graphic below, starting at the right with “business decisions.” That’s the outcome you’re looking for. In order to make those decisions, you need accurate financial reports that tell you what your cash flow looks like, how your income is trending, and how profitable your business is.
To get those financial reports, you’ll need a chart of accounts that’s set up wisely, tracking revenues, expenses, assets, and liabilities related to your business. And you can’t get that without a general ledger that correctly pulls in cash, inventory, accounts receivable, accounts payable, investments, equipment, etc.
How do you get all that? You’ll need to record movements related to inventory, production, sales, equipment maintenance, and packaging. If you have the right processes in place to track those elements, you’ll get good data that can help you plan the future of your business.
What can you gain from good inventory management?
If you want to do inventory management right, you absolutely cannot do it in notebooks or on clipboards (paper can be lost or damaged) or whiteboards (information can easily be erased). These methods may work while your team is small and your production volume is low, but to get the insights you need as you grow, a reliable system of record is required. Keith Bishop, co-owner of Bishop’s Orchards Winery in Guilford, CT, put it this way: “As soon as you bring in other people and delegate, you need a trackable system for record keeping. Verbal or paper records can lead to discrepancies, inaccuracies and a lack of communication.”
For that reason, many wineries seek out software that can help. While you may start out with spreadsheets, you’ll find that they rely on complicated formulas that can easily break, and sharing them among team members isn’t an easy process. Sure, you can share a Google Sheet, but how do you communicate work orders associated with them or show relevant team members where the numbers came from? Plus, it’s difficult to forecast your future needs and reconciliation with your accounting software at the end of each month can be a nightmare.
The right software will help you keep track of inventory, plan and record production activities, manage sales orders and invoices, and sync with your accounting software to make end-of-month reporting seamless. A cloud-based system (i.e. one that runs on the internet) allows you and your team to manage your business from wherever you are, so you can assign new work orders, keep an eye on cellar activities, or check in on sales from anywhere in real time. You’ll also be able to answer questions about your business that help you solve current problems and plan for the future with confidence. For example:
Inventory management is just one aspect of great winery management software, so make sure you do your research. No matter which tool you choose, prioritizing inventory management in your winery will pay off. When you know your business intimately and can plan ahead, you’ll be able to handle any crisis that comes your way.