The nightclub industry represents a significant part of the hospitality sector. With nightclub sales in excess of 700 billion dollars and with a revenue exceeding 26 billion, according to the official nightclub trade organization NICAA.org, thus, many nightclub managers could find themselves facing similar concerns with inventory control issues. Inventory control represents a core competency for nightclub managers and this competency is typically required of all nightclubs and clubs in general, regardless of size. This competency extends to static or stand-alone nightclubs and organic clubs located in traditional hospitality settings. Therefore, any issues or concerns that arise with inventory control operations or procedures could have a far-reaching impact, both internally and externally.
The nightclub industry is unique, in reference to inventory control, due to the nature of the inventory itself requiring exacting measurement down to the smallest of amounts. While some variations should be expected, variations that range beyond the expected can create a pattern that has negative effects on the inventory and on the ability of the nightclub managers to maintain effective inventory control methodology. Under standard circumstances, the three inventory control issues commonly found are:
- Failure To Maintain Inventory Reviews and Invoice Procedures
- Undervaluing Inventory Or Using Arbitrary Pricing
- Utilizing An Inadequate POS System
All three common inventory control issues could represent a negative impact on the physical inventory and the tracking and utilization of said inventory. Thus elevating or compounding issues and concerns that could eventually arise as a negative impact on overall accounting.
Inventory Reviews And Procedures
Inventory Control should start at the ordering process and should continue through the entire inventory life cycle. Inventory pricing could be subject to change, therefore, continual monitoring of invoices for correct comparison with order pricing should be implemented by all nightclub managers. Additionally, dispensing the inventory should also periodically be reviewed to ensure proper quantities are being used and in the correct ratios. This also could have the circumstantial effect of generating consistency for customers as well.
Undervaluing Inventory Or Arbitrary Pricing
In an April 2013 article on the nightclub industry focused www.nightclub.com, the point was offered in reference to undervalued inventory, “Each and every item and its price must be approached with the welfare of the business in mind; however, you must also consider the value that you offer your customers” Pricing should correspond to the traditional business model with margin and cost being represented in the price.
With the potential variations possible with dispensing of the inventory to consumers, an inadequate point of sale system could be a liability for nightclub managers. This can be especially troublesome if real-time inventory tracking is implemented as failure to correctly identify the inventory that has been used, might not be represented as being subtracted from the inventory system. Thus, leading to over or under ordering.
Inventory control should be an ongoing process that is continually reviewed and updated. Correct reviews conducted, and proper procedures implement should help reduce inventory control issues and concerns. By further ensuring proper pricing and recording through a proper point of sale system, nightclub managers can further reduce the same issues and concerns. Given the reliance and importance of inventory control on the success in the nightclub industry, appropriate inventory control management has to be a focus of the management team.