Item Costing is a powerful feature in the Operations Module of Restaurant365.  This document gives a high level of each type of record you must create / update in order to use the many functions within Item Costing.



Setup


These five records must be created and used in order to start using Item Costing in the Operations Module.  Click each link to learn more about each record type:

  1. Vendors
  2. Units of Measure
  3. Purchased Items
  4. Item Location
  5. Vendor Items



Create your Inventory Vendors


Vendor records can be created via the R365 Setup Assistant, the Import Tool, or Manually.  To manually create a Vendor, hover over the 'Vendor' menu and select 'New Vendor'.  A blank Vendor record will open in a new tab.



Complete all the required fields on the Vendor record as outlined on the Vendor record article.  


Vendor Entry Type



Your Inventory Vendors will need a specific setting updated in order to be used with Items in R365.  On the Vendor record, navigate to the 'Vendor Additional Info' tab and locate the dropdown field labeled 'Entry'.  This field can be set to 'by Account' or 'by Item.' 

  • ‘by Account’ - this is the default value and will display the 'Account Grid' on the AP Invoice.  This should be used for Vendors that are not invoiced by Item, but are invoiced to specific GL Accounts (by Account)
  • ‘by Item’ - this is the secondary option and should be used for Vendors that are invoiced by Item.  When selected, the 'Items Grid' will appear on the AP Invoice 


Ensure that each Inventory Vendor has the 'Entry' type set to 'by Item' and complete the Vendor creation process. 



Create Inventory & Purchasing Units of Measure


The next step after creating your Vendors is to create the U of Ms that will be used with your Inventory Items.  There are various uses for U of Ms in the R365 Operations Module: 

  • Inventory U of M - How you count or report on an Item
  • Purchase U of M - How you receive an Item
  • Yield U of M - How much an Item will Yield in a Recipe
  • Portion U of M - How much is in a single Portion in a Recipe


U of M records can be created via the Import Tool, or Manually.  To manually create a U of M, hover over the 'Item' menu, then the 'Setup' sub-menu and select 'New U of M'.  A blank U of M record will open in a new tab.




U of Ms are used to designate how Items are Purchased and Counted (such as 18oz bottles, Case of 4 gallon cans, lb, OZ-fl, OZ-wt, etc.)  There are 3 Base types of U of M. The Base types are used to help find common denominators to know how one U of M relates to another.
  1. Volume
    1. Base for this type = OZ-fl
    2. Examples: OZ-fl, cup, gal, quart
  2. Weight
    1. Base for this type = OZ-wt
    2. Examples: OZ-wt, lb, kg
  3. Each
    1. Base for this type is Each
    2. Examples: Each, Avocado


The system comes with a pre-set list of standard Units of Measure. If the desired U of M is not in the list then create a new one and set the following fields.


  • Name: This name will display when selecting the U of M on transaction or when viewing on reports. This is the only required field if Item Costing is not selected on Preferences
  • Container: Optional text field to designate container type such as box, case, sack, etc
  • Packsize Description: Optional text field to describe packsize
  • Purchase: This checkbox will determine whether the unit of measure will appear on the AP Invoice as a possible unit for purchases
  • The other 2 fields are associated with U of M Equivalence:
    • The Equivalence helps the system determine how a U of M relates to another. To set this up specify an Equivalent U of M and Equivalent Qty. 

U of M Example:

The default U of M 'OZ-fl' exists in the system, but ‘Cup’ does not.  When setting up the U of M for ‘Cup’ you would specify the following:
  • Equivalent U of M = OZ-fl
  • Equivalent Qty = 8 
Equivalent Qty is set to '8', because a Cup contains 8 fluid ounces. 

A U of M can only be set as equivalent to a U of M of the same Base type. So you wouldn’t be able to say lb = 16 OZ-fl because 'OZ-fl' is Volume and 'lb' is Weight.  While that equation is true for water it isn’t true for other substances like gold (or flour if you don’t have much gold in your restaurant). 

The Purchased Item record has fields to specify how Weight and Volume (and Each) relate to each other for that specific item.  These fields are the U of M Equivalency 




Create your Items


The next step after creating your U of Ms is to create the Items that will use the U of Ms.  There are three types of Items in the R365 Operations Module: 


This article will describe how to create your Purchased Items. 


Purchased Item records can be created via the Import Tool, or Manually.  To manually create a Purchased Item, hover over the 'Item' menu, then the 'Setup' sub-menu and select 'New Purchased Item'.  A blank Purchased Item record will open in a new tab.



General Tab


  • Name: This is the item name that will display on other forms when referencing this item
  • Number: Optional item number that will display in some reports associated with this item
  • Description: Optional additional description about the item
  • Available to in AR Invoices: Mark yes if this item will be sold to customers and should appear on AR Invoices



Inventory Cost Tab


  • Cost Account: GL Account debited on AP Invoice and on stock counts it is debited if count is lower than previous count and credited if count is higher than previous count
  • Inventory Account: GL account that will be debited on stock count if count quantity is higher than previous count and credited if quantity is lower than previous
  • Inventory U of M: Unit of measure this item will be counted in for stock counts. This is required and very important in order to manage item costs. This can be set for individual locations on the Item Location record if desired
  • Inventory Cost: This is the cost of the item based on the Inventory U of M. This can be set for individual locations on the Item Location record if desired



Purchasing Tab:



  • Default Purchase U of M: This field is required and designates the default unit of measure this item is purchased in. This can be set for individual vendors on the vendor item record if desired.
  • Cost Update Method: 3 options exist for the cost update method:
    1. Manual: This is the default and means the item cost will be updated by the end user either when entering stock counts, or by opening the Item or Item Location record and setting it.
    2. Auto Update From Invoice: Item cost will be updated during invoice entry each time an invoice is entered. This will update the Item Location record if one exists for that item and location combination and if not then it will update the Item record
    3. Auto Update Avg Last 3 Invoices: As the name describes this will auto update just as the Auto method but it will average the 3 most recent invoices instead of just the most recent.
  • Brand: Optional text field to specify brand



Item Category Tab



Item Categories are used for sorting, classifying, and reporting on your Inventory.  It is recommended that each Purchased Item receive a 'Item Category 1' and (if necessary) a 'Item Category 2'.  'Item Category 3' is used much more infrequently, but does have a useful application depending on the specific Purchased Item.  Click here for more information on Item Categories



U of M Equivalence Tab 



This tab is used for Purchased Items where different U of M Base types are used on the same item. The Base types are Volume, Weight, and Each. For example, an item might be purchased in gallons but counted in pounds. If so then of U of M Equivalence must be setup for that item. This section allows that by specifying a Weight Qty of Weight U of M = Volume Qty of Volume U of M.


Click here for more information on U of M Equivalence




Create Item Locations


The next step is to create Item Locations for your Items.  Item Locations allow you to track the cost of your inventory by Location, or rather, each Location will have a different cost value for each Item.  This is extremely useful if you have costs that vary significantly from one Location to another.  


Item Location records can be created automatically on the Purchased Item record, via the Import Tool, or Manually.  

Auto-create


To auto-create Item Locations, open a Purchased Item record that has previously been saved, then navigate to the the 'Item Locations' tab and click the 'Create for all Locations' toggle.  An Item Location record will be created for each Location in your R365 database.  You can manually delete un-needed Item Locations by clicking the trashcan icon on the respective Item Location row.



Manually Create


To manually create an Item Location, hover over the 'Item' menu, then the 'Setup' sub-menu and select 'New Item Location'.  A blank record will open in a new tab.



Refer to the Item Locations article for more information about Item Locations



Create Vendor Items


The final step in getting Item Costing up and running in R365 is creating Vendor Items.  These records represent the Items you purchase from specific Vendors.  Purchased Items can be considered 'Master Items' or Parents, while Vendor Items are the Child.  Every Vendor Item must correlate directly back to a Purchased Item.  Vendor Items have a Many to One relationship with Purchased Items, as shown below:




Vendor Item records can be created during AP Invoice Entry, via the Import Tool, or Manually.  Refer to the Vendor Item article for more information on how to create Vendor Items via AP Invoice Entry.

To manually create a Vendor Item, hover over the 'Item' menu, then the 'Setup' sub-menu and select 'New Vendor Item'.  A blank record will open in a new tab.




Refer to the Vendor Item article for more information about Vendor Items