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.
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:
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
- Base for this type = OZ-fl
- Examples: OZ-fl, cup, gal, quart
- Base for this type = OZ-wt
- Examples: OZ-wt, lb, kg
- Base for this type is Each
- 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.
Equivalent U of M = OZ-fl Equivalent Qty = 8
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:
- Purchased Item - The main Item record that represents the Inventory that you purchase from your Vendors and count on your Stock Counts
- Recipe Item - The Recipes that you prepare at your Restaurants. These Items are made up of Purchased Items and other Recipe Items, and can be Mapped directly to the Menu Items that are imported from your POS System. Click here to learn more about Recipe Costing in R365
- Sales Item - The Items that are sold to AR Customers on the AR Invoice
This article will describe how to create your Purchased Items.
- 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
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 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: 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. 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 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
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.
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.
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:
Refer to the Vendor Item article for more information about Vendor Items