While passion is undoubtedly important when running a roastery, it is the practicalities of running a business that will turn this passion into profit. Central to the running of any business that involves buying and selling is stock management, and this is no less imperative in coffee. We spoke to our trader and all round beacon of knowledge, Phil Searle, about how managing your stock effectively can allow your business to flourish.
“When it comes to stock management,” Phil explains, “the two most common mistakes are overbooking, i.e. ordering too much, and at the other end of the scale, not ordering enough and being caught short. The key to effective stock management is finding the right balance.” Both of these scenarios are avoidable with some good planning and a bit of communication. Here are some ideas to help you find that balance:
1. Plan ahead
Having a twelve-month plan provides a solid foundation for your business, as Phil explains: “It's always good to plan a year in advance because then you can forecast where you want to be and what you might need if you have any new customers or if you lose one. It is important to know the volumes your customers will require and also how reliable they are.”
Phil advises looking carefully over the last twelve months: “There are fluctuations throughout the year when it comes to coffee sales. Usually, sales figures are lower in the summer than in the winter, and around Christmas it’s normally the busiest time of the year.” Ordering based on optimistic projections will likely lead to overbooking.
2. Be realistic
There is nothing wrong with being optimistic, but when it comes to planning your stock for the year ahead it is important to keep your feet firmly on the ground. Overbooking can throw even the best-laid plans out of the window. Having excess stock will lead to mounting storage costs and delays getting in any tasty new crops. Phil warns that “…when planning ahead like this it is always better to err on the side of caution. Order in the minimum and you will be able to top up if you run out and avoid overbooking.”
3. Buy forward
Once you have made a 12-month business plan, buying forward gives you the confidence of knowing what you are going to have arriving over the next months. Phil explains: “You can buy in bulk, but you don’t have to necessarily get it delivered all at once. You can book for your whole yearly needs but then let us know your delivery requirements.” This ensures you won’t experience every roaster’s nightmare: running out of coffee.
4. Know your product
Having a consistent product is vital for a roaster’s clientele, as Phil explains. “Most roasters will have their main blend, their signature blend, and then a few single origins which are normally based on seasonality.” It is important to know the key components of your main product line to enable you to ensure consistency throughout the year. “Speak to your trader and make sure they’re doing their job. It is our responsibility as traders to monitor our stock to ensure our customers have the coffee when they need it.”
5. Know your seasons
Covering yourself throughout the seasons is always important as different origins have different seasons. If it’s a consistent coffee in your blend or it’s a good seller, instead of booking for the whole year, it’s worth covering yourself and planning around the crop year.
Phil explains, “We’ll have Ethiopians come in around April time, so you want to cover yourself from April to March, and then your El Salvadors around May, then you can have your Centrals from June. Once we know how it is priced and when it will be coming in, we can start covering you with a new crop. Unless it is a continuous stock we don’t take huge quantities of these coffees, we’ll only take what we think we can sell, so, if you wait too long it is just going to be gone.”
6. Give us a good warning
You will find that you can often avoid running out of stock by giving us fair warning. As Phil says: “This is always a good thing. We always like to know when roasters will need their coffee at least a week in advance, instead of the day before. As we are working with 3rd party warehouse and transport companies, sometimes we need to be flexible to fit in with their schedules. So basically, having enough time in advance gives us some wiggle room in case there are any unforeseen problems.”
7.Talk to your trader
It’s good to talk, and the best way to stay on top of things is by staying in constant dialogue with your trader. After all, they have the inside track on all the goings on within the industry. Listen to your trader’s advice on pricing and market value and what they think. Phil explains that, “when we offer advice, it’s based on past experience: we’ll know if a certain varietal is expensive for one year, and if there’s a substitute you can use, with a similar taste profile but better value.”
Our traders love to hear from all our customers so if you have any questions or want to hear about the new coffees we have coming in, get in contact via 020 7202 2620.