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About supply inventory..and how to determine % used.

 

A question submitted to Spas2b:

I am a Spa Director at a Resort Spa, and we have to complete a full inventory of our supplies every month (as well as our retail). Our head accountant takes the montly total of services and divides it by the closing total of our (full) inventory. Is this the proper way to determine the % of product used? And should he only use the products that are actually used during that month (as there are some things such as equipment and makeup that aren’t used at all or aren’t replaced on a regular basis)

I have been trying to find any information on this, as many spas don’t complete a supply inventory but a few times a year (at least the ones that I know). Our accounting office has no aesthetic background, knowledge or experience, and I need to find an easier method to determine the % used of supplies per month…any help is greatly appreciated.

Thanks..

 

Our Response:

This is a great question – I’m going to look deeper into this – in the meantime, I recommend that you speak to your suppliers to find out how they monitor product usage.

I am familiar with controlling usage once you have data, either historical, or standard usage data from your supplier upon placing your opening orders. So if you should theoretically be able to administer 100 facials with your cabin cleanser, you will monitor that product and observe the outcome. This takes a more detailed monitoring system than the one your accountant is currently using, but the results are more realistic when each individual product is monitored.

Using benchmarks is also an effective way to monitor results. A benchmark for cabin (facial) treatment products would be 5-10% (or more), of revenue from that department; body products usage can range significantly, from 1% to over 20% of revenue for that department, and this is where it would be important for your supplier to educate you; nails (manicure and pedicure) can range widely as well, but you might look at 1-5%; hair may be 5-8%; massage at or around 1-3%.

In tandem with these percentage checks, if you have a recipe for each treatment, including specific product measurements, staff are trained on how much to use, and it’s easier to control over-usage and even back bar shrinkage from occuring.

Having said that, to measure total supplies inventory against total services rendered is a great concept, and will give very rough estimates, but could possibly misrepresent actuals quite dramatically – I am an advocate of a more detailed approach, but the two together could form a great recording/comparatives system.

 

About Leslie

Spas2b Inc. is a full service Spa Development company, specializing in Online Spa Management Distance Learning Courses, Spa Business Manual Instant Downloads & Resources, and Spa Consulting Services.
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