You can assume chefs are creative people. The more creative you become, the more you use your right brain, while ignoring the left one. It’s no wonder you see so many great chefs: creative in designing the product and market it, but fail miserably when they run their own business because of overlooking the other side of the F&B business, PPIC (Production Planning Inventory Control). Chances are, if you knew Chef Rahmat Kusnedi (CRK) you’ve heard him saying his word, “business is mathematic, without proper calculation, it’s a charity foundation”. Now, The President of Indonesia Pastry Alliance (IPA) will discuss the importance of PPIC in a business, to the most common mistakes happen in reality.
What is the actual role of PPIC in F&B business?
Structurally, PPIC is a division of its own. You can say that PPIC’s role is similar to a bank. If the finance department has cash money, then PPIC also keep the fund in food ingredients.
Usually, here’s the workflow. When the sales people got the order, they will report to customer service, and then PPIC will estimate the necessary ingredients. PPIC will cross check with the inventory people to ensure the availability of ingredients. If they’re out of stock, PPIC will request the ingredients to purchasing division, and then it’s up to the finance division for approval.
For example, if the sales division has order worth Rp 1 million, and the predetermined food cost is 30%, then the spending for ingredients is around Rp 300.000. Of course, sometimes you’ll spend Rp 5.000 – RP 10.000 more, it’s acceptable because you can never have accurate ingredient purchase. I mean, when we need 800 gr flour, there’s no one produce 800 gr flour, most of the times they sell it in 1 kg packaging.
The role of PPIC doesn’t stop there. After the finance approves and the ingredients are ordered, PPIC has to ensure that they receive the same amount as requested. There’s lot of mistakes in this phase, especially in home industries that rely a lot on feelings, not system. We will know the loss when we do the audit.
Would you give me some miscalculation example?
On the same case, sometimes the food cost would reach Rp 400.000, even to Rp 600.000. When you want 30% margin, I can tell you that you won’t get any profit, simply put, it’s charity. It happens all the time, even I have this some times. It will cause further mistakes in determining the price point, as a result, you’ll set the selling price recklessly.
What’s the biggest issue of this division?
Control. PPIC is how we plan the production. Remember, business is mathematic, there should be proper plannings. Therefore, if the record in finance department is not accurate, you should start the investigation process from the recipe. If you are to make cheese cake, you need to know how much cream cheese, cheese, sugar, egg are needed. Without proper monitoring, your 30% margin can be reduced to 20% or even minus. For example, when there’s mistake in production process and the staff request for more ingredients, PPIC has to ask, “we gave you the ingredients back then, haven’t we?” Without PPIC, most production staffs won’t admit such failures in production process.
About the ingredients calculation, can it be 100% accurate?
There’s always calculation for each ingredient, and almost all of them can be accurate, especially in pastry, because we always measure everything. It’s different to hot kitchen, for instance, 1 kg fish may consist 6 fish, but the weight of each fish won’t be equal. PPIC has to understand the recipe and the production process so they can prevent misconducts, theft, damage, and other possibilities.
What’s the most common mistake you see in professional kitchens?
Miscalculation because of not using measuring unit. For instance, from 1 kg of flour, you’ll get 12 pcs of bread each for 60 gram, PPIC need to know whether it’s the weight before they put the filling, or after?
And then for cakes, you can’t measure the production output in centimeter when the recipe is written in gram. The thing about pastry is, we have more measurable output. However, pastry kitchen also have more ingredients variants, from baking powder, baking soda, improver, the sugar itself comes in different variants such as granulated sugar, icing sugar, or maltodextrin. PPIC must know, which measuring units are used. Sometimes, people use grams in the recipe, but actually, when the ingredient is liquid, will we still be using grams or mililiters?
And then for the number of suppliers, which one is better, less or more?
Of course everyone prefers to use 1 supplier that can provide many items. It will make every division’s job easier, from the production, R&D, inventory, to the finance. However, there’s some disadvantages from it, if you rely solely on a supploer, when they run out of stock, you’ll have trouble. In addition, by using only 1 supplier, you can’t compare the price with other suppliers.