POS systems aren’t perfect, protect yourself by preparing ahead of time.

I’ve consulted at several inventories, and have found that many managers don’t establish the occurrence of variance against their POS systems. When speaking about it to managers, many did not know what this meant, and many owners had questions about variance as well. Briefly, variance are small discrepancies that exist in real time between current standing inventory and inventory in system. It can be explained by a variety of reasons, like incorrect SKUs, price tags, or miscategorization, to errors by inventory associates counting stock, or budtenders making a mistake during a transaction. Establishing a log to find errors that occur in the system is important, as all the other reasons can be traced and corrected. Flaws that occur in every POS system are harder to find a cause for, but need to be accounted for. A variance log also prevents management or ownership from accusations of theft or mismanagement of inventory. 

Best Practices for Establishing a Log Together

The best time to establish a log for variance is during or directly after an inventory count and reconciliation. Tracking natural variance is easiest when the standing inventory and system are aligned. Trying to establish variance during a busy season, or when inventory is not accounted for will only cause complications and questions. Start by looking for items known to not currently be in house, or that were recently counted and confirmed. Start by comparing the product amounts against the POS system, and if variance is found, isolate the extra product or log the non-existent items. In an excel sheet, I build out this list of variances to include product, vendor, quantity, cost, variance, and the reason for variance. Bring your work to leadership and ownership, and keep them updated as to what your findings are. Investigating the why and how, will be the next task for tracking variance.

How to Handle Positive and Negative Variances

Tracking for variance after adjustments is crucial for accountability and tracking for state audits. If a positive variance is found, the first place to start tracking variance is the purchase order upon intake. It will usually be that a miscount occurred, and that more product than what was entered in the system exists. If a negative variance is found, I will start tracking in the transaction logs to see if it was during an order that a transaction error might have occurred. These are very common in all POS tracking systems currently available, the simplest example would be a transaction for one item, ringing up as two. When found, this can sometimes be corrected but often cannot because it brings up an internal error, establishing these trends will be imperative at this point. These errors in systems exist in every industry, and some are not as easily found as the examples above. By establishing a pattern, you can correct for variance then anticipate where it might arise again, while also having evidence that it is beyond your control.

Tracking Variance Matters

Until major software developers get involved with tracking and control software for cannabis, we still need to learn the systems that exist. Exploring these systems, their strengths and flaws demonstrates that inventory management goes beyond the surface. To be held accountable is a large responsibility, and having the major issues accounted for will make your time on your POS system easier. Providing these trends to ownership so they can hold the system companies accountable is vital for future improvements. Informing ownership, as well as other management about variance will also keep unfounded accusations from degrading the morale of the company. Tracking variance, will improve the overall health of the business as you can also communicate with accounting to keep financial variances reigned in. Inventory will always have an accurate stock to reflect the system count, making for accurate ordering and use of funds. The last benefit is directly for the patients, as they will be able to depend on online ordering or deliveries to be in stock and accurate.