Report: Utah could save millions in waste by improving inventory process at liquor stores

New state liquor store in Salt Lake City opens on June 3. A legislative audit found the state could save millions in waste by using industry best practices to manage inventory at state-owned liquor stores.

New state liquor store in Salt Lake City opens on June 3. A legislative audit found the state could save millions in waste by using industry best practices to manage inventory at state-owned liquor stores. (Scott G Winterton, Deseret News)


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SALT LAKE CITY — Utah could save millions of dollars in waste by updating its inventory management system at state-owned liquor stores, according to a legislative audit presented to lawmakers Tuesday.

The report is a follow-up to a 2023 report from the Office of the Legislative Fiscal Analyst and the Governor's Office of Planning and Budget, which recommended that the Utah Department of Alcoholic Beverage Services "improve inventory management by adopting industry best practices," use a "structured listing and delisting process to ensure data-driven decision making" and evaluate the performance of various products to meet demand.

The latter two recommendations have been fully implemented, the Office of the Legislative Auditor General found, while the inventory management recommendation is still in process.

"The efficiency evaluation ... found that the department could save millions of dollars in waste annually by adopting industry best practices for inventory management," Brent Packer, lead auditor on the report, told the Legislative Audit Subcommittee on Tuesday.

He said a "key part" of the process is how the department forecasts demand. In the past, it "relied heavily on sales estimations and on human touch" to create forecasts, as opposed to using automation.

"This resulted in overstock and understock of various items that they carry," Packer said.

Although the department recently implemented an automated forecast system for the majority of items it carries in liquor stores — a "great improvement," in Packer's view — he noted there are concerns about the accuracy of the data used in the automated forecasts.

One chart of monthly demand beginning in November 2022 shows a "0" for demand in the month of January 2023, which the audit notes is "not reflective of actual demand, but rather a stock-out."

"However," the report states, "the forecast appears to incorporate the zero, which skews the overall forecast downward."

Auditors noted that as more data is collected, the forecasting model will likely improve and be able to help plan for seasonal trends and other patterns that emerge in demand for products, but said the lack of data is why it considers the recommendation still "in progress."

In a letter to Auditor General Kade Minchey, Department of Alcoholic Beverage Services Executive Director Tiffany Clason said the department agrees with the recommendations from the report and said it "will continue to implement the recommendations above and work toward improvements as a result."

Clason said she understands the importance of improving the process, given that the Department of Alcoholic Beverage Services is the "only purveyor" of liquor products in the state.

"It's really important that we get inventory management right, not only for our customers — the people that we support with these products — but also for the state of Utah, as was referenced with the potential savings by having better data," she told lawmakers on Tuesday.

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Bridger Beal-Cvetko covers Utah politics, Salt Lake County communities and breaking news for KSL.com. He is a graduate of Utah Valley University.

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