Guidance on Optimising Food Production Inventory Management

Guidance on Optimising Food Production Inventory Management

Let’s face it – inventory management is crucial in many industries. Indeed, it is often regarded as one of the top priorities among food production companies. This is because – unlike many other classes of goods – food has a shelf life that is quite short. Of course, this will depend on the storage and preservation method that has been chosen but the fact remains that the food production sector is more dependent on inventory management best practices than numerous other industries.

It should also be noted that increasingly complex supply chains leave food production companies more exposed than ever before to global situations. Few food manufacturers and importers, for example, remained unaffected by the logistical disruption that the pandemic wrought. It wasn’t so much that producers were no longer making the raw ingredients for sandwiches, sauces, ready meals, and everything else but that they couldn’t get them to where they needed to be. The pandemic caused no end of problems for both finished product distribution and for raw material imports, thereby giving food production firms two problems at once.

Equally, the global food supply chain is at the mercy of blockages in key ports, canals, and shipping lanes. War, piracy, and bad weather can all play their part in causing problems. That’s why food and drink processing companies need to think more strategically than most businesses about their inventory management. Why? Because if they are, then they will necessarily be better placed to overcome the sorts of issues outlined above. Of course, moving your inventory management processes to the next level won’t solve global problems. What it will do, however, is to make your business more resilient when difficulties occur.

Not only can this help you to meet your contractual obligations in times of stress, but it can also help your firm to steal a march on less well-organised competitors. Read on to find out what forward-thinking food and drink production companies are doing to maximise the commercial potential of their inventory management systems.

Revaluate Your Current Inventory System

Let’s start at the beginning. In the case of inventory management, it will often be safe to assume that any food production firm operating today will have some systems in place already. The point here is not to rest on your laurels and assume that merely because you have a system that it is doing the job for which it is intended. For the most part, food production inventory management processes can be made better by taking an open and honest approach to both the good and the bad in them.

To be clear, you want to take an outcome-driven approach to inventory management. Look at what it is you are trying to achieve from a strategic point of view and then build your systems in a way that supports those outcomes. Things you do that don’t lead to the desired outcome can be de-prioritised or done away with completely. Overall, you want an unrelenting focus on wastage. That doesn’t just mean wasted food but wasteful processes through wasted time as well as wasteful expenditure on energy.

Focus on Stock Checking More Rigorously

Many food production firms have an idea of what they have in stock at any moment by being able to check it on their software system. Whether this is a fancy warehouse solution or a simple spreadsheet that monitors incoming deliveries and outgoing consignments, you still cannot rely on what your computer tells you alone. In short, you must also carry out essential physical stock checks if you want to have a robust inventory management system in place.

All too often, misplaced, or misidentified items appear to be there when they are not. Equally, you can find that the sell-by dates you have on certain goods are not as they are represented on your stock sheet. Only a physical inventory, even one that is supported by partial automation through scanners and bar codes, will be sufficient for you to know exactly where you stand with stock. Breakages, theft, and incorrect ordering assessments can all play their part of the time to give you a distorted impression without the right physical checks.

Get Better at Replenishing Stock When It Is Most in Demand

So-called just-in-time purchasing strategies are widely used in manufacturing as well as in the food production sector. Of course, the benefit of only buying what you need when you need it is that you are only spending the minimum on ingredients. With less produce in your warehouse or stock room, there is less to insure, less to maintain and more space available. However, getting just-in-time processes right requires close attention to inventory management. If you buy too late and run out of something that has been selling particularly quickly then just-in-time can soon turn into just-too-late, for example.

Equally, the cost savings associated with keeping stock levels low are not as clear-cut as they used to be. With rising fuel costs, ordering a lot in little batches might no longer make as much sense as buying in bulk. Indeed, if inflation continues to bite, then food production supervisors, logistical managers and retail business owners may all find that buying at today’s prices and storing non-perishables in-house becomes more attractive. To do this right, you need to look not only at your usual demand for produce but how seasonal this is so you can prepare for changes in demand.

Leverage Big Data to Make Customer Predictions

If you want to replenish stock at the optimal time and at the least cost to your food or beverage production firm, then leveraging big data is a good way to achieve the most viable results. Big data analytics might sound demanding but outsourcing this to experts is a superb way of making the most of modern technology without having to make significant in-house investments in IT. Of course, some trends – like Easter and Christmas holiday consumption patterns – are relatively easy to spot.

However, ask yourself whether your current grasp of inventory management systems will allow you to make more nuanced predictions about stock movements. Do you sell more products of a certain type at the weekend compared to the working week? What about lunchtime trade compared to the rest of the day? Big data should be able to answer these questions – and many more besides – by using algorithmic intelligence to spot all the mathematical patterns that are generated from each item of stock as it is delivered, stored, picked, used, and sold.

Get on Top of Product Recalls

Food product recalls happen in Ireland all the time, as they do in every other European economy. When they’re handled well, their reputational fallout can be minimised. However, slow-to-react companies tend to face the most media scrutiny and lack of ongoing trust from the public afterwards. Inventory management has a big role to play in product recalls to they’re delivered in the most effective way possible.

Firstly, the need for a product to be recalled is lessened when you are on top of your stock, your shelf lives, and your exposure to potential contaminants. Equally, you will be better placed to know when a supplier has a problem and whether or not it affects your business. Typically, suppliers perform product recalls on batches, not entire production runs. As such, good inventory management processes will allow you to determine swiftly whether any of the produce you have purchased from them falls under the remit of a recall or not. Why recall your own products because you don’t know whether you are affected because you don’t have the necessary serial or batch number data?

If you would like to find out more about our services and how they can help food and drink companies to operate more efficiently, then do not hesitate to get in contact with us.

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