The food and beverage industry is one of the largest manufacturing industries in the world, estimated to be worth over $5,650 billion as of 2017. With an industry of this size comes a huge amount of raw and completed inventory that requires monitored control to ensure that costs are kept as low as possible in order to maximise revenue for the producer. There are three key areas outlined below where food and beverage manufacturers can save costs through using effective food inventory management software and tools. These are: reducing overstocking of raw and completed products, minimising wastage and cross contamination.
Challenge #1: Reducing food wastage
Many people would think that an industry of this size would already have it all worked out and be making maximum profits already. However, in America alone, each year manufacturers waste 2.4 billion pounds of food and spend $59 million on disposal of this wastage. Multiply that on a worldwide scale and it is clear that inventory management in the food and beverage industry still has a long way to come.
One challenge in the food and beverage industry is that often manufacturing products involve the use of other raw food products which can expire and go out of date, meaning producers need to dump inventory. Businesses need to pay for both the disposal of the expired goods and also suffer a loss from the cost of the goods originally. Inventory management software can track expiration dates for businesses showing exactly which batches of raw ingredients are due to expire and how much stock of these are held.
Challenge #2: Avoiding spoilage due to poor inventory control
Monitored and tracked inventory management can ensure that producers do not overstock on products. Inventory management software can further assist in reducing wastage by using historical and future predictions of sales to assist in understanding demand for finished food and beverage products. These predictions when run through inventory management software assist in estimating the amount of raw goods that need to be ordered so that production can continue efficiently and ordering costs minimised. Efficient production and storage of raw ingredients through inventory control also means that the shelf life of the finished product can be maximised, as finished inventory is not sitting overstocked in warehouses unable to be stocked at stores.
Challenge #3: Supporting traceability and preventing cross-contamination
A further challenge in the food and beverage industry is cross-contamination. Inventory management software allows for each of the inputs into a production process to be traced right back to the batch and location the raw ingredients came from. This, in turn, gives producers a strong advantage being able to provide a detailed point of origin information to consumers, presenting a unique selling point especially with modern demands for fair trade and ethically produced products.
A further advantage of traceability of inventory is that in the event of a cross-contamination incident or product recall exact batches can be isolated and located as inventory management software knows where each product has been sent and the ingredients involved in every item’s production.
If producers within the food and beverage industry identify these challenges and start incorporating solutions into their manufacturing cycle, then they could benefit in the form of decreased costs and increased profits. In an industry that faces increasingly tight profit margins, strong inventory management could give savvy businesses a strong competitive advantage.