The food and beverage (F&B) industry is a fickle one that constantly changes and evolves based on consumer trends and seasonal produce growth and therefore can be very challenging to manage in terms of inventory and resource planning. The challenges it faces include tough competition within the industry, seasonal demands, a constant need for innovation and sustainable practices, transportation, narrow margins, limited shelf-life of raw materials and finished product and strict health and safety requirements. However, it is not impossible to control these factors and managing inventory is essential to reducing waste and overheads. If this whole area seems perplexing to you, read on for some of the challenges the industry faces and tips to overcome them.
Seasonal and consumer demand
In any industry, it is important to have accuracy when predicting consumer demand to better tailor manufacturing supply and avoid waste. This is even more important for the F&B industry as the shelf-life of product components is so short and must be optimised for consumer demand. When we consider the rapidly changing nature of consumer trends and the availability of seasonal produce with greatly fluctuating prices, this challenge becomes greater.
It is absolutely essential for manufacturers to have real-time access to inventory levels so that decisions can be made swiftly and products can be ordered quickly. This is available through inventory management software or as a component of enterprise resources planning (ERP) software. It may even be possible for suppliers to have access to their customers’ inventory so that fulfilment becomes far more streamlined and efficient.
So many components, so may units – you need a common denominator
Online inventory management software is needed to meet the demands of this task. Food and beverage companies or restaurants have a myriad of recipes, all with different units of ingredients that are not the same as the units of raw components received into stock or the units of finished product going out. This can make for a resource management nightmare if it was not for online inventory management systems; inventory management software allows businesses to quickly break down their incoming stock into smaller units.
The risk of contamination
The food and beverage industry can be more stringent than other industries because of the high food safety requirements. Failure to follow the requirements can lead to food contamination or spoilage for manufacturers!
Traceability of all ingredients is paramount to ensure any damaging effects on consumers is eliminated for future batches. Lot traceability, batch and serial number tracking are vital for this task as they allow complete traceability and transparency of ingredients throughout the supply chain. This can even be important for tracing allergenic materials. These all help to build consumer faith, loyalty and long-term viability of the brand.
The limited shelf-life of many products creates a significant challenge for companies where inventory management is concerned. It is nigh impossible to successfully keep track of all ingredients’ shelf-lives so that waste is eliminated and overheads are optimised. That is, if automated software is not used. Inventory management software is capable of surveying the shelf-lives of all ingredients and automatically alerting production management as to when a product is nearing the end of its use-by date. This ensures the production, marketing and sales processes can be streamlined so that product is almost always used in its prime, reducing the need for wastage and discards. The effects of this are also positive for our planet as wastage and discarding of organic matter destined for landfill creates harmful gasses that are terrible for our environment.
Transportation can also be a significant challenge for the F&B industry given the complexity – the need for controlled temperatures, efficient routes and quick unloading, stocking and sale at the other end. The whole process is extremely time and condition-sensitive and therefore there is no room for error.
To reduce overheads, time and labour costs, businesses might consider scheduling stock transportation so that multiple shipments can come at once, or even offering discounts to customers based on where you would like the product to go, considering efficiency and optimised shelf-life. For example, the product’s shelf-life may not be optimised if it spends a week being shipped overseas, unloaded, re-transported, shelved and eventually sold. However, if it was transported down the road and sold locally, it could be available the next day to consumers and so a discount could be offered to encourage this sales channel.
The ever-changing food and beverage industry can be extremely difficult to manoeuvre. It is certainly a challenge but not impossible with the use of improved inventory management software systems.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.