The food processing industry is different from others in many ways. For inventory management, you always have to take into account ingredients have expiration dates. Also, all the materials and products have to be stored and shipped as per regulations, as well as following general ethical guidelines - ensuring food safety compliance.
Food processors can manage their inventory by following certain practices, including:
FIFO and FEFO
FIFO and FEFO are two of the most common practices in food inventory management. FIFO stands for First In, First Out, this is when the stock that was first in the warehouse should be taken out first and used first. This will help ensure that the least amount of food will pass its expiration date. On the other hand, FEFO stands for First Expired, First Out. It is a practice where you utilise the items that are closest to their expiry date. Either options will provide inventory tracking and help minimise food waste in the supply chain.
Material Requirement Planning (MRP)
Material requirements planning can assist in food inventory management. By looking at past and future sales demand data and inventory lead times, you will be able to establish inventory reorders points and the replenishment quantity. At the reorder point, you can then replenish your stock to ensure you won't run out of supplies.
One of the main advantages of this is that it minimises the scenario of having excessive food stock in the warehouse and waste. This means you don’t need to pay for excessive warehouse space.
However, a poorly designed, inflexible model or not monitored and reviewed MRP can lead to occasional shortages of inventory items, and that can cause issues with meeting demand. Shipment delays can lower customer satisfaction levels and retention.
MRP software can be a standalone system or as part of an ERP solution which tends to include inventory and warehouse management functions too.
Use of Inventory Management Software
Inventory software allows you to share all inventory data throughout the business, it can be useful to implement FIFO and FEFO strategies and assist with MRP.
All essential information on your inventory can be viewed real-time, such as from the day it arrived in your warehouse, expiry dates, supplier details, warehouse location to the purchase price. As all goods are tracked using the system, it becomes easy to trace their path through your food production process as well. By having all this information readily available, processes are more efficient, reduce the chance of waste and food processors can meet regulatory compliance.
Training your Team on Inventory Management
Training your team on how to streamline the inventory management process is also important. Introducing a new methodology or software will involve change management and training. Start with highlighting the benefits of the system to team members and explain how a more efficient process means more capacity and better profits. If any of your workers notice a source of food waste, they should be able to bring it up so that you can improve the inventory management process even further. Inventory efficiency is an on-going process, that needs to be review regularly to achieve an optimal balance between supply and demand.
WinMan is a comprehensive manufacturing ERP solution with built-in MRP and Inventory Management functionality making it suitable for Food Processors. Contact our team today to find out more.