Food producers have a lot to gain by effectively managing the shelf lives of their ingredients and products: less waste, greater profits, better cash flow, happier customers and fewer recalls. But as clear as the benefits are, the best path to achieving them is equally cloudy.
Things get even more complicated and difficult to manage when your suppliers are inconsistent when it comes to the shelf life of the ingredients they deliver to you, and your own customers have their own varying requirements for the shelf lives of the products you deliver to them.
With so many variables affecting shelf life, making optimal choices is challenging at best. Here are some practices that may help.
First-expired-first-out (FEFO) inventory logic
One of the most important things you can do to better manage shelf life is to select items from inventory according to their expiry dates rather than the date they were received into your warehouse.
If you can choose which ingredients to pick on the basis of expiry dates (rather than the more common first-in-first-out approach), you’ll immediately reduce waste. And in addition to getting more out of your own inventory, you’ll also end up delivering longer-lived products to customers, making them more profitable too.
Unfortunately, keeping track of all the data necessary to support FEFO picking using Excel or pen and paper isn’t practical for any but the smallest firms. Frustratingly, the benefits of FEFO picking are much easier to understand than they are to achieve, which brings us to our next tip.
Integrated business software
What then, if not Excel?
The trouble with Excel is that getting anything useful out of it first requires filling it with complete, accurate data. Then the data have to be manipulated by a person with the knowledge and skill to wield Excel effectively, prioritizing completeness and accuracy again.
Even if people were good at transcribing data completely and accurately (they’re not), it takes too long when there are hundreds or thousands of inventory items to track, and even harder when you add the expiry date variable.
The crux here is that making good decisions requires that you first have a complete and accurate repository of the data, and Excel doesn’t cut it. What you need is integrated business software: software that touches all parts of your organization so that it knows without being told, for example, when items expire, how many of them there are in inventory, which other items are suitable substitutes, and so on.
When one piece of software ties everything together, it becomes possible to make much better operational decisions. Allocating inventory to production and sales orders automatically on a FEFO basis is one example.
One of the most useful tools for keeping your integrated software informed with real-time, accurate data are barcodes and scanners. With them you can achieve three things:
- Make your operation more efficient by reducing effort;
- Eliminate transcription errors;
- Easily capture variables that are too hard to capture manually for every item (like expiry dates).
By adopting barcodes across your inventory system, you make it practical to record and act on expiry date information. And by using the GS1 barcode standard internally and with your suppliers, you’ll be able to seamlessly record expiry date information as you receive inventory into your warehouse.
Barcodes sometimes don’t include expiration date information by default, but setting it up is usually easy, especially if you and your suppliers use the GS1 standard.
Manage your suppliers
Speaking of suppliers, perhaps the simplest way to get longer shelf lives from your ingredients is to receive fresher ingredients from your suppliers in the first place. You can do this by negotiating better terms with them and using pre-receipt quality checks to enforce the standards you set.
Sell short-dated products
When the expiration date is coming up on items or products you have in inventory, take action. Call around and offer discounts to whomever may be interested. Even if you have to sell those items at a loss, it beats chucking them in the garbage.
Analyze patterns and adjust your purchasing habits
Now that you have integrated software tracking and measuring every aspect of your operation, you have an opportunity to do some analysis. With the right software, you can generate reports on waste and inventory levels and see if you’re making systematic purchasing or production errors. If certain items are expiring time and again, that’s a clue that you’re ordering too much.
With integrated business software, you can even use the system’s knowledge of current inventory levels and sales orders to help you make better purchasing decisions, determine your economic order quantity, and more, all helping to reduce the volume of goods in your inventory that are nearing their expiration dates. We’ll address those topics in a future post.