If you’re in the food manufacturing, distribution or processing industry, you know the importance of expiration date management. Between spoiled ingredients, stock overages, wasted labor and unnecessary spot checks, without the proper processes in place to address expiry date management, you could be losing big money.
One of the most common ways food companies address the issue of expiry date management is by using the “First Expired, First Out” (FEFO) method. The concept is simple: the product with the earliest expiration date is the product that will be used or sold first. This method is especially useful for food companies working with perishable goods that have strict shelf life dates.
FEFO is most commonly used for the following reasons:
Ingredients and product remain fresh
For companies in the food industry, food safety is key. It’s never been more important to provide customers with safe and fresh ingredients and product. The FEFO method helps to ensure that product is being used well before its expiry date and that no expired product, or product that includes expired ingredients, is being sold to customers.
Smaller quantities of expired shrink
Reducing inventory shrink by keeping spoilage to a minimum is crucial for any food manufacturing or processing company. Inventory loss can mean big losses to profit if not properly controlled. While it may be impossible to completely prevent the accumulation of perishable inventory, the FEFO method allows you to get to inventory before it’s expired and potentially sell it at a discounted price. Remember, a 50%-70% loss on your bottom line is much easier to absorb than 100% if inventory isn’t sold at all.
Labor costs aren’t wasted on constant spot checks and inventory monitoring
Constant physical inventory checks can be tedious and time-consuming. Utilizing the FEFO method at your plant can save labor costs and ensure that workers are focusing on production instead of monitoring expiry dates.
How software can help
Expiration date management can be overwhelming, especially without the help of an integrated software solution. ERP, or Enterprise Resource Management software, allows for visibility across all departments, from the moment materials and ingredients enter your facility, until the finished product is delivered to your customer.
Having manufacturing, ordering and customer data in one centralized system will help you implement the FEFO method in your warehouse. For example, assigning expiration dates to items during or immediately after receiving, and tracking this data, will give you the visibility and insight you need to be able to send the oldest allowable stock to each customer, reducing stock age and resulting in less stock write off. Additionally, advanced warehouse functionality built in to ERP can auto-calculate and track expiry dates to ensure that only the right inventory and product is being picked, used and shipped.
Looking for more information? Take a look at our best practice guide to supply chain management in the food manufacturing industry.