4 Tips To Improve Inventory Management For Food Manufacturers and Distributors
Why is inventory management important?
In the food manufacturing industry, proper management of inventory is critical.
Other industries are able to get away with some degree of inventory mismanagement. But, because of the perishable nature of your product, food manufacturers must be precise when it comes to managing inventory.
The failure of food manufacturers to properly manage inventory results in costly waste and harm to the environment, not to mention significant damage to your company’s reputation.
Challenges of inventory management
in the food industry
Food manufacturers and distributors always need to maintain the delicate balance between having sufficient inventory to fill customers orders on time, and not having so much inventory that part of it ends up spoiling or otherwise going bad.
Proper inventory management is one of the biggest difficulties faced by companies in the food industry. Inventory levels need to constantly be adjusted depending on:
1. Evaluate current practices
Companies should not assume that their existing method of managing inventory is optimal. Evaluations should continuously be taking place so that strengths and weaknesses in current practices can be identified and acted upon.
Technology relating to inventory management in the food industry is continuously improving, and food companies should be looking into how they can benefit from these technological improvements.
2. Create a team
Inventory management, in the food manufacturing industry as well as in other industries, is best handled by a dedicated team.
Distinguished from many other goods, food stock inevitably becomes unsellable and usable. Accordingly, it is important that the inventory management team keep accurate track of not only the amount of inventory, but also the dates items of inventory come in. The inventory team must ensure that FIFO (first-in-first-out) is followed so that food products do not end up being wasted.
For health and safety reasons, it is imperative that expired food products be discarded or properly disposed of.
3. Use real-time data
Food manufacturing and distribution companies that have access to data in real time have a huge advantage over companies that do not have access to data in real time.
With access to data in real time, food companies are able to react quickly to changes in supply and demand. If, for example, real time data is showing that inventory is being purchased at a higher rate than normal, the company can immediately restock in response to the increased demand.
Without access to real-time data, the company might not be able to react in time to restock and make sure customer orders are being filled on time.
Additionally, with real-time data, food companies are able to accurately forecast supply and demand into both the near future and distant future, helping to prevent inventory from being understocked or overstocked.
4. Implement inventory management software
By implementing and utilizing inventory management software, food manufacturing and distribution companies can save time and money, and ultimately deliver better customer service than competitors that do not use inventory management software.
Inventory management software automates many tedious tasks associated with inventory management, such as manually counting stock and preparing reports for management.
Further, inventory management software allows the different departments of a food company to benefit from the data produced by each department.
For example, the moment that warehouse data shows that inventory levels are becoming too depleted, the purchasing department can respond right away by purchasing additional stock, ensuring that there are no disruptions to the fulfilment of customer orders.