Unlocking the untapped potential of perishable inventory holds the key to enhancing a company's bottom line. In this comprehensive guide, we will explore the essential techniques for effective inventory management, focusing on perishable stock, as well as actionable insights to help businesses thrive.
In this article, we will discuss:
- What is perishable inventory?
- The techniques for effective perishable inventory management
- How to implement inventory management techniques for perishable goods
- Key techniques for changing inventory needs
What Is Perishable Inventory?
Perishable inventory refers to products that expire or lose value over time and have a limited shelf life due to spoilage. Because of this, perishable goods require tailored strategies and techniques to handle the expiring products and help maximize profits.
Techniques for Effective Perishable Inventory Management
There are techniques that businesses can use to help them better manage their perishable inventory effectively. These techniques have been created to help minimize waste, maximize profits, and ensure that customer demands are met. Here’s a look at the most popular methods companies use:
First-In, First-Out (FIFO)
First-In, First-Out, or FIFO, is an inventory management method that prioritizes the sale or usage of items in the order they are received. In other words, the first item received is the first item sent out when an order comes in. When using this method, because the oldest items are sold first, businesses can reduce waste and spoilage, helping ensure that customers receive fresh products.
Learn more about FIFO inventory management here.
First Expiring, First Out (FEFO)
First Expiring, First Out (or FEFO) is a variation of FIFO that centers more on the expiration dates of the perishable inventory. This method makes sure that items with the nearest expiration date are sold or used first, helping maximize the remaining shelf life of the inventory still in stock. FEFO is especially helpful for businesses that deal with products that have varying expiration dates or have products that perish quickly.
Effective inventory tracking for expiring stock is essential for managing perishable inventory. By having accurate records of stock levels, expiration dates, and transactions, businesses can reduce the risk of errors and lost inventory due to spoilage.
An inventory management system can greatly enhance the accuracy and efficiency of the process. See the other ways an inventory management software can help businesses here.
How to Implement Inventory Management Techniques for Perishable Goods
To be successful implementing the techniques outlined above, businesses need to invest in four areas: planning, training, technology and communication. Here are the central steps to help businesses have a successful implementation:
Create an Inventory Management Plan
An inventory management plan should outline any strategies, techniques, processes and tools that will be needed to successfully manage perishable inventory. This plan should be crafted with a complete understanding of the business’s inventory requirements, customer demands, and market trends.
Training employees on the importance of an effective inventory management method and the techniques needed for a successful implementation ensures that everyone is on the same page. By having employees understand the goals and processes, they will be well armed to handle their responsibilities and succeed.
Invest in Technology
Though the process can be done manually and with the help of spreadsheets or Google Sheets, it is in some businesses' best interest to invest in an inventory technology like inventory management software. Inventory software greatly improves the efficiency and accuracy of the process and can help smaller teams achieve more with automation rules and real-time inventory data.
Keep Communication Open
Keeping communication open between suppliers and other stakeholders is essential for effective perishable inventory management. Keep your vendors informed about your inventory management plan and discuss any changes in ordering patterns to help minimize waste and maximize profits.
Key Techniques for Changing Inventory Needs
As businesses grow and evolve, inventory management needs may change. To ensure continued success, it’s important to have regular reviews and update inventory management techniques. Keep an eye on market trends, customer demands, and new technology to stay ahead of your competition and help your company be as efficient as possible.
Embrace a culture of continuous improvement and utilize your team to help make your business better and better. Create an environment that encourages employees to identify opportunities for optimization. By regularly reviewing processes and implementing improvements, businesses can enhance their current inventory management process and maximize profits.
Be prepared to adapt inventory management techniques to changing business needs and market conditions. This may mean having to look into alternative methods like LIFO or average cost, or investing in new technology to improve efficiency and accuracy.
By employing the techniques outlined in this comprehensive guide, businesses can optimize their perishable inventory management.