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Inventory Management

Jul 31, 2023

How to Master Perishable Inventory

In this comprehensive guide, we will explore techniques for effective inventory management for perishable stock.

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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? 

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. 

What are the best 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. 

Utilizing inventory tracking systems

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.

Furthermore, implementing the right tracking system can provide numerous benefits to businesses. Optimal inventory levels can be achieved, ensuring that businesses have the right amount of perishable goods on hand to meet customer demand without excessive waste or shortage. This not only helps in reducing costs but also maximizes profits by minimizing unnecessary expenses on excess inventory.

Improved inventory tracking also leads to better cash flow. With accurate records and timely replenishment, businesses can allocate resources efficiently and avoid tying up capital in stagnant or expired inventory. This ensures that funds are available for other essential business operations and investments.

Accurate perishable inventory tracking also contributes to customer satisfaction. By having a clear overview of stock levels, businesses can fulfill customer orders promptly, minimizing instances of stockouts and ensuring timely delivery. This enhances the customer experience, builds loyalty, and helps in establishing a positive brand reputation.

Last but not least, effective tracking of perishable inventory helps in reducing the risk of recalls. By closely monitoring expiration dates and stock levels, businesses can proactively remove expired or spoiled products from circulation, avoiding the potential financial and reputational consequences associated with recalls.

By implementing an efficient inventory tracking system for perishable goods, businesses can optimize inventory levels, improve cash flow, enhance customer satisfaction, and reduce the risk of recalls. This comprehensive approach to perishable inventory management ensures that businesses can mitigate risks, increase profitability, and maintain a competitive edge in the market

How can shelf life management be monitored?

First expired, first out (FEFO)

Implementing the FEFO process ensures that perishable inventory is sold based on the proximity of their expiry dates. This method ensures that products are delivered to customers or consumed before reaching their expiration dates, preventing spoilage and wastage.

Utilizing inventory tracking systems

To effectively monitor shelf life management, it is crucial to have a reliable system in place to track inventory. Utilizing inventory tracking software or manual spreadsheets can help maintain an organized record of perishable products, their arrival dates, and expiration dates.

Effective supplier management

Managing your suppliers is an essential aspect of monitoring shelf life. By partnering with reliable suppliers who are capable of delivering products promptly, you can ensure that fresher ingredients are available. Additionally, having alternative suppliers as backup can mitigate any disruptions in the supply chain.

Selling short-dated products

To optimize shelf life management, prioritize selling products before their expiration dates. By doing so, carrying costs can be minimized, and customers can receive high-quality products that meet their expectations.

Implementing specialized software

Introducing specialized software, such as batch inventory management systems, can significantly improve shelf life management. These systems enable efficient tracking of perishable inventory, especially valuable for manufacturers dealing with a large number of items. Such software can provide real-time alerts for approaching expiry dates, facilitate proper rotation, and optimize inventory levels.


What tools are available to set up safety stock and reorder points in perishable inventory management?

In perishable inventory management, there are several tools available to help set up safety stock and reorder points. One such tool is the implementation of a batch inventory management system with software specifically designed for perishable inventory tracking.

By using software for perishable inventory tracking, businesses can efficiently monitor their inventory, manufacturing operations, and other relevant departments through a visual dashboard. This software offers various features and advantages, including:

  1. Batch or lot number tracking: The system allows tracking and identification of specific batches or lots of perishable inventory. This helps ensure accurate monitoring of shelf life and facilitates efficient product recall processes if necessary.

  2. Product traceability: The software enables businesses to trace the origin, journey, and current status of perishable items within the inventory. This information is crucial for quality control and effectively managing expiration dates.

  3. Safety stock and reorder point setup: A reliable perishable inventory management system provides tools for setting up safety stock and reorder points. Safety stock acts as a buffer by carrying a specific number of items that can be used to fulfill customer demand while awaiting new purchases or manufacturing. Reorder points are preset thresholds that trigger notifications when inventory levels dip below a certain point, indicating the need to restock.

  4. Responsive stock management: With a well-configured system, businesses can maintain ideal stock levels, enabling quick adaptation to demand spikes or adjustments caused by spoilage. By utilizing the tools available in the software, businesses can act promptly to avoid stockouts or excessive waste.

Integrating these tools into perishable inventory management facilitates effective stock control, ensures minimal loss due to spoilage, and enables businesses to meet customer demands efficiently.


What is the benefit of implementing software for shelf life management?

Implementing software for shelf life management provides numerous benefits for businesses. Firstly, it allows for the introduction of a batch inventory management system, which is essential, particularly for manufacturers dealing with a large variety of perishable items. By having an inventory management system in place, businesses can effectively track their perishable inventory.

One of the key advantages of using software for perishable inventory tracking is it enables batch or lot number tracking, which is crucial for maintaining product traceability. Knowing the exact batch or lot from which a product originates allows businesses to identify specific issues or concerns related to a particular batch, ensuring prompt action can be taken if necessary.

In addition, software for shelf life management facilitates efficient product recall processes. In the event of a product recall, the software can swiftly identify the affected items by matching them with the batch or lot numbers. This saves valuable time and resources that would otherwise be spent on manually tracking down and recalling the products.

Overall, implementing software for shelf life management brings significant benefits to businesses. It enhances inventory tracking, streamlines monitoring processes, ensures product traceability, and facilitates swift and effective product recalls when required.

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. 

Train employees

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. 

Continuous improvement

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 flexible

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. 

Frequently asked questions about perishable inventory

How can barcode scanning be used for inventory management?

Barcode scanning is a valuable tool for efficient inventory management. By utilizing barcode scanning technology, manufacturers can achieve real-time visibility and control over their inventory, production, sales, and more. The process becomes significantly easier with features specifically designed to track perishable inventory.

Batch or lot number tracking is one way barcode scanning can be used for inventory management. Each product is assigned a unique barcode that contains information about its batch or lot number. This enables manufacturers to easily track the movement and location of specific batches or lots, ensuring accurate inventory management.

Another use of barcode scanning in inventory management is the tracking of expiration and best-before dates. By encoding these dates into the barcodes, manufacturers can easily monitor the shelf life of their perishable inventory. This allows for better prioritization of products based on their expiration dates, reducing the risk of spoilage and minimizing waste.

Barcode scanning also aids in efficient product recall processes. In the event of a recall, manufacturers can quickly identify the affected products by scanning their barcodes. This enables them to initiate the necessary actions, such as removing the products from shelves or notifying customers, with speed and accuracy.

Implementing a barcode scanning system into your business can revolutionize your inventory management. By streamlining the tracking process, it saves time and minimizes errors associated with manual data entry. Additionally, it provides real-time information on inventory levels, allowing for better decision-making and planning.

If you are interested in learning more about how barcode scanning and other inventory management systems, such as Katana, can benefit your perishable inventory control, we invite you to sign up for a free 14-day trial. Take advantage of this opportunity to experience the advantages of barcode scanning firsthand and see how it can optimize your inventory management processes.

What can be done with short-dated products to avoid spoilage?

To avoid spoilage of short-dated products, there are several actions you can take. First and foremost, your priority should be to ensure that these products are sent out to customers before their expiration dates. By doing so, you can minimize carrying costs while still delivering a high-quality product to the customer.

In the event that you have products that are nearing their expiration dates, direct communication with customers can prove to be beneficial. Let them know about the short-dated status of the products and offer them attractive discounts or promotions to incentivize their purchase. This approach not only helps to sell these items quickly, but it also fosters a sense of transparency and trust with your customers.

Another strategy is to consider inventory kitting. This involves bundling short-dated products with other items, creating value packs or gift sets. By combining these products with other items that have longer shelf lives, you can increase the overall desirability and appeal of the offering. This method not only helps to move short-dated inventory but also provides an opportunity for customers to try new products, potentially leading to increased customer satisfaction and loyalty.

Finally, it is important to remember that selling short-dated products at a loss is preferable to completely disposing of the inventory. While it may be disheartening to sell items at a reduced price, it is a proactive approach that helps to recoup some costs and avoid unnecessary waste.

In summary, to prevent spoilage of short-dated products, prioritize timely delivery to customers, communicate directly with them, offer discounts or promotions, consider inventory kitting, and be open to selling at a loss if necessary. By implementing these strategies, you can effectively mitigate the risk of spoilage and optimize your inventory management processes.

How can suppliers be managed to ensure fresher ingredients?

Effectively managing suppliers is essential to ensure the availability of fresher ingredients. By following a few key strategies, you can enhance your supplier relationships and optimize your supply chain.

First and foremost, it is important to identify suppliers who have a track record of consistently delivering fresh ingredients in a timely manner. Look for suppliers who prioritize freshness and have efficient distribution channels to minimize the time span between harvesting and delivery. Additionally, consider having alternative suppliers in place to ensure a backup plan in case there are any disruptions in your primary supply chain.

Negotiating better terms with suppliers can also contribute to obtaining fresher ingredients. This may involve discussing shorter lead times, which will allow ingredients to reach you sooner after being harvested or produced. Prompt delivery can significantly impact freshness levels and enhance the quality of your finished goods.

Conducting pre-receipt quality checks is another effective method to manage suppliers and ensure fresher ingredients. By actively verifying the quality of incoming products before accepting them, you can identify any issues or discrepancies early on. This proactive approach will help you avoid potential problems downstream and ultimately improve the quality of your final products.

Maintaining open lines of communication with suppliers is crucial for effective management. Regularly reaching out to your suppliers enables you to stay informed about any potential issues that may arise, such as stock shortages or delays in delivery. By being aware of these issues, you can develop contingency plans to mitigate any disruptions and maintain optimal levels of perishable inventory.

In summary, managing suppliers to ensure fresher ingredients involves a multi-faceted approach. It requires selecting reliable suppliers who prioritize freshness, negotiating favorable terms, conducting pre-receipt quality checks, and maintaining proactive communication. By implementing these strategies, you can enhance the overall quality of your ingredients and ultimately improve the freshness of your finished goods.

How can traditional spreadsheets be used for perishable inventory tracking?

Traditional spreadsheets can be utilized as a means of tracking perishable inventory. Despite the additional manual work required, using spreadsheets for inventory tracking can prove effective for small businesses. To begin, meticulous monitoring of inventory is essential. This involves creating custom templates and documents that outline procedures for managing perishable items, conducting regular checks, and recording necessary sign-offs. Spreadsheets enable businesses to track the arrival and departure of perishable stock, keeping a detailed record of each item's expiry date. This information can then be visualized through the use of colored stickers, making it easier to identify when stock was received. Although spreadsheets may not be the most efficient long-term solution, they provide an initial framework for managing perishable inventory effectively.

Final thoughts

By employing the techniques outlined in this comprehensive guide, businesses can optimize their perishable inventory management. 

See how an inventory management system can support your business first-hand. Schedule a one-on-one meeting and get all your questions answered. 


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