Maintenance of inventories is an essential function in the context of the food manufacturing business and impacts the business operations and outcomes in terms of control of costs, time, and quality. In this kind of business, food products have a short shelf life, and the food industry’s regulatory framework requires close monitoring of food products to prevent contamination. However, for food manufacturing companies, it is even more difficult since the products can rot, have different shelf lives, and demand varies over time.
Fundamentals of Inventory Tracking
Inventory management entails the processes of identification, control, and recording of the movement of goods from the supplier, through the production and warehouse, to the customers. In the food manufacturing industry, it helps to account for both the incoming raw materials and the final produced food items and thus helps little wastage and proper scheduling. Tracking enables organizations to always achieve manufacturing standards of the products.
Essential Inventory Metrics
Key Metrics in Inventory Tracking Include –
- Turnover Rate – Looks at the speed at which the inventory is utilized or replenished. Low LLH means that the recovery rate is also high since a high turnover rate shows efficient inventory control.
- Order Accuracy – The number of orders received by the company and the actual number of orders fulfilled to the required standard; represented in percentage. High order accuracy has the advantage of reducing returns and increasing the satisfaction level of the customers.
- Spoilage Rates – Performs monitoring of the amount of inventory that is made to be unusable due to spoilt. The result of the spoilage rate before the proposed system and spoilage rate after setting up the proposed invention can be calculated as follows, Lower spoilage rate of the produce means better control of the inventory and condition of storage.
Inventory Tracking Techniques
- Manual Tracking Systems – A traditional approach to tracking inventory is writing the data on paper or using a template on a spreadsheet. Although cheap and efficient, the techniques used entail the involvement of many people and considerable time and do not offer near real-time data. The method of using figures manually to track the inventory can cause inaccuracies and poor in managing the stocks.
- Automated Tracking Solutions – This technique involves the use of bar codes and RFID (Radio Frequency Identification) that minimize human interferences and put into practice instant inventory checking. Barcodes are speedy as contrasted to RFID tags, but RFID is non-contact and can hold more data as compared to Barcodes. Improved technology in tracking inventory increases its accuracy and efficiency.
Technology – Driven Inventory Management
- Software Solutions – Some additional features, unique to inventory management for the food industry include features such as real-time tracking, auto-replenishment, and so on, that can track batches of foods to ensure they meet the necessary compliance standards. Solutions like SAP, Oracle, and other FoodLogiQ food manufacturing-specific software increase the top and bottom visibility and management of inventory.
- Integration with Other Systems – A strong view of operations is obtained when inventory management software is used in conjunction with ERP and CRM systems. These are helpful in the coordination of various departments, demand management, and also supply chain management.
Best Practices in Inventory Management
- Regular Audits and Reconciliation – Stock taking of the actual physical inventory is done as a confirmation to reveal any variance between the actual stock and the recorded stock. Reconciliation processes address these disparities so that inventory records are correct. They also assist in identifying problems such as theft, spoilage, and system problems at an early stage.
- Data Analytics and Forecasting – Such trends are useful in demand forecasting by food manufacturers to help them understand future requirements. Sophisticated forecasting processes enable the right amount of stocks to be ordered to avoid overstock and stockout. Recognizing the trend of demand in the market, makers are put in a position to schedule manufacturing activities as well as effectively control stocks.
Real-life examples and key learnings
- Success Stories – There are examples of food manufacturers who have been able to enhance inventory tracking by applying technology. For example, a dairy company incorporated the use of RFID and drastically improved its spoilage rates by 30%. One bakery applied a similar concept to menu management, the inventory-management software used to ensure reordering and led to the order accuracy of 20% and timely delivery of products.
- Expert Opinions – The experts in the field also pay, attention to the need to adopt technological solutions in inventory control. In Supply Chain’s opinion of the future of inventory management is that it will be based on IoT and AI to gain prescriptive intelligence from inventory.
Automation of inventory management is crucial in the food manufacturing sector due to factors such as the perishability of the products and variations in demand. This way, manufacturers can attain operational efficiencies through the use of automated systems, integration of software solutions, and implementation of the best practices like carrying out audits and data analysis periodically.
To learn more about how Think Aisle’s inventory management solutions can help your food manufacturing business, pick up the phone and give us a call or schedule a demonstration right on our website.
