Let’s first establish the importance of inventory management. The covid-19 pandemic has affected the food and beverage manufacturing industry globally, with unpredicted lockdowns globally along with supply chain issues resulting in chaos and fluctuating customer demand.
Between 2020 and 2022, sudden spikes in demand for certain products have occurred. Food and Beverage manufacturers have been forced to cater to the dynamic fluctuations in the market by increasing supply and modifying inventory in unprecedented ways.
The Food and Beverage Manufacturing (F&B) industry has one very relevant characteristic: almost all stock is perishable. Consequently, the supply chain must be managed such that prompt delivery and consumer safety are of equal importance.
Efficient and effective F&B Manufacturing supply chains require end-to-end inventory management where the flow of goods is managed all the way from the manufacturer to the warehouse to POS.
This includes the administration, management, warehousing, and processing of finished goods, raw materials, components, and end products. To improve your inventory management it is, therefore, necessary to have complete control and visibility of warehouse operations and physical stock. Here are three practices that you can apply that will streamline and improve inventory management.
1. Evaluate your current workflow and process
Efficient inventory management is purpose-driven. Examine the details of what each link in the chain does. This will provide insight into specific aspects of the system that may need improvement.
Collaborate with members of your team to identify potential problem areas and then work on a plan to address them.
For example, in F&B Manufacturing, there are typical areas where waste occurs, and these represent areas that you could begin focusing on right away to improve inventory management:
- purchasing, and logistics
- Use demand planning and modeling tools that support just-in-time production to avoid maintaining excessive inventory
- Eliminate wait times by granting staff with required access to streamline decisions and approvals with automation
- Ensure machinery is up-to-date and working in the most effective, productive, and efficient way
- Have controls in place to eliminate defects. Acknowledge where there are showstoppers and eradicate them at the source
2. Perform routine stock checks
Critical information involved in inventory management includes knowing exactly how much of each item is available in stock.
Simply tracking what was purchased against what was sold does not guarantee the full picture. Food and Beverage products can get lost, stolen, or damaged after they have been registered at the warehouse.
Lost items may go unreported until the right person becomes aware, many times after mistakes in procurement and purchasing have already been made.
Remedy this problem by regularly reviewing physical inventory for comparison with current records.
3. Study customer behavior and leverage the benefits of big data
One of the benefits of using big data is the ability to make accurate predictions. Customers often display different purchasing patterns for Food and Beverage products depending on the time of year.
Many purchasing patterns may be obvious for example, seasonal holidays such as Thanksgiving, Christmas, and New Year. However, there are also circumstances where businesses won’t be able to recognize specific patterns without some form of data analysis. To assist consider performing some best practice analysis of inventory:
- Always keep track of how often you are restocking selective items and try to identify any pattern or trend that may or may not be seasonal and may be due to other external factors that affect your product flow
- Study the peaks and valleys in customer orders. Understanding customer behavior allows you to avoid over and under ordering, enabling optimal inventory balance
- Big data means managing a lot of data, therefore, the more data that can be analyzed the better. Keep all inventory data, even data that has been archived for long-term storage. Big data analytics can be very effective for inventory management, even flagging problems that you didn’t realize existed
If you don’t have a system in place that helps you address all these practices, Sage X3 is your answer! Talk to one of our experts at IWI Consulting Group and we will be happy to schedule a demo and provide a product tour that will help you understand how Sage X3 can help you optimize your inventory management.