Shelf life management in the prepared food industry
Processors of fresh prepared foods - like pre-made sandwiches and washed, cut vegetables - face a markedly different set of challenges to many other food sectors. In particular, management of product lifecycles is an extremely active concern. The very nature of the sector means product lifecycles have to be short, manufacturing is “just-in-time” and visibility over expiry dates is often substandard.
The US fresh prepared food manufacturing industry is worth around $14billion, and the success of the business model relies heavily on the efficiency and synchronicity of operations. The challenges businesses face are largely from the complexity of balancing product shelf lives.
The most attuned prepared food businesses counter these problems by using industry-specific software solutions. Most companies try to manage inventory through standard business technology, but this frequently fails to understand the nuances of what is a highly specialised sector. But how exactly does bespoke technology like food ERP help prepared food businesses?
Consider the problems that can arise from sourcing a multitude of necessary ingredients from various suppliers, many of which provide products with inconsistent expiry dates. This is before it even comes to a business’ management of its inventory and the requirements of individual customers.
The most obvious of these problems is lost revenue through shrinkage (or “wastage”/”spoilage”). Shrinkage is a major issue in the food industry as a whole - with $15billion worth of goods being rendered unsaleable in the US each year. In the world of prepared foods, where products have short lifecycles and timing is everything, shrinkage can have a significant impact on a company’s bottom line.
What’s needed is a system that can segment stock by shelf life, making it easier to use and sell the items with the earliest expiry date first. Crucially, this will not always be the oldest produce; expiry date is the key data here and this is often harder to manage. This is known as first-expiry, first-out (FEFO) management.
ERP for the food industry provides businesses unparalleled visibility over their inventories - helping them make the right decision on which stock to use when.
In an environment where the already-rising tension between quality control and cost control has been heightened by Covid-19, the edge ERP provides is invaluable.
Compared to the more traditional pen and paper or Excel spreadsheet, ERP allows us to keep track of stock without wasting valuable time (data can flow seamlessly from purchase schedules) and in a way that is flexible to changes in supply and demand.
Let’s take a look at what these means in practice. ERP allows businesses to introduce barcode scanning and accurate lot tracking. This speeds up operations, reducing the time items are spent sat stationary and ticking towards their expiry date. Also, these automated systems eliminate the majority of mistakes occurring; produce being stored or designated incorrectly is a major cause of wastage.
ERP also helps businesses react to shocks. These can range from fluctuations in supply and demand to the global disruption to supply chains caused by the pandemic. ERP is smart technology - production schedules can be easily changed to smooth problems and react to the unexpected. This is only possible because of the amount of data ERP systems are able to interpret and the amount of internal and external factors they can take into account.
Increasing efficiency and scaling up
The demand for fresh prepared foods continues to increase, especially in growing markets like India and China. Despite the global uncertainty, the industry is in a relatively strong position and many businesses will be looking to scale up in 2021.
To be able to do this, efficiency is key. This encompasses everything we’ve discussed here - from minimizing shrinkage to having an accurate view of your inventory. But it also means processing stock quicker and giving yourself more capacity; these are the efficiency savings that can set an organisation on the path to faster growth.
ERP naturally aids you in this goal, helping you label, pack and ship products quicker to make your supply chain as optimised as possible. As your business expands, a food ERP is there to facilitate this and ease any growing pains with flexibility over new modules and new production and inventory schedules. When the time comes to invest in new factory equipment, ERP helps integrate it into the wider technology stack and effectively extends the core features to all users.