Food and beverage industries rely heavily on inventory to really operate a well-oiled operation.
Without it – companies will have more expensive production processes, lower outputs, strained supply chain connections, and shakier regulatory compliance.
To really keep your profit margin at its most ideal and your consumers satisfied, a food and beverage-suited inventory or Enterprise Resource Planning (ERP) system works best.
This assists food and beverage firms in successfully managing waste, increasing production, and controlling cash flow.
1. It can save on wastage
The basics of inventory management are to ensure that there is adequate stock needed in your store or warehouse to create an equilibrium between the supply and demand of products.
Having this equilibrium is essential in the food and drink industry along with any industry in need of an inventory management solution.
Avoiding lost expenditure on wastage is one of the leading costs in the food and drink industry… on the “Bord Bia” (Ireland’s governing food body) website it states 23% of food waste volume happens at the production level, 12% at storage and handling, 5% at the processing level, 9% at distribution and market-level.
There is food wastage at every different stage along the journey to getting it from production into the consumer’s hands.
The estimated global cost of profit according to the Bord Bia website is €1.2 trillion every year. This is a huge sum of money to go into wastage on a global scale each year.
We can’t deny that sometimes wastage is unavoidable, but what an inventory management solution can do is try to minimise this wastage and help to retain profits.
2. Prevents low stock issues
No one likes being understocked, especially if you are in the food and drink industry, there is nothing worse than having a busy day and customers constantly following up on stock levels.
Having an automated stock reordering system that calculates how much stock you need based on the previous sales is the ideal tool for anyone who may have experienced issues with low stock levels and has experienced a loss in profit due to having these low stock levels.
3. Keeps you away from overstocking issues
Who doesn’t love having lots of stock as it increases the potential to sell and maximise profits and lead you on your way to having a breakout month and posting record sales…
…But that’s inaccurate.
In the food and drink industry and any industry really – if you have lots of stock in your warehouse it’s dead money sitting there.
What would happen if the warehouse flooded? Or what would happen if the stock got damaged somehow?
It’s lost earnings in stock that is in your warehouse!
As a business owner, you need to reduce the amount of risk that you can take as a business, if you are overstocking then you are taking huge risks.
On occasion, it might pay off and you can post record sales but who can really afford to take that risk?
Ordering the ideal stock every week/month is a challenge for warehouse managers as they must forecast what the sales figures are going to look like.
Automated stock reordering can help to alleviate these problems for you, also the re-adjustable levels that you can change is a very useful tool to have as it lets you monitor and if need be adjust the amount of stock that needs to be reordered.
4. Improve Your Order to Cash Process
Some businesses like the longer more robust transaction process for big juicy deals whilst others prefer the speedy cash flow process so they can get their stock in and out as quick as possible.
Whatever you prefer, having an inventory management solution will improve any order to cash process that you desire.
Having full visibility over any stock coming in or out of your business can be extremely beneficial to you.
This kind of visibility allows you to make informed and confident decisions in how your business is performing and will perform in the future, these decisions can change the course and trajectory of how a business may grow or fall.
5. Make Re-Ordering Seamless
Re-ordering stock can be a lengthy process, going through all the stock levels can feel like it’s never-ending, also checking the reorder point of the stock can be quite distracting to the point that you are minding the stock levels constantly rather than getting on with the job at hand.
This can all be avoided, and you can focus on the job in front of you rather than having the stock management issues going on in your head.
By eliminating the constant thinking about stock, it can take a lot of stress off your shoulders and allow you to think about how to bring your business to the next level and grow it.
Having a reorder stock function in inventory management is a solution that can help you take the stress off your shoulders.
If you look at the bigger picture – it is a solution that calculates how much stock has left your warehouse and how much stock is needed for your warehouse to meet the minimum stock levels for your business to keep the perfect stock levels needed at any time.
All these reasons are great examples of how to take advantage of your inventory management processes, it can save you in terms of revenue and manpower over time.