When it comes to inventory management, few sectors have as much of an uphill battle as food and drink. Not only do you have all of the standard challenges that come with inventory management, but you also have to consider potential ingredient shortages, traceability, expiration dates, contamination, and more.
In this post, we’re going to cover why effective inventory management is important for food and drink businesses, as well as some practices and benefits this sector can implement when inventory management is done right.
Why inventory management is important
When you’re delivering a product to consumers, inventory management is the name of the game. It’s what helps to keep costs down, reduce waste, improve your overall efficiency, strengthen your regulatory compliance… the list goes on.
In many ways, it’s the backbone of operations for food, drink and food service. Behind every bite and sip is weeks or even months of preparation and organisation.
Inventory management essentials for the food, drink, and food service sectors
Whether you’re running a restaurant or pub, or distributing a brand of food or drink, inventory management is a must. Below are the essential elements to successful inventory management in the food, drink, and food service sectors.
Be consistent about when you check inventory and who checks your inventory
Consistency is key when it comes to inventory management in the food and drink sector. Faltering even a bit can create unnoticed errors, which can snowball into food safety hazards, waste, and other unforeseen consequences.
To avoid this, have a regular schedule for when you check inventory. And to take it a step further, have the same person(s) check your inventory each time. This will help them become more efficient at doing so and develop an eye for inconsistencies.
Keep a food waste sheet
In addition to monitoring your food that’s safe to ship and consume, you should also have a separate sheet that you use to monitor food waste. You don’t want to be throwing inventory out without keeping a record of doing so.
The reason for this is two-fold. First, it increases the data you have access to, which ensures that everything, truly everything, has been accounted for. And second, with this extra data, you can start to find ways to cut down on waste. If you don’t have any insights into what you’re wasting, and when, then this is a hard feat to achieve.
Follow the FEFO method to keep your inventory moving correctly
Everyone in the food and drink industry has no doubt heard of FEFO at least once. Short for First Expiring, First Out, it’s an organisation method in which the food that’s nearest to spoiling is delivered to the customer first. That way, you’re cutting down on potential food waste ahead of time.
Labels are key to following FEFO. Make sure that everyone in your operation is aware of this strategy and follows it.
Get both your on-trade and off-trade inventory management right — or suffer twice
In the food and drink sector, there are two halves to most operations. Your business might sell on-trade (to hospitality services, like restaurants, bars, and hotels) or off-trade (supermarkets and other off-the-shelves sellers). Often, though, it’s both.
Inventory management failure on one front can result in issues on both sides of the business. Stay organised twice, and you’ll have half the issues.
The benefits of proper inventory management for the food, beverage, and food services sectors
Now that we’ve covered why inventory management is important and what the essentials are for the sector, it’s time to get into the benefits. After all, there are several benefits to proper inventory management, and understanding them is important to hitting your inventory goals.
Don’t hold too much inventory
One of the primary benefits of inventory management is that it ensures you don’t hold too much inventory. A surplus of inventory is never a good thing regardless of which sector you’re operating in. In the food and drink sector, however, it’s even more of an issue.
When you deal in perishable goods, not only is excess inventory not making you money, it’s likely going to waste before it gets a chance to sell. Proper inventory management will help you prevent this from happening.
Never let customers down
On the other side of a surplus inventory is an inventory shortage. When this happens, customers are inevitably let down. It takes longer to give them what they want, assuming you’re able to give it to them before they churn.
Again, having the right inventory management tools and practices in place can prevent this from happening. And when it does happen, you’ll be able to mitigate its effects.
Weather supply chain issues
If 2020 and 2021 have shown us anything, it’s that supply chain issues can come from anywhere, hit hard and fast, and last for a long time. The food and drink sector has experienced this almost more than any other sector, with shortages of various products experienced around the world.
Inventory management can make these challenging periods far easier to bear — particularly when it’s automated.
Save money on wins and avoid wasting money on mistakes
Lastly, inventory management can help you save money when you get things right and avoid wasting money when issues inevitably arise. It provides you and your operations with a structure to follow, keeping everything on the right track and making sure that the wrong track isn’t something you’ll ever end up on for long.
This may seem out of reach for smaller businesses, but with the right tools and strategies, any food and drink company should be able to reap the benefits of inventory management.
Best practices for inventory management in food, drink and food services
To enjoy the benefits of inventory management, food and drink businesses not only need to keep the inventory management essentials in mind but also employ a few key best practices. Here are three to adhere to.
Automate as much as possible
Inventory management is one area in which automation excels. That’s because inventory management revolves around tracking products, keeping counts, notifying managers, and preventing errors. The more you can automate, the more reliable your inventory management will be.
Stop relying on spreadsheets
For many small businesses, spreadsheets might be the sole way that they keep track of their inventory. While this worked back in the day, it’s now far more error-prone and tedious than modern solutions. It’s time to upgrade to a more sophisticated solution.
Know your stock inside out
The third best practice that food and drink businesses should keep in mind is to manage their stock effectively. Managers must know what they have and don’t have, plus how it’s dated and organised.
Otherwise, no amount of inventory management is going to improve your strategy. Get the basics down, and use inventory management tools to build on that foundation.