Picking a proper order picking method when dealing with shelf life of food products can have a tremendous impact on your company’s bottom line.
It’s a familiar scenario: you’re in the refrigerator aisle at the supermarket, buying orange juice.
You hunt towards the back of the shelf and pick the bottles with the latest expiry dates, so they’ll keep longer.
Yet at home, you’re annoyed by that family member who simply grabs the first bottle of orange juice to hand, rather than the one they’re supposed to use – the one that expires first.
If you’re in the food manufacturing, distribution or processing industry, choosing the right order picking method is key.
Without having a proper order picking strategy in place to address expiry date management, spoiled ingredients, stock overages, wasted labor and unnecessary spot checks could all result in significant losses.
If this sounds familiar then you’re not alone.
Every year, 30% of all food produced worldwide is lost in the “from farm to fork” value-added chain, which equates to approximately 1.3 billion tonnes.
When it comes to fruit and vegetables the loss rate is particularly high, amounting to almost 50%.
To minimize food losses and meet the food requirements of an ever-growing global population, companies dealing with perishable and processed food need to focus on implementing intelligent logistics software solution, or in other words, a Warehouse Management System solution.
Freshness begins at the warehouse
It is hardly surprising that there has been an explosion of novel technologies designed to extend the freshness and quality of food, including physical, chemical and bio-preservation methods.
However, one of the most effective ways to maximize shelf life of food products and minimize waste is by closely monitoring the supply chain. It basically means to ensure that the right product is delivered at the right time in the right condition.
This involves a strategic shift in warehouse operations from purely efficiency-driven order picking methods to the picking of products according to each specific customer’s needs and replenishment policies.
If you don’t optimize your picking strategies based on product shelf-life then you’re taking a huge risk and could directly impact the profitability of your business (e.g. through returns or expired stock on the shelf).
Your customer service level and ultimately your brand’s reputation.
For example, temperature is not a factor for most parcels such as clothing, books and other commonly ordered goods. However, facilities that store perishable foods constantly have to manage temperature fluctuation.
According to the NRDC, cooling and refrigeration inconsistencies is among the biggest contributors to food spoilage and waste.
This is due to the fact every food product has a definable maximum shelf life and storing them at a sub-optimal or fluctuating temperature can impact and drastically shorten this timeline.
Temperature errors with items like meat and poultry can also lead to bacteria growth and foodborne illnesses.
In fact, the CDC estimates that 48 million people get sick, 128,000 are hospitalized and 3,000 die from foodborne diseases each year in the United States, putting a spotlight on how seriously food safety issues should be taken.
Intelligent logistics for Food and Beverage companies
If you look at the majority of ERP systems and warehouse management systems you’ll realize something important.
Most of them are not designed for the dynamics of the food industry.
That means they lack the functionality to manage variables such as shelf life and expiry date.
As a result, an item can be pushed to the back of a refrigerator during the re-stocking process. So it can unknowingly be shipped after its expiration date. This is how it happens that organizations could potentially send spoiled food to consumers.
This leads to a huge amount of food wastage and damage to the brand’s reputation. It also impacts the company’s profits through the need to replace low margin products.
In addition to this, consuming spoiled food can be detrimental to your health.
Many of the older warehouse management systems were designed primarily to reduce the cost of business operations.
In the pursuit of efficiency, many companies have adopted a first-in-first-out (FIFO) approach – a logical choice for asset rotation.
However, the assumption is all products arrive at a particular date. That means they all have the same shelf life potential, which is not always the case.
Your warehouse management system needs to be able to communicate with other system. Internally and in the supply chain network.
If that’s not the case, it will inevitably lead to disjointed and inaccurate transfers of information. That means lack of visibility across your trading partners.
In addition, as warehouse operations grow, there’s no way to manually scale this system.
When stocking perishable inventory, all organizations should embrace the concept of ‘First expiration’, ‘first out’ or ‘FEFO’. Therefore, the selection of a warehouse management system that can handle FEFO should be a foregone conclusion.
Why should food and beverage companies switch to FEFO Order Picking Method?
A solution that recognizes the estimated remaining shelf life of food products and matches it to the requirements of the next part of the handling chain can add immense value.
A FEFO warehouse picking strategy, based on a data-driven approach, will pick products depending on their shelf life potential. This of course correlates with their end destination.
Food and Beverage companies benefit tremendously from running a FEFO order picking method.
This is particularly true in this age of the Coronavirus outbreak and how it impacts consumer behavior.
Online shopping increased substantially and now even more product are delivered to consumers doors.
As the retail landscape changes, consumers are demanding more information about the food products they purchase.
Many researches today point out that expiration dates crucially affect purchase decisions.
By giving your clients more lead time on the expiration dates of items that you ship to them, you can help them move more products, and boost the number of sales orders that your business receives.
By using the FEFO method instead of FIFO, distributors can help ensure retailers receive products well in advance of expiration.
An example of this would be assigning expiration dates to items during or immediately after receipt.
Then tracking this data to give you the visibility and insight you need to be able to send the oldest allowable stock to each customer, reduce stock age and end up with less stock written off.
When your company’s manufacturing, ordering and customer data is stored in one centralized system will help you to implement the FEFO method in your warehouse.
Closing thoughts on your warehouse picking strategies
Selecting the best order picking method has a huge impact on shelf life of food products. Differing lot sizing policies impose different risks fin terms of waste and food going off.
The golden rule of any warehouse is that wasted food cannot be sold. If your products have gone off then all profit, plus the initial cost of the product, goes down the drain.
As such, make sure you get rid of your perishable products before they go off.
Even if you sell them at a huge discount, bear in mind that a small amount of profit is always better than a loss!
