The scope of food manufacturing industry is tremendously vast, as it comprises of a number of sub-verticals and stakeholders.
Rightly so, it is one of the largest industries in the world, and the biggest in the process manufacturing sector.
Therefore, it comes as no surprise that the stakeholders — especially the manufacturers — face numerous challenges in successfully operating in an industry this diverse.
While the challenges such as thin margins, labor complexities, long & complex supply chains, and stringent regulatory & food safety requirements etc. are tough nuts to crack, perhaps the biggest of them all for the food manufacturers is the challenge of effectively managing and controlling the inventory, which comes with limited shelf life.
If you are into a food manufacturing business, you know that keeping track of your inventory is a serious business.
Fortunately, there are different practices that can be implemented in order to get the most out of your inventory tracking.
Every food business these days looks to employ such sound inventory tracking practices within their organizations.
What are those best ways of tracking inventory — especially if you are a small or a midsized food manufacturer?
This blog discusses the two different approaches of the use of manual methods and automated ones for inventory tracking and goes further deep in reviewing the contemporary, and more practical methods of inventory tracking utilizing technology.
But why’s inventory tracking important in the first place?
Inventory tracking, which refers to the process of tracking how much of an individual product a business is procuring and storing for resale, and keeping a count of how much of it is being sold and how much remains in stock, is an integral part of any manufacturing business.
It is an important aspect of the manufacturing business because it lets the manufacturers know what they have in stock, how much of it do they have, where is it stored, whether or not it is selling, and also when to re-order a particular item before it runs out.
Talking particularly about the food manufacturing businesses, inventory tracking gains greater significance due to the limited shelf life of the products, which is one of the biggest drawbacks of this industry.
The food manufacturers need to know how fast a product or its ingredients need to be consumed before they expire.
Also in case of any non-conformity, the food manufacturers need to have a proper mechanism to track the inventory from source to sale.
Manual method:
The manual method is the traditional, or the old-school approach of tracking inventory. A tiresome method, it involves tracking the inventory with the use of spreadsheets.
The setting-up of this method involves the creation of rows and columns in a computer spreadsheet or inventory log book.
The rows are then labelled with the product names and descriptions, while the columns are labelled with the date, total inventory count, expiry dates, and the inventory on hand.
Once this is done, the next step includes applying price tags to all the products along with other details that accurately match with the product name entered in the records.
After the sale is made, the price tags can be removed and used to record the sale. Every transaction is being accounted for, and the items are updated by subtracting the quantity sold from the last total after every sale made.
The manual method of tracking the inventory is feasible for small and midsized manufacturers, as it has its own benefits.
This method allows for the condition of goods to be assessed when counting the stock physically. However, the manual method has its downside as well, as it is extremely labor intensive, time-consuming and requires continuous monitoring to be up-to-date with on-hand inventory.
Then there’s always the risk of human errors and inaccurate inventory counts. This has gradually paved the way for the use of technology and automated methods for inventory tracking.
Automated tracking:
Automated tracking of inventory has many benefits, as it eliminates the risk of manual errors, improves accuracy, and increases overall operational efficiency.
For effective inventory tracking, there are different automated methods which when implemented in close collaboration with a food ERP software, can deliver great results for the food manufacturers.
An ERP for food manufacturing industry that uses barcode technology and radio frequency provides advanced inventory management and optimized workflows.
Universal Product Code (UPC):
The UPC or barcode method serves as the most common, and perhaps the most important, inventory tracking method.
It has been designed specifically keeping today’s retail environment in mind. It allows the retailers to track inventory through point-of-sale (POS) equipment, which is usually a wireless handheld scanner.
Barcodes assign a special number to each and every item that is there to be tracked.
When the inward or outward inventory’s barcodes are scanned, they get decoded and entered into a database, which then allows tracking and maintaining of inventory quantities, pricing, and any other saved data related to the inventory.
This method ensures that every time an item is sold or shipped, it gets logged. As the quantity of items in stock goes down, the quantity of items needing replacement goes up.
Radio Frequency Identification (RFID):Â
Food manufacturers also use the RFID technology for inventory tracking.
RFID readers identify products on their arrival and track these products in real-time as they transition through the warehouse.
The RFID technology allows contactless reading and writing of data and importing multiple tags in batches.
Thanks to this technology, the inventory can now be received in bulk. Also, it can be easily tracked using the RFID tags, thus saving on crucial man hours as well as money.
Unlike the barcode technology, the RFID technology can scan more than one unit at a time, and does not require human intervention to work.
Tag System:
Many small and midsized specialty food manufacturers also use a tag system to track their inventory.
They tag their merchandise daily, weekly, monthly or at any other required interval. The retailer removes the tag at the point-of-sale, and the collected tags are verified against the physical inventory to determine sales quantities.
This method only tracks the inventory movement based on sales, and is mostly used by retailers who usually don’t use the barcode or POS systems.
Conclusion:
Manual or automated — no matter which method you use, inventory tracking should be a fundamental task of your food manufacturing business.
However, the need of the hour is automating the process of inventory tracking. And fortunately, you can make a seamless transition from the manual processes to an automated inventory tracking system.
A good ERP for food industry supports the different automated methods of inventory tracking like the barcode scanning, RFID, and tag system. Its robust inventory management module enables tracking and locating inventory within the business, giving the manufacturers an insight into the quantity of stock they have in hand, its location, and whether or not there is a need to replenish it.
Having this knowledge eventually helps business save crucial time while improving the efficiency.
If you are looking for one such food manufacturing ERP software to automate the inventory tracking process for your food manufacturing business, reach out to us at sales@batchmaster.com for a free consultation.
We at BatchMaster have over 30 years’ experience of serving different process manufacturing industries – including the food manufacturing businesses – with solutions designed specifically keeping their needs in mind.
