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 OJ to hand, rather than the one they’re “supposed” to use which expires first.
In perishable food products, large losses are incurred between farm and fork due to spoilage. So it’s 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.
But one of the most effective ways to maximise shelf life is closer management of the supply chain to try to ensure the right product is delivered at the right time in the right condition. That involves a strategic shift in warehouse operations from purely efficiency-driven order picking methods to picking products according to each specific customer’s needs and replenishment policies.
It may sound like an obvious solution, but there’s traditionally been a lot of emphasis on minimising travel time and maximising productivity: measured in time and money, order picking is one of the most costly activities in a typical warehouse.
But it’s also the activity that plays the biggest role in customer satisfaction with the warehouse and, ultimately, the entire supply chain. If you can’t optimise picking for shelf life, you risk impacting directly on the profitability of your business (through returns or expired stock on the shelf) as well as to your customer service level and therefore brand image.
From FIFO to FEFO
The trouble is, most ERP systems simply aren't designed for the dynamics of the food industry, so they lack the functionality to manage variables such as shelf life and expiry date. If you have an older warehouse management system, it may have been built primarily to reduce the cost of business operations. In pursuit of efficiency, you may have adopted a first-in-first-out (FIFO) approach – a logical choice for asset rotation.
But this assumes that all products arriving on a particular date have the same shelf life potential, which is not always the case. And if your WMS can’t talk to other systems in the supply chain network, this will inevitably lead to disjointed and inaccurate transfers of information and a lack of visibility across your trading partners.
Huge value can be added with a solution that takes into account the estimated remaining shelf life of the product and matches it to the requirements of the next part of the handling chain. A first-expired-first-out (FEFO) strategy, based on a data-driven approach, will pick products depending on their shelf life potential in relation to their end destination.
Your system should have the functionality to support a definition of “freshness requirements” by customer, and to track the age, best before or expiry date of each product batch/lot. It should enable a picking process that suggests the oldest lots for picking which meet the customer’s freshness requirements, either by age or remaining days before use by/expiration date. So for example, a customer that is local to you might be able to take an older product than one that is further away, once transportation time is taken into account.
One example of a company that has embraced this process is Mexican food and beverage wholesaler, Hanan Distribuciones. The company had identified that shorter delivery times were the key to improving customer satisfaction, but the main obstacle to overcome lay in efficiently managing FEFO inventory for incoming and outgoing stock.
Product expiration dates were manually recorded – a time-consuming and error-prone process that often delayed invoicing and shipping.
Since the implementation of Preodumex Warehouse Management, when goods arrive in the receiving area, Hanan Distribuciones’ warehouse staff capture expiration dates with handheld scanners, eliminating the manual data entry and errors that previously stalled inbound receiving.
Outbound logistics have been similarly automated, dramatically improving picking, packing and shipping processes. And managers have access to the insight they need to improve inventory management, with a unified dashboard that offers full visibility into vendor performance, product movement and customer orders.
Written by; Produmex