How to track the shelf-life of your inventory

How to track the shelf-life of your inventory

In an ideal world, inventory management produces the right products at the right time in the right quantity and in the right condition. But we all know that it is absolutely impossible to achieve such a feat.

In some industries, such as pharmaceuticals and food, for example, effective perishable stock management ensures goods arrive at the end user in top condition. Tracking shelf life requires policy, planning, documentation and system controls. This is done in order to guard against waste and financial loss caused by passing the best-before dates of any perishable product. Most inventory control plans are built around the first-in first-out stocking system.

Perishable products

The important aspect to keep in mind is that by perishable products we don’t just mean pharmaceuticals or food. Consumables such as batteries also start degrading over time. So, if they end up being shelved for a couple of years, you might end up trashing them, since they’ve gone bad. Trashing products is the last thing we want, because it literally means that we’re throwing money away. So how can we prevent situations like these from occurring?

Here are a few tips:

  1. You should establish a stock control policy and share it with all employees who work with perishable inventory. Make sure to outline all procedures, checks, forms and sign-offs needed to identify, mark and follow inventory that has a shelf life. Detail supervisory oversight and control procedures to ensure proper tracking is completed as outlined.
  2. Storage shelves with access on both sides can be stocked from the back and removed from the front, assuring the oldest stock is most easily accessible. Where shelves are against walls, consider white boards identifying currently used batch numbers or inventory control markings.
  3. Think about the storage conditions. Some perishables require protection from heat and light or refrigeration. Work with the supplier to establish optimum storage conditions for stock with shelf lives. Include checks of storage conditions in inventory control audits.
  4. Identify dates of perishable stock at receiving. Packing slips and other shipping records may give expiry dates and batch numbers as well as product numbers. Be sure to add this information to computerized inventory control spreadsheets or software.
  5. Make sure you’re including batch information on inventory count sheets and count products with different batch numbers as separate items
  6. Use colored markers or labels to visually identify stock arrival times. Colors can be changed weekly or monthly depending on your needs and conditions.
  7. Visually inspect perishable stock. This is obvious in the case of fresh produce, for instance, but damage to packaging for other types of goods may allow you to return goods to suppliers for credit.

First-expired-first-out

A FEFO approach makes different assumptions in terms of a product’s shelf life. FEFO will only ship products depending on their shelf life potential in relation to their end destination. It will only ship goods when their expiry date is known, thus ensuring only high-quality products arrive at their destination and eliminating product loss during transport.

Warehouse equipment

The transition to a strategy of FEFO requires the implementation of information-sharing highways across supply chains between trading partners. This enables a data-driven supply network that will give the distribution center manager more information about the integrity (shelf life) of all incoming goods and, as a result, the distribution center manager may then choose to distribute goods based on their remaining shelf life. In these cases, distribution centers will now need to coordinate a ‘days to destination’ approach to logistics.

Also, DC managers will be able to view the complete history of a particular product across primary production, secondary processing and distribution, which goes beyond a one-step-back, one-step-forward approach.

Just as much as managing product self-life is important, shorter delivery times are equally important to improving customer satisfaction. However, the main obstacle is to overcome lay in efficiently managing FEFO inventory for incoming and outgoing stock.

QA – Quality assurance

Quality assurance (QA) is also an important stakeholder to engage for securing the right flow of products. QA is a key process especially in the pharmaceutical industry, and the sequence in which they review and approve batches is just as important as having the right flow in the warehouse.

Always keep this in mind – A batch waiting for approval from QA can cause that the batches are shipped to customers in the wrong sequence, potentially resulting in scrap and poor customer service.

Closing thoughts

Inventory management is highly impacted by shelf life planning. Different lot sizing policies impose different risks for scrapping. Inventory optimisation must not just take holding cost into account, but should also seek to reduce the risk of scrap.

This is the golden rule of any warehouse – scrapped goods cannot be sold. If your products have gone bad, you have literally lost any profit, plus the initial cost of the product. As such, make sure you get rid of your perishable products right before they go bad. Even if you sell them at a huge discount, keep in mind that a small amount of profit is always better than a loss.