For low-margin grocery and food companies, robust inventory tracking is the difference between profit and loss. What makes for a robust inventory tracking? As with most things, we start at the beginning.
Let’s imagine an online grocery business that specialises in fruits and vegetables and handles 10000 customer orders every day. If each order has an average bag weight of 2.5kg, the daily inventory turnover is 25000kg.
Imagine keeping track of all this inventory. Right now, the industry standard is frequent stock checks.
Stock checking is a necessary, if inefficient, way to verify physical stock. However, stock checks on all SKUs every day are impractical and expensive. As a result, most companies only do physical stock checks every 30 days or longer. A complementary method to physical stock checking is to track and use transactions to create a virtual inventory.
- Hub A bought 100kg of “Desi Tomatoes” from farmer 1
- Hub A shipped 60kg of “Desi Tomatoes” to Hub B
- Hub A shipped 39kg of “Desi Tomatoes” to Hub C
- Hub B packed 115 packets of “Desi Tomatoes – 500g”
- Hub C packed 70 packets of “Desi Tomatoes – 500g”
- Hub B sold and shipped 110 packets of “Desi Tomatoes – 500g”
- Hub C sold and shipped 70 packets of “Desi Tomatoes – 500g”
If we capture and store this transaction data, we can virtually infer inventory and location at any point in time. There are 2 ways to track virtual inventory information.
Locally – Storing information on the crate, physically.
What does this mean exactly? When the product is loaded into the crate, SKU-specific information, like SKU code, weight, date of manufacture and the farmer from which it was procured, are manually entered into the system, and a label is printed out.
Some companies print QR code labels to simplify the process. Whenever the QR code is scanned, the company is made aware of how far the crate has reached and which centre it is at. This saves the hassle of having to enter information into the system manually.
And as mentioned before, the SKU information is dynamic – mainly the weight. So as the crate goes from the collection to the distribution centre, it goes through various label changes. At each step, the old label is removed, and a new one is placed on the crate with the updated SKU information.
Removing, reprinting and resticking labels takes time and effort. Hence it does not come as a surprise that old labels are not removed most of the time. A new label is stuck on the crate while the old one is just left there. Over time, each crate is covered with various half-torn and scratched labels, making it hard to recognise the latest one. This, naturally, leads to a lot of confusion and inventory mess-ups.
Clearly, we need to find a process that’s more efficient than re-printing labels every time there is a slight change.
How do we do this? The idea is to store information remotely rather than locally.
Remote – Storing information on the cloud.
Here each crate is given its own identity. Let’s run through the flow of events assuming each crate has a QR code corresponding to a static crate ID.
The products arrive at the collection centre and are loaded into crates. The crate QR code is scanned, and instead of storing the SKU information on a label, it is stored on the cloud corresponding to the scanned crate ID.
As the crate goes through centres and SKU information changes, the data can be updated on the cloud by a simple scan. This saves the process of removing, reprinting, and resticking labels – making it extremely eco-friendly. When the crate reaches the distribution centre, the SKU information on it is cleared, and the crate is sent back to the collection centre.
The QR code of the crate can be scanned at any time to view the SKU in it, its weight, date of manufacture, the farmer it has been procured from, etc.
This method is called cloud-based inventory management. It completely eliminates the usage of labels and stores everything on the cloud. Data stored on the cloud can be accessed by field staff using mobile devices or desk workers via a web browser.
Cloud storage can effortlessly determine the stage each SKU has reached, when each batch was scanned last, how swiftly they are being transported, etc. This simplifies inventory management, especially when dealing with large-scale inventories. It can help you measure the performance of your inventory processes if you follow the right inventory metrics.
A major advantage of using unique crate IDs is the level of tracking and traceability that can be achieved. As a crate moves across hubs, scanning its unique QR code allows you to keep track of its location and prevent losses. Anecdotal evidence suggests that 2-3% of untracked crates are lost each month!
Overall, efficient inventory management allows you to maintain an equilibrium between your supply and demand. Matching demand and supply more accurately can be hugely beneficial for your company, especially when it comes to reducing waste.
The grocery business includes a highly complex multi-hub supply chain. Keeping track of inventory can often prove to be extremely challenging. The right inventory management system can help you reduce the amount of time and money you spend every day.
This is especially true for weight-dependent products, like fruits and vegetables or meat products. All you need to do is tally the amount of weight that left one hub and reached the next. That is, the amount of stock that left Hub X should be equal to the amount of stock that arrived at Hub Y. If not, the only explanation would be losses that occurred along the way, allowing us to understand what went wrong and where. While it sounds simple, this process can be extremely time-consuming and complex when done manually. Automating this data collection is key to successful and consistent audit operations.
Cloud-based inventory management also offers farm-to-fork traceability to consumers. As the name suggests, farm-to-fork traceability means that you can track everything on your dinner plate right back to the farm it came from. It provides a clear picture of the journey each ingredient has taken to reach your plate.
Farm-to-fork traceability allows you to consistently maintain high food safety standards. Being able to track where their food has come from gives customers an unmatched sense of security. Increased customer confidence often implies higher margins.
It also allows you to perform instant recalls up and down the supply chain. Whenever an issue arises, you can perform a recall based on specific details such as batch, pack date, invoice, delivery date, purchase order, etc. You can easily determine the source and magnitude of the problem and deal with it accordingly.
Overall, efficient inventory management can help you optimise the performance of your stock, supply chain, logistics links and enable stronger customer confidence.