Inventory traceability software requires a financial investment – there’s no question about it. But when you really dig in and begin to understand the cost savings that result from implementing the software into your organization, it quickly becomes apparent that the savings outweigh the investment.
Managing inventory is arguably one of the most challenging aspects of running any business. However, when you factor in things like raw and perishable goods, expiration dates, and the need for precise inventory-level insights, companies in food industries have the most to lose.
That’s why you must adopt inventory traceability software. It provides numerous benefits on many fronts, but let’s take a look at some of the cost-cutting advantages that come along with an investment in inventory traceability software.
1. Expiration analysis
As mentioned, the fact that you work with raw and perishable goods only exacerbates the severity of inventory issues. Something as simple as forgetting about some inventory or overlooking an order can result in costly disposal and/or substantial delays in your supply chain.
With inventory traceability software, you suddenly gain control over raw and perishable goods. This works in a couple different ways:
- Visibility of expired inventory. Inventory will inevitably expire from time to time. Sometimes only a few units will perish, while other times entire orders go to waste. And while expired inventory is never good for your bottom line, the last thing you can afford is for those ingredients to be unknowingly picked and used. With inventory traceability software, you get real-time visibility on inventory that has expired and therefore don’t run the risk of using the wrong raw materials.
- Approaching expiration warnings. You don’t just get warnings about expired goods, though. Inventory traceability software also tells you when certain items are approaching expiration. You can set parameters that will notify you when various thresholds are reached, which allows you to maximize the materials you have on hand.
The expiration analysis features packed inside inventory traceability software are arguably the most valuable. They allow you to focus on what really matters – production and delivery – without losing sight of this critically important aspect of running your business.
2. Picking controls and order
As you know, lots are supposed to be picked and consumed in order of expiration dates. When inventory is handled manually, this may be the intention, but it doesn’t always work out this way. An honest mistake or oversight can prevent you from maximizing the inventory you have on hand, which requires reordering, drives up your cost of goods sold, slows down delivery and ultimately damages your bottom line.
With inventory traceability software, you don’t have to rely on manual intervention. Lots are automatically consumed based on expiration dates. Picking controls are put in place that prevent products from being consumed out of ration unless otherwise approved by a supervisor. This prevents both fraudulent activity and simple mistakes.
3. Prioritization of needs
Inventory traceability software can actually prevent cash flow problems in your organization by specifying which items in your inventory need the most attention. For example, just because an item is expensive doesn’t mean it’s the most important to your bottom line. Less expensive items often have a greater impact because of the higher turnover rates.
With an advanced inventory traceability system in place, you can determine how individual items influence the overall business and actually prioritize one item over another. This restores balance and allows for better cash flow.
4. More accurate invoicing
One of the biggest issues food companies face is complicated invoicing and reporting. This becomes an even bigger problem when there are things like incorrect shipments, returns and data entry errors.
Inventory traceability software helps prevent human errors by automating and streamlining data entry. No more manually punching in numbers and hoping for the best. From purchase orders and consumption to shipments and returns, every individual unit is visible in real time.
According to management education expert Ashok Rao, companies can directly increase their profitability by as much as 20-50 percent through more careful inventory management. Unfortunately, a lot of organizations assume that inventory management is all about ordering the right amount of inventory in a timely manner. This is part of it, but certainly not everything. Accurate invoicing and proper data entry matter, too.
Learn more about the benefits of traceability software
For more information on inventory traceability software, check out our guide on farm to fork traceability and learn how business software can help with multiple areas of your business, including recall readiness, food safety, and output.
Or, view a recording of our farm to fork traceability webinar.
Ready for a specialized food ERP? Learn more about Aptean Food & Beverage ERP JustFood Edition — a solution purpose-built to solve your challenges and propel your food business and digital transformation to the next level.