The current economic difficulties have brought new challenges to many different industries. This is especially true for the food industry, where rising food prices have impacted the bottom line of grocery stores and fast food restaurants. To further exacerbate the challenge, research from Aspion has found that an average of 7% of food inventory is wasted, primarily due to products not being stored properly, sitting on shelves too long, or being damaged during transportation. At such a critical time, these businesses need to find ways to improve profit margins, minimize costs, and increase efficiency. One way to achieve this is by reducing food waste, especially through a first-in, first-out (FIFO) approach.
The environmental and economic impacts of wasted food inventory throughout the supply chain have a significant impact on every business operation. As much as 1.3 billion tons of food are lost or wasted each year. To minimize this level of waste, grocery stores and quick service restaurants must improve their operational efficiency, which will help them meet changing demands and ultimately accelerate their business success in the current economic climate.
Embracing case and pallet level advancements throughout the supply chain improves operational efficiency, minimizes risk of waste, provides ready visibility to inventory and ensures satisfying quality produce for consumers.
Leveraging technology
Real-time visibility into the food supply chain is necessary now more than ever to comply with regulations and ensure high product quality. It also allows businesses to reduce unnecessary food waste and streamline the farm-to-table process. Having real-time insight into inventory allows grocers and quick-service restaurants to optimize their sourcing strategies and buy only what they need, significantly reducing waste while optimizing storage and transportation costs.
RFID technology gives grocers real-time visibility into their supply chains with 93 to 99 percent accuracy, allowing them to streamline processes and improve operational efficiency.
By using RFID tagged products at the pallet level, grocers and quick service restaurants can create a digital trail that allows them to monitor inventory levels. RFID technology provides quick service restaurants and grocers, and their customers, with important information about products, including where they are sourced and the specific route they took. This transparency allows quick service restaurants and grocers to ensure they are meeting consumer demand and sourcing products in a compliant and sustainable manner.
RFID reduces labor challenges throughout the supply chain, reducing the time it takes to count and locate inventory, optimizing business efficiency. With instant access to data like product ID, quantity, and expiration date, warehouse staff can streamline delivery processes and operate at peak performance.
Inventory Optimization
Currently, more than 30 percent of food produced goes uneaten, is wasted, or is lost during production. For grocery stores and fast food restaurants, this means nearly one-third of revenue is lost to shrink and waste. In the current economic climate, this statistic is undoubtedly a major concern for businesses. However, if organizations can hang on to that 30 percent, it also creates an opportunity to improve their revenue streams.
Some foods have a short shelf life, which, if left unmonitored, can lead to expiration and ultimately waste. By adopting a First Expired, First Out (FEFO) approach to prioritizing products, grocery stores and quick-service restaurants can maximize the amount of produce they sell at the best price, fully optimizing their inventory and maximizing financial returns.
With RFID technology in place, quick service restaurants and grocery stores can seamlessly create a FEFO strategy. By tracking products throughout the supply chain in real time and having complete visibility into product information, quick service restaurants and grocery stores can ensure that products with the shortest shelf life are sent through the supply chain first. While this is a seemingly simple strategy, technology plays a critical role in laying the right foundation. Without complete visibility into inventory, businesses cannot make accurate operational decisions that enhance processes and maximize sales opportunities. RFID provides this visibility, enabling organizations to transform operations from production to final sale. Deeper insight into inventory levels at all locations reduces the need for unnecessary transportation and enables better, faster decisions regarding inventory, optimizing operations while reducing costs.
Conclusion
By streamlining their supply chains now, grocers and fast food restaurants can get ahead of the curve, complying before deadlines and minimizing financial losses from food waste. Acting now will ensure long-term success. RFID technology offers the solution to stay competitive and optimize food inventory through a complete supply chain transformation, complying with regulations and maximizing the success of food retailers.
Dean Fuller is president of SML Group's RFID Solutions division.
