Food and beverage manufacturers know the importance of reducing food waste during production. Between environmental concerns, sustainability pledges and the effect on business’ bottom lines, ignoring the issue of food waste during manufacturing can have harmful effects on a company’s ability to grow.
But how can food and beverage manufacturers reduce waste throughout the production process without jeopardizing efficiency, time, and profits? Let’s take a look at the major causes of food waste during manufacturing and how technology built for the food and beverage industry can help companies like yours optimize operations to reduce waste and ensure success.
Causes of Food Waste in the Manufacturing Process
For food and beverage companies looking to improve efficiency and reduce waste, it’s critical to identify the steps in the production process where waste occurs.
Inventory Management
The most obvious cause of food waste in a manufacturing facility is inefficient inventory management, which can lead to expired or spoiled product. One of the simplest ways to better manage the shelf life of your inventory is to use items according to their expiry dates instead of the date they were received in your warehouse.
This first first-expiry, first-out (FEFO) approach to inventory management works especially well for food companies with perishable ingredients and ensures products remain fresh and reduces the quantity of expired shrink.
How software can help: Developing a FEFO method for inventory management is easier in theory than it is in practice. Utilizing Excel spreadsheets or pen and paper to track expiry dates of all your inventory isn’t practical for most businesses. An Enterprise Resource Planning (ERP) solution creates visibility into inventory expiration dates and gives management the control and insight it needs to better manage inventory. By centralizing manufacturing, ordering and customer data into one system and assigning expiration dates to inventory at receiving, you can ensure you’re sending the oldest allowable stock to specific customers, ordering raw materials only when necessary, adjusting prices of near-expired inventory to move it off shelves quicker and adapting production processes to use product faster. This reduces stock write offs and minimizes waste.
Forecasting and Production Planning
A large source of production waste occurs when food and beverage manufacturers aren’t able to accurately forecast demand and plan production accordingly. By relying simply on historical demand data for raw material ordering, inventory management, changeovers and sanitation scheduling, food and beverage companies can’t accurately manage fluctuations in demand, resulting in inefficient processes, stockouts and excess waste. Without clear insight into forecasted demand, your manufacturing team is forced to adapt to unforeseen changes in production, which leads to inefficiencies and wasted product.
How software can help: An integrated software solution continually adjusts forecasts based on recent periods of demand, forecast error, demand exceptions and historical data. By increasing the accuracy of your demand forecasts, you can better plan production and meet plan attainment goals. With Material Requirements Planning (MRP) functionality in industry-specific ERP solutions, manufacturers can reduce waste by accurately estimating the material demand required for production. On top of this, manufacturers who have better control over their production processes can minimize waste due to inefficient changeovers or lengthy sanitation processes. Food-specific ERP software helps to sequence actual changeover times based on product specific criteria, so production runs as efficiently and with as little waste as possible.
Traceability
Having the ability to accurately trace a product or ingredient throughout its lifecycle is not only important from a regulatory perspective, but also limits the scope of a recall if one should occur. By minimizing the amount of product that needs to be recalled, manufacturers can greatly reduce food waste while still ensuring safety and overall compliance.
How software can help: With an ERP system at the core of a food company’s recall management strategy, manufacturers have the tools they need to be prepared to mitigate the risk of a recall and then minimize the impact of the recall should one occur. ERP software provides food and beverage companies with the ability to adhere to food safety regulations using documentation and quality control features, ensure emergency readiness with granular tracking at the lot level, and lessen the breadth of affected products with functionality that automatically freezes inventory and generates reports and customer recall notices.
By implementing a food-specific ERP system to aid in your inventory, forecasting, production and traceability processes, you can substantially reduce the amount of waste your food and beverage manufacturing company generates and make a real impact on your bottom line. To learn more about how FoodBusiness ERP helps food businesses reduce food waste by improving operations, read our latest eBook on the topic or reach out to us. We’d love to chat.