Mastering Inventory Expiry Management: Techniques to Boost CX and Minimize Waste

Imagine the disappointment of a customer who purchases a product only to find out that it has already expired. Unfortunately, this scenario is more common than many businesses realize. In fact, studies show that millions of products are sold past their expiration date each year, leading to significant customer dissatisfaction (FMI) (FDA). Expired products not only harm the brand’s reputation but also result in increased returns, lost sales, and a decline in customer loyalty.Having clear visibility into your company’s inventory at any given moment is essential to its overall success. Some of the industry’s biggest losses stem from faulty inventory management procedures. For food manufacturers, the loss of raw ingredients is the second-highest cost to companies (at 25%) outside of labor.  By implementing smart strategies, businesses can minimize waste, optimise inventory, and ensure that customers receive only the freshest products. Here’s how you can manage inventory expiry effectively while boosting Customer Experience.

1. Apply First-Expiry, First-Out Inventory Logic:

The FEFO method is an inventory management principle that ensures that products next to expiry should be put to use first, which decreases the chance of products getting damaged and expired before they are sold. In order to use this principle, warehouse managers need to label and track the products by their production or expiration dates, and organize the storage and picking areas accordingly. FEFO can help in improving product quality, safety, and freshness and reduce losses due to spoilage.

2.  Leverage Predictive Analytics and Pricing Strategies:

Predictive analytics provide actionable insights into the inventory level and the demand pattern by analyzing the historical data and market trends. These help the business to keep a record of the products which are likely to expire soon. 

Consumers are price sensitive and implementing dynamic pricing strategies can help manage inventory effectively. The products that are nearing their expiry date can be offered on discounts or bundled with some other items. This will encourage the customers to purchase the products immediately, improving the bottom line and reducing the risk of waste. The analytics tool also suggests the best times to reorder stock or implement promotional strategies to clear out soon-to-expire items.

3. Invest in Proper Storage and Handling:

Each product varies with regards to storage conditions which brings additional warehouse complexities. To ensure product efficacy, the goods need to be maintained in certain conditions from the point of manufacture till the time it’s delivered in-order to avoid product degradation and expiration. Investment in appropriate storage solutions such as temperature controlled environments and automated alerts helps to extend the shelf life of perishable goods. Proper handling practices also reduce the risk of damage, ensuring that products remain in sellable condition for as long as possible.

4. Use Advanced Inventory Management Software:

Gone are the days when people used to rely on manually operated Microsoft excel spreadsheets to manage inventory. Manual tracking of expiration dates is not only time-consuming but also prone to errors. In order to solve this problem, new AI enabled technology Transportation Management System and Warehouse Management System was developed to manage the matters of information capture and database maintenance. The integration of advanced TMS and WMS helps to keep a track of expiry items, improve operational efficiency, set up automatic alerts and manage inventory levels through accurate demand forecasting. According to a study published by McKinsey and Co., businesses using AI-driven inventory management systems reduced stockouts by up to 30% and decreased inventory holding costs by 35%.They also provide real time visibility into the inventory levels and expiry dates, and enables businesses to take proactive measures to avoid stock obsolescence. Additionally, their integration helps to improve customer satisfaction and improve operational efficiency.

5. Use information- Rich Barcodes:

Barcodes are considered as a game changer in managing inventory. Barcodes contain tons of information in mere inches such as expiration dates and storage instructions, which can be imported into your system with a single scan, making the process efficient and error-free. They also help in quicker scanning and tracking which further reduces the chance of expired products reaching the customers.

Managing inventory expiry is not just about reducing waste, but also ensuring that customers receive high quality products. By implementing smart strategies such as the FEFO system, barcodes, accurate demand forecasting and automated tools like TMS and WMS, businesses can effectively manage their inventory while boosting customer satisfaction. These strategies play a crucial role in creating a differentiating factor in such a competitive market, which helps in maintaining a strong, loyal customer base and driving long term success.