Using predictive analysis in the food and beverage industry is critical for growth, as it helps your enterprise ensure you have the right amount of food and beverage in stock. If you do not have enough, you run the risk of angry customers not being able to procure the products they want, but if you have too much inventory, you run the risk of wasting money and having to dispose of inventory. Not only that, but this type of analysis can also help you set the right price for your items and monitor trends in the industry.
How Predictive Analysis Can Help
Items with a short shelf life require very nuanced predictive analytics. Forecasting expiration dates, handling fragile materials, and promotion planning are three of the most critical areas to keep an eye out for when it comes to inventory in the food and beverage industry.
With predictive analysis, you will be able to monitor your short shelf life items with a close eye. When combined with machine learning, predictive analysis will predict what stock levels your company should maintain, and you will be sure to keep the right amount of materials on the shelf at all times.
Disposing Excess Stock
How should a company ethically dispose of excess stock? This is a problem in every supply chain. However, it is even more of a problem in the food and beverage industry. With hunger a problem throughout the world, it doesn’t feel good to have to throw away food. But, what else can you do when the bread expires and you run the risk of serving your customer moldy bread?
The easiest, and most ethical, solution is to make sure you need to throw away as little food as possible. The only way to do this is to use predictive analysis to learn how much food to keep in stock.
Trend Tracking
Tracking trends might be the most important aspect of predictive analysis. If you are a wholesale cookie manufacturer, for example, you might see that you sell a lot more cookies in December for the holidays than you would in April when people are eating different things. Take the guesswork out of your stock predictions. The right analysis tool is going to analyze and predict trends for you, telling you exactly how much flour and sugar to procure, so that you will need to dispose of as little as possible.
The same holds true for alcohol sales. You might see higher sales around major holidays when people are feeling festive and you might see spikes during times of the year when people abstain more from alcohol. While you might be able to research and predict these trends yourself, your time and energy is better spent elsewhere when there is software that will easily predict these trends for you.
Demand Forecasting
This is really what it comes down to, what are your future demands? In a perfect world, you’d sell everything on your shelves, and never have too much on your shelves so the food goes bad. Predictive analysis is the best way to perform your demand forecasting, since demand is never linear.
The same bakery also might have different needs in New York City than in North Dakota. There are a variety of aspects that predictive analysis considers when doing its projections. What does demand forecasting consider?
- Region and location — you will sell more parkas in Alaska than Georgia, and there are tools that will factor that into your stock level needs.
- Safety stock levels — there are some items that you will never want to be out of. A bakery simply cannot run out of flour. When your inventory drops below a certain predetermined number, the system will trigger you to order more material.
- Determine pricing — predictive analysis can also help you set your prices. Consider what times of year you might be able to capitalize on surge pricing, and what times of year you might want to consider putting your items on sale.
What Happens if You Fail to Forecast?
Failing to forecast can kill your business. There are two major problems with having drastically incorrect inventory. If you have too much inventory, you are going to waste a lot of food. With the state of the world these days, you’ll lose customers because you might gain a bad public image as a company that is inconsiderate of world hunger. Secondly, if you are frequently running out of stock, you’ll also lose customers who can easily buy a similar product elsewhere. If they like the other product, they might not ever come back to your business.
Don’t forget that predictive analysis does more than just inventory forecasting, as it’ll also help you set the right price for your products and help determine if you should ever raise or lower prices based on industry trends.
Taking Care of Your Staff
Some of these forecasting needs can indeed be taken care of by a staff member. It’s possible to maintain stock, monitor pricing trends, and take care of other needs just by doing your research and checking on competitors. However, if you are in the food and beverage industry, wouldn’t you rather your staff focus more on the quality of the food, and creating new recipes, than on doing the job that a computer is capable of?
Work with the strengths of your team, and take some pressure off of them by computerizing things where you can.
What’s Next?
Accurate inventory forecasting is vital to the success of your business, no matter what industry you are in, but especially in the food and beverage industry. Our team of supply chain experts is standing by ready to help answer all of your questions. We can explain in more detail how your food and beverage company can successfully use predictive analysis to improve your inventory needs. Contact us today for any help with supply chain questions and how to make the most of demand forecasting at your food & beverage enterprise.
