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A distinctive feature of fresh products such as fruit and vegetables in the retail food sector is that the supplier, packaging and pricing vary throughout the year.
So how do buyers calculate what quantity of products they should buy? How can they reach the optimum stock level without having to place expensive, last minute orders that lower the profit margin?
The Supply Chain is extremely dynamic when it comes to harvesting production. Decisions can be made based on supply, quality, price and crop yield in different countries. In addition, there may be fluctuations in consumer demand that differ from day to day.
CALCULATING SALES IN UNIT OR WEIGHT
While fruit and vegetable sellers know everything about quality, price and country of origin, consumer demand is always in question. Order quantities are based on orders from the past without checking whether purchase orders are actually correct.
However, fruit and vegetable sales are greatly affected by weather conditions. For example, if the weather is much better than expected, the sale of lettuce and other fresh products that are more frequently consumed during the barbecue season will increase.
PRODUCTS REDUCING PROFITABILITY
Accurate foresight is essential in order to reconcile with suppliers and place daily orders. However, without accurate information, the risk of over-ordering and therefore waste will also increase. On the other hand, empty shelves can also be a result of low orders.
Buyers often have to place additional orders with suppliers, as many food retailers need to keep certain products in stock at all times.
However, this results in an effort to fill the shelves against their competitors at the expense of losing their customers. This can reduce the profit margin by increasing the supply price.
By distinguishing between non-branded products (for example: apple, etc.) and different varieties of the same product (for example: Fuji apple) with the right prediction, sellers can get a general idea about the sales performance of the products.
OPTIMUM ORDER QUANTITY
The package quantity of the products varies according to the delivery time and stage. In harvest dependent production, the optimum order quantity can have more than one value. Instead, the order quantity must be distinguished depending on the country of origin and supplier.
With the help of inventory management firm, the supplier can determine the optimum order quantity based on daily sales. To eliminate excessive fluctuations in supply and demand and to ensure that product buyers can make the most of market knowledge, food retailers must contact professionals.
By providing the purchasing teams with the necessary information regarding the expected sales and providing the optimum order recommendation, teams can be fully focused on their core responsibilities.
As a result, by ordering the right amount of product, the risk of shrinkage and rushed “expensive” rush orders can be avoided directly.
For example, during the COVID19 pandemic, companies that were able to operate their business had to face major changes in customer behavior.
When the quarantine application started, customers changed both the products they consume and their consumption frequency. This stage has made demand planning a constant nightmare for many companies, all this highlights the important of consulting best inventory management companies.