If you asked customers which product in their fridge is constantly on the verge of expiring, many would answer: milk. Dairy products are famous for their short shelf lives as well as their traditional presence in a home kitchen. Companies that transport dairy have to keep it cold and make sure customers receive a fresh supply on a regular basis.
Recently, the dairy industry has experienced some difficult trends. Here's how companies cope and what inventory management can do to keep milk and cheese available for consumers:
The Search for Sustainable Cows
Along with all products made by cows - meat and leather for example - dairy consumers want to buy products created through sustainable practices. Nation's Restaurant News said major chains look for more sustainable food product sources as consumers begin to favor companies that offer eco-friendly merchandise available through supply chain transparency.
Looking specifically at milk, Feed Navigator reported a dairy company decided to phase out genetically modified products once it realized customers would pay more for the alternative. Having direct feedback from customers is a great way to design green production activities and supply chains. GreenBiz said the dairy industry has difficult choices to make if it wants to become sustainable. Cramped milking facilities are unpopular with animal rights activists but free range options can lead to deforestation.
So, what's the right answer for businesses? Usually, whatever their consumers want. Companies need to track what customers buy. Real-time information provided by data collection devices in grocery stores or stockrooms will tell businesses what products move and how audiences react to socially responsible marketing campaigns. Comparing this data to growing trends and new science should help decision-makers recognize which changes are necessary and feasible.
Too Much Cheese
One dairy product faces a lack of demand leading to overstocking, according to The Wall Street Journal. In 2014, U.S. agricultural export markets were doing well, so farmers expanded their output. Recently, foreign demand has decreased. This isn't a major problem for products easier to store like grains - especially as these markets are expected to grow in the near future - but cheese is a different story.
At the end of March 2016, 1.19 billion pounds of cheese were in cold storage waiting for the industry to pick up. While American consumers are expected to keep buying the product, the demand won't match a supply that's still growing. Companies should scale back current expansions and focus on merchandise that keeps well that they can make for lower prices.
There are many different types of cheese. Some can sit in freezers for long periods of times without any ill effects, while others need to be moved to consumers in weeks. Businesses must avoid overlooking different types of merchandise in warehouse management routines. It's vital to have a system that can differentiate stock in storage. The best data collection systems provide visibility without constant trips to freezers and easy to read timelines for every product. With this information, managers can communicate what needs immediate attention and how best to deal with surplus.
The Perishable Supply Chain
Milk and other dairy products must remain cold from packaging to transport. The Milk Means More blog advised shoppers to check on dairy temperatures before making purchases. Companies can supply curious consumers with information by making constant supervision of inventory temperatures part of regular data collection solutions.
Hofstra University said cold storage has become more intelligent in recent years. This provides an opportunity for supply chain logistics management, but at the same time, it also means customers and regulators expect more from products.