Three fundamentals of meat inventory management
Do you know what's in your freezer right now? Not just, "meat. duh." Everyone knows that. I mean can you tell me exactly what's in your freezer right now?
Can you picture the freezer in your mind, see the arrangement of all of your product and run a quick tally of the volume?
Most importantly, do you know how much it's worth right now? How much it was worth 2 days ago, or will be worth tomorrow?
Even if the answer to that is "yes," read on because I can guarantee there are a few things that we can all do better when it comes to inventory and inventory management. And if the answer is "no," then this post is for you.
The basics of meat inventory
Inventory is essentially the product that you have on hand at any moment. If you are purchasing product from farmers and then selling it wholesale or retail, this is the product in your freezer waiting to go out the door. It has not yet been sold to your customer, so the inventory you have on hand is based on how much you think you need to buy to satisfy demand. How much you can buy depends on how much capital (money) you want tied up in your storage facility.
HOW MUCH INVENTORY DO I NEED?
How much you need depends on how readily you want to be able to fill orders. There are some out there who believe that you should have enough inventory so that a customer can call and order anything they want, in any amount and you'll have it. Others believe you need "just enough." Just enough will be determined by historical volume you do in the past, taking into account future trends.
1. Understand Your Yields
To replenish your inventory, no matter the philosophy you choose (well stocked, or playing it tight) you'll need to periodically order, or create more inventory. Some shops simply order sub-primals and fabricate the various cuts that those pieces yield. Others are more intricate and require managing several different process steps to create more inventory, for instance processing whole animals.
No matter how simplistic or complex the process is to create inventory, yield is a driving factor in how you will create, and value, that inventory of finished product. This may sound obvious, but the point here is not that you need to factor in yield when replenishing inventory - the point is that most shops do not do a good enough job of really understanding the value that is either gained, or lost due to the yield of the raw material. How do you value your bi-products? How do you track your yield? How are you valuing labor? To what extent does your finished product price factor in these finer points of yields?
For example: you should be tracking yield periodically in order to learn of any variations from cutter to cutter, or differences in grades. Yes, there is a percentage that a primal will yield of each cut produced from that primal, but knowing the details of time spent cutting (labor), finished products yielded (including bi-products), and how you're merchandizing those bi-products can help you either make a profit on each sale, or cost you money you may not even know you're losing.
2. Understand the Cost of Sitting on Product
As we've found out above, sometimes there is product that doesn't move as quickly as other cuts, for one reason or another. There may be a tendency to let it build up in your freezer before marketing it altogether. This is good practice, as long as you are not waiting too long. What's too long? The moment when that product stops being a future sale and starts being a present liability.
Remember, every product in your cooler is preventing another product from taking its place. If you are saving up soup bones, for example, because bone broth is so hot right now, you may be setting aside freezer space for poor profitability. First of all, those bones came from an animal that you once paid full price for, and secondly, it's preventing other more profitable items from using its space. Don't let a cheap product become inherently more valuable to you.
3. Practice Proper Product Rotation
This entire section should go without saying. If you're not properly rotating your product (First In, First Out) and keeping accurate records, then who cares if you follow step 1 or 2 above? Every item in your freezer should be documented in an easy to find place (a clipboard hooked to the wall outside the freezer) and be updated every time someone brings a new batch in.
Not only does proper recording keep you informed as to your inventory levels, but it prevents you from making mistakes. Imagine finding a tray of meat that belongs to a customer, but it was hiding behind something else and they came to pick their meat up weeks ago? You either are a thief if you keep it, or a dumdum if you call them and tell them it was hiding all this time. Meanwhile, you could have been actually storing new meat and making money off of that occupied tray.
If you don't know what's in your freezer or how much it's worth, start now. It's not too late to improve your record-keeping, inventory management and therefore, your profit.
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Good inventory management can help you increase sales and reduce waste.
Not properly keeping track of your meat inventory can cause you to lose money in a variety of ways, from spoilage to theft. Creating a simple inventory system that identifies your meats by cut, date of purchase and sales opportunities can help you make sure you order and sell meats in a timely fashion, keeping your costs down and profits up.
Benefits of Inventory Management
Keeping track of your inventory allows you to make sure you have plenty of the necessary cuts of meat on hand to take advantage of sales opportunities. Monitoring the age of your inventory allows you to put meats on sale before they go bad, reducing waste. Knowing how much inventory you have and its age also helps you reduce the risk of ordering meat you don’t need or forgetting to order cuts that are running low. If more than one person has access to your inventory, keeping track of your meat can help you spot and reduce theft.
An obvious way to inventory your meat is by the cut. This will allow you to keep the right amount of each in stock. For quick reference, keep track of unbutchered meat by cuts to let you know how many strips, ribeyes, roasts or other cuts you can sell to meet demand. You’ll avoid losing sales if you can accurately keep enough of each cut in your store to meet anticipated demand.
Keeping track of your meats by cut also helps you control your costs if you pay a delivery fee. Thinking you have enough of one cut, finding out you don’t, then having to place an extra order can raise your costs.
Once you’ve cataloged your meat by cut, put the date by each piece of meat. If you are keeping inventory using a computer spreadsheet, this helps you check quickly when certain cuts are expiring or note on a daily basis what meat you need to sell soon. This allows you to put older meat on sale or create other promotions to help it move.
If you know that certain cuts move better during certain days of the week or during certain holidays, add a “Need” category to your inventory. For example, you may need more premade hamburgers, kabob cubes and mid-price steaks on the weekend for cookouts. You’ll need more kosher brisket for holidays such as Passover and Rosh Hashanah if you have Jewish customers.
Checking your inventory sheet each day can remind you when to grind extra beef and display and promote certain steaks. A Need category lets you create a calendar that reminds you to order, prepare and promote the right cuts of meats at the right time.
Keeping track of your inventory by anticipated need also allows you to use the Just In Time inventory system, which lets you order inventory close to when you need it. This lets you keep your funds earning interest in your bank account, rather than sitting in your walk-in.
Software for Inventory & Traceability Tracking for Meat Processors
The following is a re-print from NMPAN June 2016 newsletter and was written by Stan Ward, Principal Consultant, Stan Ward Consulting, specializing in Food Information Systems.
Meat processors and their livestock producer clients often ask about effective software solutions for inventory management and traceability tracking. There are many, many inventory management systems available, but the list gets much shorter for those that are suitable for very small and small meat processors. This article is intended to give an overview of the features to be considered and some specific software solutions for meat processors.
Must-have features in software solutions for all meat processors are basic inventory management and traceability tracking. Inventory management includes a set of business processes that include receiving, production, and sales, and traceability is the identification of individual, real-life items using a "lot number" or "batch number" that stays with each food item as it goes through the inventory management and manufacturing processes.
Basic inventory management and traceability for meat processors must include record keeping for:
Receiving of products. For meat processors, "products" will include animals, primal cuts, spices, and more.
Traceability for receiving: Every item received should have a lot number/batch number recorded. If a lot number has not been assigned by the supplier or original producer, then you must assign a lot number to the item.
Production. For meat processors, this can include disassembly of carcasses into cuts and ground, and the assembly of items using a "bill of materials" to produce things like sausage, cured meats, bacon, corned beef, and jerky.
Traceability for production: A lot number should be assigned to all final product and "work-in-progress" items produced/manufactured, as well as all ingredients which go into final product and "work-in-progress" item.
Sales of your all of final products should be recorded.
Traceability for sales: The identity of your customers and the lot number of every item sold to your customers should be recorded.
Recall. Utilizing the lot tracking used throughout the use of the system, recall features should easily create a report that traces the supplier, inventory in-stock, products manufactured, and customers for any ingredient or final product. Using recall features is important for actual recall events, as well as performing mock recalls and verification of traceability for third audits required by customers and certifications (e.g., organic certification).MPC
Additional Features To Consider
Catch-weight - A must-have feature for many meat processors. Catch weight is the actual weight of a food item, originating from the seafood industry, for example, as the name implies, the actual weight of an individual fish, crab, or bag of clams. For meat processors, examples of catch weight refer to the actual weight of an individual cut, carcass, sausage, or package.
Scale integration, barcode scanning, label making - Many meat processors would optimally like to have scale integration and label making built-into their software solution, so that the can seamlessly weight, label, and put items into inventory all at the same time. For some businesses, barcode scanning can provide labor savings and decrease human errors created by manual entry of codes.
Specific software solutions for meat processors
ACCTivate is an inventory system with lot tracking, partial catch-weight support, and barcoding scanning, but it does not have scale integration. ACCTivate can provide inventory tracking on a piece level and do the sale calculation by weight. Where it does not work is tracking both pieces and weight for inventory tracking and reporting. The catch weight is only on sales. You can manually add weights for each piece, but it is just not integrated with a digital scale.
ACCTivate is a Microsoft Windows, client/server software system that integrates with QuickBooks' desktop versions. You need to install it on your own computer, and you would want that to be a server computer on your LAN for a multi-user environment. Instead of maintaining your own server, you could have it hosted by a third party hosting service, for an additional fee.
DEAR Inventory is an easy to implement, cloud-based inventory management system best suited for uniform weight final products, for example, a 12 ounce packaged beef jerky. DEAR has good lot tracking and strong food safety recall features, barcode scanning, and label printing, and it will automatically generate recall customer letters. DEAR does not support catch-weights or scale integration.
DEAR integrates with many cloud-based systems including cloud-based accounting systems QuickBooks Online and XERO, eCommerce solutions Shopify, Amazon, Bigcommerce, WooCommerce, Magento, eBay, Neto, and Etsy, the shipping logistics system ShipStation (FedEx, UPS, USPS, DHL), and Point of Sale and Payment Processors including PayPal, Vend, Stripe, and Square. DEAR also includes integration with MS-Office Word for those wishing to customize reports and forms. [Full Disclosure: After helping food business implement DEAR Inventory for three years, Stan Ward Consulting and DEAR Inventory are formalizing a partnership to enable several hours of free consulting when Stan Ward Consulting is named as account manager.]
VistaTrac is an excellent choice for small and mid-sized meat processing businesses, offering an industrial system that is located right on the production floor. VistaTrac has all of the features needed by a meat processor, including barcode scanning, scale integration, label printing, lot tracking, and recall features.
VistaTrac is a Microsoft Windows, client/server software system that integrates with QuickBooks' desktop versions and Sage, as well as SAP, Oracle, and other accounting systems offering third party integration. VistaTrac has recently changed their technology set-up to use iPads as terminals, which has made the overall cost of their solution more affordable.
Other software solutions to consider:
For more information, contact Stan Ward at email@example.com.
Editor’s note: The NC Choices Technical Assistance Training Manual also has a chapter on inventory management. You can access that manual here.
MEAT INDUSTRY EXPERTS
Farmsoft™ has been used in the meat industry for over 30 years and more than 50% of our customers are meat companies. Wholesale, foodservice, distribution, online retail, slaughter, and custom processing companies all find incredible value in Farmsoft.
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MEAT INDUSTRY SPECIALTY MODULES
Live Animal Receiving
Weigh and tally loads and record vendor data. Compare live weights to hot weights and view receiving reports with shrinkage.
Print carcass tags to create inventory, eliminate kill-floor paperwork with digital BSE Checklist and custom data collection. Record retained and condemned carcasses.
Create custom slaughter orders with cut instructions for processing your customer's animals. Print customer logos and UPCs to provide maximum value.
Scan carcasses or weigh and label with a rail scale to create carcass inventory, record custom vendor info and data for USDA.
Cut To Order
Foodservice JIT order processing. Print cut slips with table assignments and truck route numbers, process orders by route and view the status of route fulfillment from the office.. Verify routes by scanning all product at staging and created pallet labels.
Scan inventory into your Shopify warehouse to sync inventoy to your webstore. Fill orders by scanning without manual entry.
In-Motion weighing of birds and printing individual bird labels. At packing, birds are scanned into boxes according to their weight range and case labels with total weights are printed.
Recipes & BOM
Create a BOM for value-added products and set standard yields and costing for each raw material and finished good. Enforce workers to only scan in batch ingredients and create special instructions to display on the plant floor devices.
Farmsoft is affordable, flexible software that manages the inventory and business needs of meat distribution businesses and has the tools to handle the specific requirements including…
Traceability with the ability to track forward & backward throughout the supply chain
Inventory management to account for meat, spices, and other ingredients, as well as other products
Forecasting to better predict future buying and production needs including seasonal demand variances
Seamless integration with QuickBooks
Affordable meat distribution software to manage the supply chain, improve visibility & reduce costs
Farmsoft helps meat distributors of all sizes improve operations, increase profits and comply with regulatory requirements with the features your business needs…
Inventory management is a key factor in building any meat business, and buffering inventory is a simple way for small businesses to make inventory decisions that can lead to increased revenue, better return on investment, and lower operating costs.
In this guide, you will find:
A discussion of the prerequisites for a successful inventory management strategy
A definition of the concept of buffering
A step-by-step explanation of buffering
An example of buffered inventory management in practice
This guide is authored by:
Nick McCann, Good Food Fund Value Chain Specialist, MSU Center for Regional Food Systems
Noel Bielaczyc, Value Chain Specialist, MSU Center for Regional Food Systems
Meat processing industry play a major role in today's world. The global meat industry is a global business hitting 315 million tons of meet worldwide in year 2014.Meat in its broad definition is animal tissue, used as food. Meat industry is one of the top food industries in the world. The importance of meat in the food habit of human being is already evidenced by its extensive use. The study has been undertaken in Indian Meat Company. The company was originally designed to slaughter and process 30 pigs. The meat products of India diversify its activities by handling cattle, buffalo, goat, rabbit and poultry utilizing the available facilities. At present the company is processing forty six varieties of meat and meat products derived from the above species. The study deals with the inventory management at Indian Meat Company. There are basically three types of inventory which constitute the smooth functioning of the organisation. These include raw materials, work in progress and the finished goods. Finished goods are those goods that have completed the manufacturing process but have not yet been sold or distributed to the end user. In accounting language inventory means stock of finished goods only. The study aims to understand the inventory management existing in the company. Indian Meat Company possess several varieties of meat products. These products are produced in bulk without considering their consumption pattern or level. It is therefore very important to manage the inventories efficiently and effectively in this organization. This study aims at finding out the yearly differences on purchase value of products at Indian Meat Company. Data used for the research was collected from secondary sources. The data is analysed by calculating FSN analysis and the ANOVA test. Tables are used for presenting the data. A better inventory management will surely help the company in solving the problems the company is facing with respect to inventory and will pave the way for reducing the huge investment or blocking of money in the inventory.
This article presents an analytic model for managing inventories in a butchers shops, considering the costs of obsolescence and stockout. In order to handle the cost of obsolescence we consider a variety of prices which were decreased while the product remains in storage. This aim of the model is to determine the optimal order quantity to maximize the utility in the point of sale of pork. We present the analysis of obsolescence and the possibility of supplying pork meat per cut type and also considering to buy the whole pork.
Inventory and sales for customer satisfaction
Tools to understand & grow your business
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Meat distribution software with traceability
Meat distribution software: track and traceFarmsoft gives you the ability to easily track, trace & handle recalled products with power and great flexibility.
Tracking of an unlimited amount of products through inventory by lot numbers
Trace lots back to suppliers or to retailers by lot or batch
Optionally, capture lot number at the time of shipment when managing inventory by number is not required
Manage, view and report on source, expiration date, lot, inspection and quarantine information
Pre-assign specific lot numbers for the warehouse or pick or allow warehouse personnel the convenience of picking any number and record it when shipping
Meat distribution software with forecasting and supply chain management
Sales forecasting & inventory requirements planning
See supplier purchasing information for each product including published price, last price, lead time and purchase history for any number of vendors
Handle multiple units of measure, catch weights, standard weight, shelf life and expiration date
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Meat distribution software with pricing flexibility
Farmsoft lets you price your products with a wide range of flexible options to put you in control.
Automatically select standard, promotional, quantity break, customer specific or contract prices
Sell products at retail price less discount
Establish price basis as set price, cost plus or list minus
Price by unit, case, weight or catch weight
Meat distribution software with order management
Farmsoft allows you to manage some of the more complex order management & order fulfillment requirements.
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Gain the functionality your business needs without leaving QuickBooks
Farmsoft seamlessly integrates with QuickBooks, enabling users to gain advanced inventory & business management tools while continuing to use QuickBooks for financial management.
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Learn more about Farmsoft & how it can improve operations across your entire business. Call us at 817-870-1311 or try Farmsoft for free.
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