KANSAS CITY - One of the many COVID-era lessons learned the hard way by commissaries and other offsite providers and their retail partners is that it’s more important than ever to know your inventory and to limit budget-busting waste.
The value of inventory management systems like Periscope, made by Mississauga, Ontario-based Invatron Systems Corp., has become even clearer during a disruptive event like the pandemic, said Joe Smirlies, senior vice president of Periscope.
“From a production planning and ordering perspective, a perpetual inventory position is used as a measure of reality on how product has moved from the shelves and is constantly used against any future need assessment,” he said. “During COVID, clearly product was moving off shelves at varying levels that challenged operators with keeping on track with future needs.”
Combined with dynamic and sensitive forecasting that recognized the impacts of COVID in future demand, Invatron’s perpetual inventory position has allowed operators to run production plans and generate orders on an ad-hoc unscheduled basis so that product need assessments can be made for topping up as product was leaving the shelves faster than before due to COVID.
“Our customers have also realized a transformational shift in e-commerce sales, which has accelerated the need to integrate those systems into the overall retail system infrastructure so true e-commerce demand can be understood and forecasted and product availability can be ‘guaranteed’ to the end-consumer when they shop online.”
During the pandemic, companies all along the food supply chain have found it more important than ever to keep an accurate eye on inventory control, said Matthew Starobin, president and CEO of Bronxville, New York-based At-Your-Service Software Inc., makers of cloud-based ReciProfity food costing software.
“Businesses are under more stress now, their costs. People are not spending money the way they used to, and for them to be able to manage costs in any shape or form is more important than ever,” he said. “From inventory control to other issues, it’s front burner. Companies don’t want to lay people off if they don’t have to.”
For commissaries, central kitchens and retailers who make prepared foods onsite, inventory management can be especially critical, Starobin said. A baker planning on making a recipe that includes blueberries, for instance, may be using data from months before when costing his blueberries. That can negatively impact the bottom line and inventory levels.
Adapting forecasts to shorter time frames
Wynne Barrett, a partner in Hopkinton, Massachusetts-based software specialist Jera Concepts, said COVID has made clients of his company’s inventory management and other software “shorten their view of the past and the future.”
Jera began getting calls for shorter forecasts in March, when the pandemic first reared its ugly head. Businesses weren’t sure what was going to happen next week, much less next month or next year.
Without shorter forecasts, the perishables that are sold in supermarket perimeter departments and other corners of the food world were in serious danger of expire without better forecasts that took COVID into account.
“It changed the products sold,” Barrett said. “You couldn’t do much grab-and-go. The prepared food inventory was all pre-wrapped.”
Jera already had plans in the works to update aspects of its forecasting software. COVID accelerated that process, allowing for the shorter windows customers were in desperate need of to navigate this new world.
It will help customers not only now but also in the future, Barrett said.
“If any of this happens again, people will be better prepared,” he said. “COVID did make us stronger, it made the software better, it forced us to take a deeper look at forecasting engines.”
Periscope, a fresh item management system that maintains and manages a perpetual inventory for all sellable and backroom products, also has a Financial Inventory module for the purposes of capturing fresh inventories for periodic financial reporting.
And the system’s Recipe Manager and Cutting Test modules, which maintain foundational transformation data, helps commissaries, retailers and other food industry professionals maintain a perpetual inventory of raw ingredients used in the production of retail products, Smirlies said.
Periscope’s commissary-specific capabilities help separate it from the field, he added.
“Periscope can be implemented within a commissary that supplies grocery stores and the inventory for the commissary is managed at a raw ingredient level for replenishment and production planning at the facility,” he said. “We’re also seeing our customers working to incorporate Periscope into dark kitchens and micro fulfillment centers to optimize the replenishment needs of those facilities as volumes through those facilities grow.”
Periscope has evolved significantly over the years, perhaps most markedly in its tools for supporting financial inventories, Smirlies said.
Invatron has found that, especially with publicly traded retailers, financial counts have to be proven to have been performed in a secure and accurate way to stand up to any audit.
Periscope also has evolved in the direction of improving cycle count targeting algorithms that minimize the operator’s efforts and maximize their use of limited time to performs these spot checks.
The system has also adapted to make the requisite product enhancements to support all modes of production, and Smirlies said product distribution has been a pillar of our product roadmap.
One core differentiator for Invatron and the Periscope system, Smirlies said, has been the management of a perpetual inventory for raw ingredients used in products produced within the store.
“This is difficult since there is no traditional clear record of inventory usage when product is transformed from raw ingredients into finished products,” he said. “We’re able to accomplish this by understanding the transformation logic in the form of cutting tests, recipes or even direct-to-retail relationships.”
That ability is enhanced by the fact that much of the usage needs to be determined at the point-of-scale (production) and not the traditional point-of-sale, Smirlies added. And since Invatron has a scale management solution, the company is more than equipped to provide it.
Aneta Ranstoller, Invatron’s vice president of marketing, said Invatron works directly with food retailers to understand the challenges of managing a fresh operation to pioneer the industry’s digital transformation.
“The challenge many retailers and supply chains face are delivering on the ever-changing needs and wants of consumers at the right time, so that consumers have what they want, when and where they want it across their fresh offering,” she said.
Invatron’s goal is to help retailers drive incremental gross margins by focusing on better operational practices and predictive demand forecasting combined with more efficient operational practices to keep fresh in stock throughout the day while maintaining a perpetual inventory.
“Retailers have to order properly to optimize in-stock positions and shrink levels, produce in store goods, such as salads, sandwiches, bread and cut meat, in a timely and labor efficient manner so that you maintain adequate profit margins,” she said. “This can only be achieved by using technology and best practices – which store associates like and use as it allows them to do their jobs better and faster.”
Invatron’s solutions, she added, center on activities including merchandising, forecasting, ordering, baking, cutting, assembling, scheduling, and maintaining a perpetual inventory.
New cloud-based tool for commissaries
New for At-Your-Service is a cloud-based version of one of its old products that is especially helpful for commissaries, central kitchens and other offsite facilities provided prepared and other foods to grocery retailers.
The old version ran on the company’s server-based inventory management system. When At-Your-Service went 100% cloud-based, converting the service went on the back burner, Starobin said.
But increased demand from a growing commissary industry put it back front and center.
“We’re selling to enough bigger companies now,” Starobin said. “Users who had a single store are getting to the point where they have three, four stores, the magic number where they feel the need for a central kitchen.”
The commissary-specific software’s advantage is providing instant updates to recipes, regardless of their size. With Reciprofity, commissary and other offsite users can know the exact quantities of all ingredients and have them ordered instantly, keeping inventory accurate and avoiding food loss.
“Commissaries are designed to consolidate, to add efficiency, but if they’re not tracking what’s going out, did we waste anything,” they’re not taking full advantage of their business model, Starobin said.
Inventory management software also helps take a lot of the guesswork out of the work commissaries and retailers face in prepared food production, Starobin said.
“One of the issues I’ve heard from stores, from kitchen people, is that when it comes time to production and you have to make a large number of sandwiches, for example, there’s a lot of guesswork in that practice. Prep people pull out what they need and they never underestimate. And once it’s out of inventory, it doesn’t go back.”
In the case of the sandwiches, that means that maybe 30 tomatoes get pulled for the order instead of the 25 that are needed. Or if it’s a fruit like cantaloupe, prep cooks aren’t as careful about getting the maximum amount of usable fruit out of each piece, because they know that they’ve likely pulled more than is needed. With inventory management software, regardless of the size of the order, kitchen managers know instantly the exact amount of each ingredient needed.
Paper out, tablet in
New for Jera this year is a tablet-based production planner, the latest iteration in the company’s “what to make, when” software, that Barrett said is perfect for supermarkets.
“Customers are looking for simpler solutions,” he said. “They don’t want employees to have to do analytics. So we decided to come up with an interactive, tablet-based version.”
The product is perfect for prepared foods sections in the perimeters of grocery stores and their commissary, central kitchen or other offsite value-added providers.
Previous versions of similar products were paper-based, which is the last thing grocery foodservice departments in today’s market, Barrett said. They already have enough of that.
“Supermarkets are notorious for a lot of paper-based” record keeping in retail foodservice and other departments, Barrett said. “This is simpler to interact with, it’s easier to track, and there’s no more data recording you have to do manually.”
On the horizon for Jera is what Barrett calls “exception reporting,” a system in which users will be notified only when there’s a problem (or “exception”) that needs to be fixed, instead of being bombarded with data that just shows things are working as they should.
“It helps brings problems to the surface,” he said.
Jera also has seen strong demand for its new printer label integration software, which allows retail foodservice and other value-added categories in the grocery perimeter to compare their inventory forecasts with what they actually wound up using.
The software connects with Web-enabled label printers that helps address problems related to implied waste. It decreases the need for accurate employee waste recording, which is always bad, Barrett said, since people are not good at entering such data themselves.
“We have one customer on it and three others who are considering it,” he said. “It’s been wonderful, now they can imply waste, know what their waste is.”
This story was featured in the October edition of Supermarket Perimeter. Click here to view the whole issue.