Importance of Understanding Your Shelf Life While Navigating Supply Chain Uncertainty
With the growing constraints and rising levels of uncertainty in supply chains, managing the availability and quality of products is challenging. In the beverage business, it’s hard to have a conversation about product inventory or supply chain without also considering the shelf life of your product.
Shelf life is a topic that can get complicated when you’re building a beverage business. At its core, your shelf life should support the safety and quality of your beverage. But it also impacts your brand’s reputation with retailers and consumers and the profitability and sustainability of your beverage business.
What is shelf life?
The Institute of Food Science and Technology defines shelf life as “the period of time during which the food product will remain safe; be certain to retain its desired sensory, chemical, physical, microbiological and functional characteristics; where appropriate, comply with any label declaration of nutrition data, when stored under the recommended conditions.”
You need to determine the endpoint of your beverage’s shelf life to ensure every product on the shelf meets your sensory profile and quality standards. In addition to meeting quality specifications, your beverage may also need to comply with industry guidelines and best practices established by various levels of government, retailers, and labeling organizations.
While there is no federal law requiring products to include a “sell by” or “best by” date, companies must follow all food safety standards and maintain truth in advertising for every product they sell. You also need to share your beverage’s shelf life with retailers and distributor partners.
How do you measure shelf life?
In addition to looking at product and food safety standards, many beverage brands factor in how well their product maintains its appearance, smell, taste, and texture over time. Conducting a sensory analysis at various points provides data to ensure a consistent customer experience.
How Do You Manage Shelf Life?
When considering shelf life, beverage brands have to think through the trade-offs between the risk of having excess product that may need to be scrapped due to shelf life expiration and failure to meet demand which can result in lost revenue, out of stock situations at retail, and potentially the loss of a customer.
It is easy to plan for products that have a long shelf life, high order frequency, and high demand volume as the risk of inventory obsolescence is minimized; however, shelf life planning and inventory management for products with more infrequent orders and lower order quantities is trickier. If your business has inventory nearing its shelf life date, then you may need to prioritize orders for high-volume business partners or offer deep discounts to incentivize product orders in an effort to recoup a portion of their production cost.
The High Cost of Out of Date Products
Inventory that has reached or is approaching its best-by date can create significant costs and hassle for beverage brands. Distributors and retailers are wary of taking on products that are close to the end of their stated shelf life because they don't want to be left with beverages that they can't sell. Any out-of-date product you can't sell or have to pull in from stores means you forfeit those sales, the cost to make, ship, and warehouse the product, then ultimately the freight and cost to pick up and destroy the out-of-date product.
So, while some brands may feel inclined to manage down costs by making more products than they're forecasted to sell, there are risks that come with letting your beverages get too close to their sell-by date.
A Comprehensive Approach
Shelf life planning and execution allows you to identify and plan for risks throughout your supply chain that could impact your ability to deliver your product while minimizing the risk of carrying obsolete inventory.
There’s no one-size-fits-all formula to follow. Managing your product inventory requires a comprehensive end-to-end process that brings together data and insights from every business area, including product development, quality assurance, procurement, logistics, sales, customer service, and inventory management.
As beverages bring in more complex ingredients and create cleaner functional formulations, more shelf life challenges come into play. Ensuring ingredients are safe and effective throughout the product’s shelf life becomes more involved, especially working with natural and organic elements. At the same time, adopting a clean label often means doing away with some artificial preservatives or processing practices that extend shelf life.
Navigating Supply Chain Challenges
While shelf life planning can be a complex area of your beverage business to manage, now is not the time to ignore it. As the pandemic, the economy, and other crises impact your supply chain, you may need to rethink your sourcing and production practices, identify ways to optimize and more effectively manage your supplier network and become more proficient at forecasting demand.