Improving Inventory Performance in Food & Beverage Supply Chains Using Decision Intelligence

The food and beverage (F&B) industry is undergoing profound transformations, grappling with a convergence of challenges that demand innovative solutions. Shifting consumer expectations for personalized, transparent, and sustainable products has added complexity to supply chain management. These challenges are exacerbated by rising costs of raw materials, transportation, and labor, as well as frequent disruptions in global supply chains. Amid these pressures, inventory performance has emerged as a critical focal point for F&B companies striving to maintain operational excellence.

The Inventory Challenges of F&B Supply Chains

Balancing inventory effectively — ensuring that stock is sufficient to meet demand without overstocking — is a perennial challenge for F&B companies. Mismanagement of inventory can lead to severe, costly consequences:

• Spoilage: Excess inventory often results in perishable items expiring before they can be sold, leading to waste and financial loss.
• Tied-Up Capital: Overstocking ties up valuable financial resources that could otherwise be directed toward growth initiatives or operational improvements.
• Markdowns: Surplus inventory frequently necessitates price reductions, eroding profitability and brand equity.

Traditional inventory management approaches frequently fall short in addressing the complexities of modern supply chains. These legacy systems and methods are often hindered by a lack of real-time visibility into inventory levels, making it difficult for companies to respond quickly to shifting demand patterns. Additionally, many businesses continue to rely heavily on manual processes, which are inherently prone to human error and inefficiency. This reliance not only slows decision-making but also increases the likelihood of costly mistakes. Predicting demand fluctuations is another major hurdle, as traditional systems struggle to integrate and analyze the diverse range of data sources required for accurate forecasting. Furthermore, these outdated approaches are ill-equipped to manage the unique challenges of perishable goods.

Without precise tools, companies frequently grapple with both overstocking and understocking, leading to higher rates of spoilage, missed sales opportunities, and overall inefficiency. These limitations underscore the need for a more advanced, data-driven approach to inventory management.

Aera Decision Cloud: Revolutionizing Inventory Performance with Decision Intelligence

Aera Decision Cloud empowers F&B companies to navigate these challenges with confidence. By harnessing the power of artificial intelligence (AI) and automation, Aera delivers smarter, faster, and more impactful decisions. At the heart of this innovation lies decision intelligence, which transforms inventory management into a proactive, optimized process. Several advanced Skills help to optimize inventory performance in real time:

1. Control Tower provides real-time visibility into inventory levels and movements, enabling quick, informed decision-making to address potential issues before they escalate.
2. Demand Forecasting uses historical data and external inputs to generate accurate forecasts, ensuring that inventory aligns with anticipated needs.
3. Demand Sensing incorporates real-time signals such as point-of-sale (POS) data and weather trends to refine forecasts and adapt to sudden demand shifts, enhancing responsiveness.
4. Dynamic Safety Stock Adjustments continuously recalibrate stock levels based on real-time demand variability and supply chain conditions, optimizing inventory buffers.
5. Inventory Rebalancing dynamically redistributes inventory across locations, preventing overstocking in some areas and stockouts in others.
6. Aging Inventory Management identifies at-risk inventory and suggests redistributive actions to reduce spoilage and minimize financial write-offs.

By leveraging these Skills, F&B companies can achieve measurable improvements in inventory performance:

• Reduced Spoilage and Waste: Efficient management of perishable goods can reduce waste by 20-30%.
• Optimized Stock Levels: Improved inventory balancing frees up 5-10% of working capital by avoiding overstocking.
• Enhanced Service Levels: Proactively managing inventory prevents stockouts, ensuring 5-10% better product availability when and where customers need it.

A Real-World Success Story

One global leader in the food and beverage industry turned to Aera Decision Cloud to address chronic inventory challenges. The company faced difficulties in forecasting demand across its extensive portfolio of SKUs and markets. Traditional tools, reliant on static models and siloed data, were unable to process the vast amounts of POS and external signals. This led to frequent stockouts, overstocking, and strained relationships with retail partners.

By deploying Aera’s Demand Sensing Skill, the company operationalized AI to analyze diverse datasets, including POS data, economic indicators, and weather forecasts. Advanced machine learning models provided actionable, real-time insights that significantly improved planning accuracy. The impact was transformative, including the following achievements:

• $20M Saved: Decisions previously left unactioned were now optimized, yielding substantial savings.
• 4-13% Improvement in Forecast Accuracy: Enhanced precision in sell-out forecasts.
• 25% Reduction in Planner Workload: Automation and AI reduced manual planning efforts.
• 98% Fill Rate and 97% On-Shelf Availability: Improved stock availability ensured customer satisfaction.
• 2-5 Hours Saved Per Forecast Cycle: Key markets experienced faster, more efficient forecasting processes.

By transforming demand forecasting from a reactive process into a proactive capability, Aera not only reduced costs but also laid the groundwork for improved retailer collaboration and global scalability.

The Future of Inventory Management

The food and beverage industry’s success hinges on the ability to navigate supply chain complexities with agility and precision. Aera Decision Cloud’s AI-driven capabilities empower companies to transform inventory performance into a competitive advantage. By leveraging decision intelligence, F&B organizations can reduce waste, enhance profitability, and deliver superior customer experiences—all while adapting to the evolving demands of a dynamic market.