Inventory Management for Fresh Produce: Balancing Waste and Availability

A key characteristic of fresh produce (fruit and vegetables) is that this assortment changes throughout the year in terms of supplier, packaging, and price. Fresh produce buyers know exactly when they need to switch countries of origin, but do they also know how much to purchase? How can they ensure optimal store availability and avoid costly last-minute purchases (which eat into profit margins)?

The supply chain for fresh produce is highly dynamic. Supply, quality, and price depend on crop yields from different countries, and consumer demand can fluctuate sharply from day to day. Buyers of fresh produce, who must find the right balance, are often true specialists in their field. They know the global market for fruits and vegetables inside out and can pinpoint exactly when and where different crops are harvested. For example:

• In summer, they source cauliflower from the Netherlands.
• In winter, they source cauliflower from Spain or Italy.

They often have a keen sense of both quality and price, and switching suppliers regularly is second nature to them.

Counting by Pieces or Kilograms

Fresh produce buyers are experts on quality, price, and country of origin, but they often face uncertainty when it comes to forecasting consumer demand. Order quantities are typically based on past orders without checking if those earlier purchases were actually sufficient.

The sales of fruit and vegetables are highly weather-dependent. If the weather suddenly turns nice, demand for items like iceberg lettuce and other BBQ vegetables spikes, turning the demand pattern for many products upside down.

Margin Killers in the Supply Chain

An accurate forecast is crucial when determining the right contracts with suppliers and placing daily orders. Without a clear understanding of future demand, retailers risk:

• Over-purchasing, leading to waste.
• Empty shelves, due to under-purchasing.

Because “no-sale” is not an option for many food retailers, buyers often have to place urgent additional orders through intermediaries or, worse, direct competitors. The prices in these situations are typically much higher, making these last-minute actions serious margin killers.

Slimstock has extensive experience in inventory optimisation within food retail.

The key lies in a detailed forecast of daily demand, considering factors such as seasons, price elasticity, weather scenarios, and actual sales to date.

By distinguishing between generic items (e.g. cauliflower) and variants (e.g. cauliflower from the Netherlands, cauliflower from Spain), we ensure that a complete picture of sales is always available. Units from different suppliers are automatically converted to the standard unit of measurement, eliminating any confusion.

Optimal Order Quantities for Fresh Produce

Suppliers from different countries have varying lead times, order periods, and packaging units. Therefore, there is no single optimal order quantity for fresh produce, it must be differentiated by country and supplier.

By using advanced software that generates a reliable forecast of daily demand and calculates the corresponding optimal order per supplier, buyers can determine the best supplier for each product. The rest of the process can then be automated.

To manage the extreme dynamics of demand and supply, and to make the most of fresh produce buyers’ market knowledge, food retailers must have access to advanced supply chain software. By providing purchasing departments with insights into expected demand and offering optimal order suggestions, they can focus entirely on their core tasks.

By placing the correct quantities of orders directly, waste and costly parallel purchases can be avoided. This helps ensure high availability on store shelves and keeps profit margins healthy.

To further support these objectives, many food retailers adopt a category-level planning strategy to streamline their assortment decisions. This approach enables them to tailor product ranges to customer demand while minimising spoilage and optimising shelf space.

Conclusion: Optimising Fresh Produce Inventory for Sustainable Success

Effective inventory management for fresh produce is a delicate balancing act that requires careful planning, market knowledge, and reliable forecasting. With the dynamic nature of the supply chain, including weather fluctuations, crop yields, and consumer demand, food retailers must adopt advanced solutions to stay ahead of the curve.

Key takeaways include:

• Accurate forecasting is essential to prevent waste and avoid stockouts.
• Using advanced software helps calculate the optimal order quantities per supplier, ensuring that fresh produce is available when needed without over-purchasing.
• The ability to distinguish between product variants and suppliers ensures a complete understanding of sales patterns and simplifies inventory management.
• Automating the ordering process can save time, reduce errors, and ensure that stores maintain healthy profit margins.

Leveraging technology and advanced forecasting tools is no longer optional but necessary to maintain both product availability and profitability. By focusing on these key aspects, food retailers can optimise their supply chains, reduce costs, and keep fresh produce available to consumers—ultimately leading to a more efficient and sustainable business.

Discover how our fresh item management software can help you optimise your supply chain, reduce waste, and keep fresh produce consistently available—driving efficiency and sustainability for your business.