Lot Analysis Benefits
Lot Analysis in Action
With the proper lot data, HIMPACT® will project and break down the total On Hand into the following categories:
- Original On Hand – what was received
- On Hand – how much is left
- Sellable – On Hand that HIMPACT® projects will be sold before its expiration date is less than the customer guaranteed shelf life
- Discount – aka a Spoilage Warning – On Hand that HIMPACT® projects could be sold with less than the customer guarantees shelf life but not yet expired.
- Spoilage – projected spoils
Here is a brief example to show the Lot Analysis functionality in more detail.
The original columns in the image below display the On hand units and dollars for the Lot when it was first received. On Hand is today’s on hand. Sellable is the classification for the on hand left in that lot, which we can sell at full price before we reach the Customers’ Shelf Life Minimum Guarantee. Then Spoilage can start on the actual Expiration date. Or, as in this case, it starts 3 days before that date. This is a customizable parameter.
The top row shows lot 679649 is already fully expired because today is April 27, 2022 and the expiration date was April 24th. Therefore, 0% of this is sellable and all 32 remaining units of this lot have spoiled.
Then we have 3 lots with an expiration of June 5, 2022. In a typical environment, these would all have the same Lot ID. This customer uses a slightly different system because they track by pick location.
The header row of these 3 lots shows that we have 53 units on hand and 60 days of supply. There are, however, only 40 days left from today until June 5th, which is the expiration date. There is a 10 day Customer Guarantee shelf life threshold. With that, we calculate that the first, and biggest Lot holding 32 units will have 29 units or 30 days before it reaches its Customer Guarantee shelf life threshold.
HIMPACT’s Lot Analysis classifies these units as Sellable, meaning sellable to all customers at the normal, full price. Then between May 27th and June 2nd, we classify the final 3 units that might be sellable to a select set of customers who are willing to buy with less than 10 days of shelf life as Discounted.
In the third Lot we simulate that 6 of the 7 units could be sold at a discount before we reach June 3rd. Again, the expiration date is June 5th, but we consider the minimum shelf life that can be picked to be 3 days, so the last two days, June 3rd and 4th are not valid days to ship to customers because that is below the company’s minimum Shelf Life of 3 days.
Lot Analysis shows that the effective sellable On Hand is only 3 of the 7 cases. Because Lot Analysis removes unsellable on hand from this item, HIMPACT® will order more today and avoid potential out-of-stock situations.
What most buyers do today is they adjust the On Hand by scanning the Lot data from their WMS and exclude either just the potentially discounted inventory or in this case the spoils as well. Lot Analysis makes buying these types of perishable items much easier and quicker.
Note: HIMPACT® supports both manufacturer lots and the ability to scan pallet IDs with expiration dates. You can group by the expiration date to create your own views in HIMPACT®.
Lot Analysis works best if FIFO practices are observed as much as possible. Foodservice organizations should avoid giving fresher products to larger customers. This practice is doubly disruptive because it removes on hand from lots that are not at risk of spoils and slows the draw from lots that have older products.
Looking Ahead – Lot Analysis: Phase 2
In the coming months, we will release the second phase of the Lot Analysis tool. In the second phase, the Lot Analysis will expand to be used as a Spoils Analysis. This will enable users to track company and buyer performance over time. It will also send early warnings for spoilage and can be used as a markdown tool.