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Challenges & solutions for managing expiry dates in the e-commerce supply chain
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Wednesday, 04 December, 2024, 15 : 00 PM [IST]
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Ravi Kabra
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Managing expiry dates in the e-commerce supply chain is a critical aspect of ensuring product quality and consumer safety. As online retail continues to grow, supply chain logistics complexities have also increased. Perishable items such as food and beverages require precise monitoring of expiry dates to avoid losses, maintain customer trust, and comply with regulations. According to a 2020 report by the Food and Agriculture Organization (FAO), approximately one-third of food produced globally is wasted, much of which is due to improper management of perishables. Effective solutions to optimize inventory, minimise waste, and streamline processes are essential.
The vast e-commerce network involves multiple stakeholders, including manufacturers, warehouses, logistics providers, and end customers. At each point in the supply chain, delays or mismanagement of expiry-sensitive products can occur. A report by McKinsey highlighted that in 2020, logistics disruptions led to a 15-30% increase in product waste in the supply chain. Additionally, the high volume of inventory movement makes it difficult to track individual items accurately. Without robust systems in place, products nearing their expiry dates might be overlooked, leading to wastage or, worse, the sale of expired items. According to a study by the National Restaurant Association, 77% of consumers say they would stop purchasing from a brand that sells expired products, emphasising the importance of quality control.
One significant challenge is forecasting demand accurately. Overstocking, particularly of expiry-sensitive products, leads to increased wastage, while understocking can cause shortages and dissatisfaction. According to a report from Deloitte, 56% of companies still use basic inventory systems for demand forecasting, which often fail to accurately predict consumer behaviour. By using data analytics and machine learning, businesses can predict demand patterns more accurately. These technologies analyse historical sales data, seasonal trends, and consumer behaviour to optimise inventory levels and reduce wastage.
Another important aspect is real-time tracking and inventory management. Traditional systems often fail to provide visibility into expiry dates across the supply chain. Modern inventory management systems equipped with barcode or RFID technology can solve this problem. According to a survey by Zebra Technologies, 56% of retailers are already using RFID for inventory management. These tools ensure precise tracking from manufacturing to delivery, allowing businesses to prioritise the sale of products nearing expiry. Implementing these technologies enhances operational efficiency and minimises losses. Moreover, cloud-based systems allow all stakeholders to access real-time data, improving decision-making.
Collaboration between suppliers, retailers, and logistics partners is essential for managing expiry-sensitive products. Transparent communication ensures that shelf-life information is shared at every stage. According to a 2023 survey by Accenture, 79% of supply chain professionals agree that collaboration with external partners improves efficiency and reduces waste. For instance, products with shorter expiry dates can be allocated to high-turnover regions or channels. Special promotions or discounts can also be used to clear out inventory before expiry. Shared platforms and technology facilitate better coordination across all partners.
Innovations in packaging, such as smart packaging with embedded sensors, can also help monitor freshness and product quality. These solutions are particularly beneficial for cold chains, where temperature fluctuations can accelerate spoilage. A study by Transparency Market Research predicted that the global smart packaging market would reach $32.4 billion by 2027, driven by demand for fresher, longer-lasting products. Smart packaging allows companies to track conditions in real time, reducing spoilage and human error while ensuring products maintain quality throughout transit and storage.
Consumer awareness plays an important role as well. Clear labelling and educational campaigns about best-before and use-by dates can empower consumers to make informed choices. According to a 2021 study by Nielsen, 55% of consumers are willing to pay a premium for products with transparent and clear labelling. Offering flexible return or exchange policies for expiry-sensitive items also helps build trust and loyalty. Retailers can send digital reminders or notifications about products nearing their expiry dates, encouraging timely consumption and reducing waste at the consumer level.
Regulatory compliance is another critical consideration in managing expiry dates. Governments worldwide impose strict regulations to ensure consumer safety, and non-compliance can lead to fines and damage to a brand’s reputation. A report by US Food and Drug Administration (FDA) showed that 5% of food products recalled in the past five years were due to improper expiry date labelling or mismanagement. Companies need to stay updated on regulatory changes and implement processes to meet these requirements. Collaborating with industry bodies can also help businesses anticipate upcoming regulations.
The integration of automation into supply chain operations provides a potential solution. Automated sorting systems in warehouses can identify and prioritise products based on expiry dates. A report by Capgemini revealed that 68% of supply chain leaders are investing in automation to improve product tracking and inventory management. Automation reduces human error, speeds up processes, and ensures that expiry-sensitive goods reach consumers while still within their shelf life. In densely populated markets, automation helps efficiently handle large volumes of goods.
However, these solutions come with challenges. High initial investment in technology and infrastructure can deter small and medium-sized enterprises. A 2022 survey by Statista revealed that 42% of SMEs report budget constraints as a major barrier to adopting new technology. Additionally, training employees to adapt to new systems requires time and resources. Despite these barriers, the long-term benefits of reducing waste, improving efficiency, and enhancing consumer trust far outweigh the costs. Businesses can implement solutions in phases to manage expenses and integrate new technologies gradually.
Partnerships with third-party logistics providers specializing in perishable goods can also offer a cost-effective alternative. These providers often have the infrastructure and expertise to handle expiry-sensitive products. By outsourcing this aspect of the supply chain, businesses can reduce the need for significant upfront investment while still ensuring quality management. A report from Grand View Research suggests that the third-party logistics (3PL) market is projected to grow at a compound annual growth rate (CAGR) of 8.5%, indicating strong demand for outsourced logistics services.
Sustainability is increasingly becoming a priority. By effectively managing expiry dates, businesses can contribute to reducing food waste, aligning with broader sustainability goals. According to a report from the Ellen MacArthur Foundation, the food sector accounts for 8-10% of global greenhouse gas emissions, making food waste a significant environmental concern. By optimizing inventory, reducing waste, and exploring circular economy practices such as donating near-expiry goods, companies can enhance their corporate social responsibility credentials.
Managing expiry dates in the e-commerce supply chain requires a combination of technology, strategic planning, and collaboration. By leveraging data analytics, smart packaging, automation, and modern inventory systems, businesses can ensure effective management of expiry-sensitive products. Transparent communication among stakeholders, consumer education, and regulatory compliance further strengthen these efforts. Though initial investments can be significant, the long-term benefits—reduced waste, improved efficiency, and enhanced consumer trust—make this a worthwhile pursuit. As e-commerce continues to grow, addressing expiry date challenges with innovative solutions will be essential for sustaining business growth and meeting consumer expectations.
(The author is co-founder at Skippi)
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