Perishable Inventory: Shelf-life optimization and first-in-first-out management

AI-powered perishable inventory systems optimize shelf-life management, reduce waste, and ensure first-in-first-out (FIFO) practices for higher efficiency and compliance.

Project Overview

Industry: Food & Beverage / Grocery Retail

Inventory Scale: 800,000+ perishable items managed monthly across 200 stores and 4 warehouses

Project Duration: 6 months

Team Size: 2 data scientists, 2 supply chain analysts, 1 inventory manager

Business Challenge

A large grocery retailer faced significant losses from expired or wasted perishable goods. Key issues included:

Difficulty tracking real-time shelf-life across multiple storage locations
Lack of consistent FIFO implementation leading to expired stock on shelves
Inaccurate demand forecasting for short-lifecycle products
Limited visibility into expiry trends and root causes of waste
Increasing regulatory pressure for food safety and waste reduction

The inefficiencies resulted in high write-offs, compliance risks, and reduced customer trust in product freshness.

Our Approach

We built an AI-driven perishable inventory management system focused on shelf-life optimization and FIFO execution. Key principles included:

Freshness Assurance: Real-time shelf-life tracking across inventory
Waste Reduction: Optimized allocation and demand-based replenishment
FIFO Enforcement: AI-supported workflows for storage and shelf stocking
Compliance: Automated tracking for food safety regulations

AI-Powered Perishable Inventory Management

Automated shelf-life tracking using product metadata and IoT sensors
FIFO-based stocking and restocking optimization
Demand forecasting tailored to perishable product lifecycles
Dynamic discounting recommendations for near-expiry products
Real-time dashboards for store managers and supply chain teams

Implementation Process

Phase 1: Data integration from ERP, POS, and warehouse management systems
Phase 2: AI model training on demand and expiry data
Phase 3: Pilot rollout in 20 stores with high perishable turnover
Phase 4: Full deployment across all warehouses and retail locations

Quality Assurance

Daily monitoring of shelf-life predictions vs. actual expiry
Automated alerts for non-FIFO handling detected in workflows
Random audits for compliance with food safety standards
Continuous feedback from store managers and supply chain teams

Results

Productivity Improvements

90% compliance with FIFO stocking across all stores
Waste from expired goods reduced by 35%
20% improvement in replenishment accuracy
Labor hours for manual expiry checks reduced by 50%

Business Impact

$4.5M annual savings from reduced write-offs
Improved compliance with food safety regulations
Enhanced customer satisfaction due to fresher products
Stronger brand reputation for sustainability and food quality

Technical Implementation

AI Framework: Forecasting + optimization models tailored to perishable lifecycles

IoT Integration: Sensors for real-time shelf-life monitoring

Automation: FIFO-based replenishment and stocking workflows

Dashboards: Expiry tracking and waste-reduction KPIs for managers

Key Features

Real-time shelf-life visibility across locations
AI-enforced FIFO stocking and picking
Dynamic discounting for near-expiry products
Automated compliance tracking and reporting
Demand forecasting for perishable categories

Client Feedback

“”

We used to lose millions every year to expired goods. Now, with AI-guided FIFO and shelf-life tracking, our waste is down, compliance is up, and customers notice the difference in freshness.

Implementation Timeline

Before AI Implementation

High losses from expired perishable stock
Inconsistent FIFO handling at store level
Manual expiry checks taking significant labor
Limited visibility into root causes of waste

After AI Implementation

35% less waste from expired goods
90% FIFO compliance across all stores
50% fewer labor hours spent on expiry checks
Transparent expiry tracking and compliance reporting

Quality Control Process

Automated expiry alerts across warehouses and stores
Escalation workflows for at-risk stock
Audit trails for compliance with food safety standards
Continuous optimization from sales and waste feedback data

Implementation Challenges

Integrating expiry tracking with legacy POS and ERP systems
Training store staff on AI-enforced FIFO workflows
Handling edge cases like damaged packaging or partial returns
Calibrating models across different product categories with unique shelf lives

Continuous Improvement

Monthly model retraining with updated expiry and waste data
Seasonal demand forecasting adjustments
Expanded IoT sensor use for cold storage monitoring
Ongoing feature development for sustainability tracking

Future Enhancements

The retailer is exploring further AI-driven features:

Integration with customer-facing apps for near-expiry discounts
Predictive supplier ordering for short-lifecycle products
Sustainability dashboards tracking waste reduction goals
AI-powered shelf scanning for automated expiry detection