|
Return to Main
Page | Contact Us | Sales Information
|
||||||||||||
|
Return to Main
Page | Contact Us | Sales Information
·
FIFO System
– The Existing Protocol
Dealing
with both of these types of losses can be achieved by a different approach
to perishable product management. The typical system that is used in
conjunction with a product date stamping system is FIFO. Using FIFO (First In, First Out), the product with the soonest
expiration date is preferentially placed on the retail shelf for sale.
With this system, it is still possible to put spoiled product in front of a
customer that is not fresh to the taste, or possibly not wholesome or safe.
This is because the variation in the temperature history of any given
product parcel is fairly large, and some may actually expire before the
expiration date says they will. Product that can be “judged to be
expired” before the actual stamped date can be removed and discarded.
This is an important part of “shrink”. Of course, if the product
has actually expired before the stamped date and is purchased by a consumer,
other more significant losses may occur (food safety problems, loss of
customer confidence, etc.).
LSFO
System – The Use of TTI’s as Replacement for Shelf Life Dates
The
use of CheckPoint® TTI labels on products offers a different and more efficient
alternative. Instead of a FIFO system, TTI labels allow a LSFO (Least
Shelf Life, First Out). In this system, if the temperature sensing and
integration function of the labels shows an earlier signal in the CheckPoint® label (signaling a
the need for a stock rotation decision), then that product is
rotated to the retail shelf. This rotation is totally independent of
the product dating. Under this scenario, the possibility of placing
“bad product thought good” in front of the consumer is almost reduced to
zero. The LSFO system also permits the economic use of product that is
still good, even though a date stamping system might mandate it’s
discarding. Generally, however, the “early warning” aspect of the
LSFO system purges old product from the system before this has any
significance to product rotation.
The
superiority of the LSFO system using CheckPoint® labels was
scientifically proven in a case study
[Footnote 1]
performed at the National Technical University of Athens by Dr. Petros
Taoukis. Using actual data on
the known shelf life at different temperatures of two prepared food products,
and combining these data with field data on retail storage temperatures, Dr.
Taoukis was able to perform a comparison of the FIFO system and the LSFO
system using CheckPoint®. The studies compared the outcomes in terms of product losses in each
system.
The
findings of the study are extremely revealing:
This example was a
conservative demonstration of the utility of the LSFO approach. The salad product had an 84 day shelf life, and is a relatively
stable product. The LSFO method may very well have more dramatic results with
perishable products of lesser stability and shelf life.
Economic
Consequences of an LSFO Method
If
the savings of the example presented by the quantitative study of Dr.
Taoukis is correct (15%), then the cost factor associated with employing a
CheckPoint® LSFO system is easy to calculate.
Under
the assumption of a 15% shrink factor, and a corresponding improvement with
the use of the LSFO method, the following analysis shows how the system pays
for itself even at low value recovery (low value perishable commodities).
Cost
Basis of Master Carton
Typical
Cost of CheckPoint® Label[Footnote 2]
Label
as % of Total Cost
FIFO
Shrink %
Cost
of Shrink using
FIFO System [per Master Carton]
Shrink
Reduction with LSFO [per Master Carton]
$
5
$0.
2.0%
15%
<$0.75>
(loss)
$0.65 (gain)
$10
$0.10
1.0%
15%
<$1.50>
(loss)
$1.40 (gain)
$20
$0.
0.5%
15%
<$3.00>
(loss)
$2.90 (gain)
$50
$0.10
0.2%
15%
<$7.50>
(loss)
$7.40 (gain)
Basically,
this chart shows the dollars and cents consequences of using a LSFO
system. On the first line (master carton costs $5), the shrink loss
with FIFO is $0.75. This same line shows a bottom line net gain using the LSFO system with a
CheckPoint® TTI of $0.65. Of
course, if the shrink factor were greater than 15%, then the analysis would
show greater gains. This analysis shows that the use of CheckPoint® in an LSFO
approach can be economically viable, and especially significant with high
value products. Similar spreadsheet analyses will yield the same or better
cost benefit consequences.
Conclusion:
Almost
every conceivable use of CheckPoint® labels as a product management
tool for stock rotation using a LSFO protocol will create some net positive
cash advantage. If the CheckPoint® labels are being used for food safety,
product integrity or other benefit, using a parallel LSFO system will ensure
that the program will be cost beneficial and “pay for itself”. Our
white paper treats this issue in detail.
Footnotes
[1]
Taoukis,
P.S., Bili M., Giannakourou M. (1998).
“Application of shelf life modeling of chilled salad products
to a TTI based distribution and stock rotation system.“ Proceedings of
the International Symposium on Applications of Modeling as an
Innovative Technology in the Agri-Food-Chain Ed. L.M.M. Tijskens,
Wageningen, Netherlands, p. 131-140.
[Click above to view whole article.]
[2]
The typical cost with application and storage in low volume usage is
shown at $0.10 in this analysis.
Cost of the CheckPoint® III system would be substantially lower than
$0.10 at high volume. | |||||||||||||||||||||||||||||||||||||||||||||||||
