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Guide April 16, 2026 · Guidance Team

• ✓ Map all inventory locations and understand their distinct procedures.
• ✓ Enforce strict receiving and reconciliation processes at every touchpoint.
• ✓ Track all finished goods by lot number for traceability and expiry management.
• ✓ Conduct regular physical counts at all locations to ensure data accuracy.

Know Where Every Case Is, Always

Your finished goods inventory isn't just in one place. It's at your co-packer's facility, in transit, sitting at a 3PL, and perhaps a small amount in your office for samples. Each location represents a different point of control and potential for error. The first step is to map out every single location where your finished product could reside. This means having a clear understanding of your co-packer's storage policies, your 3PL's receiving and shipping procedures, and your own internal handling. Don't assume; get specific details on how they record movements. A physical location isn't just a name; it's a distinct inventory bucket that needs its own set of checks and balances. For example, if your co-packer ships directly to a 3PL, ensure you have visibility into both sides of that transaction.

Implement Strict Receiving Procedures Everywhere

Accuracy starts at the receiving dock. Whether it's your 3PL or your co-packer receiving raw materials or you receiving finished goods, the process must be precise. When finished goods arrive at your 3PL from a co-packer, the count on the Bill of Lading (BOL) must match the physical count. Any discrepancies need to be noted immediately and communicated back to the co-packer. Don't sign off on a BOL without verifying the case count and checking for visible damage. This isn't just about preventing fraud; it's about ensuring your inventory records reflect reality. A single miscount on a pallet of 48 cases, multiplied by several pallets, can throw your entire stock level off by hundreds of units, leading to missed orders or unexpected overstock.

Track Every Movement with Lot Numbers

Finished goods inventory tracking isn't just about quantity; it's about lot numbers. Every production run at your co-packer should generate unique lot numbers. When product ships from the co-packer to a 3PL, those lot numbers must be on the shipping documents. When the 3PL receives, they should log those specific lot numbers. This end-to-end lot traceability is critical for recalls, quality control, and managing expiry dates. For example, if you produce 1000 cases of SKU A with Lot 123, and 500 cases with Lot 456, your system needs to know exactly how many of each lot are at each location. Without this, you can't implement a proper First-In, First-Out (FIFO) system, leading to expired product and wasted money.

Conduct Regular Physical Counts and Reconcile

Even with the best systems, physical inventory counts are non-negotiable. You need to conduct regular cycle counts – perhaps monthly for high-volume SKUs and quarterly for others – at all your locations, including your 3PLs and your co-packer's finished goods area. These counts must be reconciled against your system records. Any variances need investigation. Did a shipment go out unrecorded? Was there a receiving error? This is where a platform like Guidance becomes critical, offering real-time stock levels across all locations and co-packers, not just a static spreadsheet. It tracks production runs, PO receipts, and shipments, making reconciliation faster and more accurate than manual methods, reducing the headache of mismatched numbers.

Manage Expiry Dates and Implement FIFO

For food brands, managing expiry dates is as important as managing quantity. Your inventory system must track the manufacture date and best-by date for every lot. This ensures you're always shipping the oldest product first (FIFO – First-In, First-Out). If you have a product with a 12-month shelf life, and you have lots from January and March, the January lot needs to ship out before the March lot. Failure to manage this leads to product expiring in your warehouse or at your 3PL, resulting in costly write-offs. Work with your 3PL to ensure their picking logic prioritizes older lots. Regularly review aging inventory reports to identify potential write-off risks before they become a problem.

Integrate Inventory with Sales and Shipping

Your finished goods inventory isn't a static number; it's dynamic, moving constantly in and out. For effective management, your inventory system needs to be tightly integrated with your sales order and shipping processes. When a sales order is placed, your system should automatically allocate inventory. When the order ships, the inventory should be deducted. This prevents overselling and provides an accurate picture of available-to-sell stock. If your sales team promises product that isn't actually available, you're creating customer service headaches. Ensure your 3PL provides daily or real-time shipping confirmations that update your inventory records, giving you a truthful picture of what's truly left to sell.

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