A person in a red shirt is looking at tomatoes.
inventory

What is Perishable Inventory Management?

Managing inventory is a lofty undertaking. Even more so when your company deals with an inventory stocked full of perishable goods. Business owners with perishable inventories must ensure they sell off their stock before the clock checkmarks down and causes their goods to become unsellable, losing money in the process.

That’s why perishable inventory management is such a vital part of any business that works with food and other perishable items. But what exactly covers perishable inventory, and why is the management of this department so important?


Next: How to Manage Obsolete Inventory

Perishable Meaning

Perishable describes the act of something going bad or spoiling, meaning it can no longer be used. Perishable goods have an expiration date, and once they reach that date, they are no longer in a usable condition. Food items like milk and cheese, produce, and meat are all perishable.

Nonperishable goods, on the other hand, are items that don't have an expiration date and are in a usable condition for longer or indefinitely. Non-perishable items include clothing, as well as food items such as canned soup and tea bags.

What is perishable stock?

For many individuals, perishable stock means food inventory. Such an example of perishable inventory includes meat, dairy products, and produce. However, perishable stock can refer to various other items other than food that can go out of date. Take flowers, for example. Florists and plant stores cannot sell flora or fauna that is dead (unless they are selling dried flower bouquets).


Even the tickets associated with concerts, sports games, and live events are considered perishable items, as once the event is over, the ticket loses its value. The same with hotel rooms- a room that sits empty for a night loses revenue for that business.

Therefore, when considering perishable inventories, restaurants and grocery stores will possess this type of stock, but so will hotels, concert venues, and theatre companies.

Examples of perishable stock

  • Such examples of perishable goods and inventory include:
  • Food items such as produce, meat, and dairy products
  • Flowers and houseplants
  • Pharmaceuticals such as aspirin, blood pressure medication and antibiotics
  • Event tickets such as concert passes, theatre tickets, and stand-up comedy nights
  • hotel rooms and accommodations

Importance of Managing Perishable Inventories

Perishable inventory is one of the trickiest types of inventory to manage. Because perishable items go out of date, there is only a short window of time that a business can purchase, stock, and sell merchandise before it loses its value. Therefore, perishable inventory control is of the utmost importance for a business’s bottom line. When a company successfully implements an inventory management system for its perishable goods, they will benefit from:


  • Increased Revenue: Knowing what to purchase and when allows for optimal profitability of your inventory- the turn around on perishable items should happen as quickly as possible.
  • Improved Cash Flow: Having a handle on your inventory means your cash flow will increase as you only order what you need.
  • Customer Satisfaction: managing inventory means understanding the supply and demand of the market- if you stock items that are popular with your customer base, they will continue to purchase them from your store.
  • Fewer Recalls: Keeping tabs on your perishable goods allows you to hear of recalls right away.

How to Manage Perishable Inventory

To implement inventory management and obtain the benefits listed above, you will need to understand how to deal with perishable stock. One of the most popular methods of perishable inventory control is known as the FIFO method.


The first-in,first-out, or FIFO method is when the oldest inventory items are recorded as sold first. This doesn't mean that the oldest items must physically be sold, but that the costs associated with the perishable goods that are purchased first, are the cost expensed first.

Dealing with perishable inventory control in this way means that you are less likely to need to write off the expense of spoiled goods while boosting your overall revenue. Learn more about inventory valuation and costing methods to get the most out of your inventory bottom line.

Tips For Perishable Inventory Management

FIFO is just one of the methods used by businesses to manage inventory successfully. However, there are many things you will need to take into consideration when managing your perishable stock.

Single period inventory system

The single-period inventory system sees you purchasing enough goods for one period. Once the goods from your first order have been purchased, you will assess the state of your current supply and demand before making a second order. This system will limit the number of products that will go bad within a period.

Suppose you order 200 apples for a four-week period. If you sell all 200 apples by the third week, you will wait until after the fourth week to purchase more. By waiting to order further inventory until the next period, you will have less wastage.

Know your stock, use inventory tracking

Inventory tracking provides businesses with a comprehensive understanding of the goods they own, the safety stock they possess and the goods they are looking to sell. Knowing how much or how little stock you have of something gives you the control to do something about it.


If you order 50 cases of a new apricot drink, but none of your customers choose to buy it, then you might decide to cancel the second order before the next period. Maybe you procure a new stock of cherries from a different supplier, and they fly off the shelves. You could look at your inventory numbers and choose to stop buying from the older supplier and only obtain cherries from the new supplier, as they sell better.

Inventory tracking provides you with the information you need to make successful business decisions to increase the company’s bottom line.

Regular inventory auditing

Running an inventory audit means taking stock of your physical goods, and cross-referencing the exact numbers of your perishable items with your business’s financial statements. Routine inventory auditing helps determine how much of a business’s inventory has been lost due to wastage, damage, obsolescence, and pilferage.

As perishable items are more prone to spoilage than nonperishable goods, regular audits can help offset these losses and curb wastage before it gets out of hand. Routine auditing also ensures your inventory and your books have corresponding information; this is especially important for the accounting of perishable inventory.

Know your suppliers

Your business is only as good as the quality of the product you sell. To obtain reliable products, you need dependable suppliers. Having a good business relationship with your suppliers could mean better deals and better goods.

Your perishable goods typically have a short shelf life, meaning you must ensure they arrive at your store in good condition and not already spoiled. Know who the right suppliers are, and only do business with the ones that provide you with high-quality perishables.

Have a contingency plan in place

A good rule of thumb when dealing with any type of inventory- always have a backup plan in place. Being prepared for any outcome is a beneficial strategy for your business.


The storage of your perishable inventory is an essential part of the management process. What happens if your commercial freezer shuts down in the middle of the night and your frozen products are spoilt come morning? Should you have a backup generator in place? Can you write-off the spoiled goods? These are the questions you should ask yourself and the problems you should prepare for if the worst happens.

The Right Inventory Management Software

All of these strategies can be easily implemented in your business using the right inventory management software. Automate inventory processing and stay on top of your perishable stock with low stock alerts, date tracking of goods, and quick purchase orders with all your supplier information and stock quantities all in one place.

Manage your perishable inventory like a professional with inventory tracking software like QuickBooks Online. The right inventory management solution could save you time, money, and effort- try it free today.


Next: How to Manage Obsolete Inventory

Related Articles

Looking for something else?

Get QuickBooks

Smart features made for your business. We've got you covered.

Firm of the Future

Expert advice and resources for today’s accounting professionals.

QuickBooks Support

Get help with QuickBooks. Find articles, video tutorials, and more.