Managing inventory for whole-animal wholesalers

Previously we discussed inventory management. The first of the 3 tips was about knowing your yields. You need to be aware of which and how many cuts you are getting from each carcass so you know how much you need to process in order to have adequate inventory on hand.

For wholesalers who are purchasing whole animals, meeting demand on a cut-by-cut basis can be complicated. 

If you know how much meat you need to have on hand, you need to know how much meat to cut to have that meat on hand. In order to accurately fill your product needs, you need to understand your yields.

Since we are dealing with whole animals, it is not a 1:1 ratio.  

It's pretty simple when it comes to ground beef, as everything that doesn't make it into a whole cut or the inedible barrel is going to become either ground beef or sausage. 

Whole cuts, on the other hand, vary widely in what you can get from one animal. Let's say you need 200 lbs of bacon a week, and each pig is giving you about 20. That means you need 10 pigs a week. But what if you're moving 200 lbs a week in spareribs? That's about 10 lbs per pig, which means you need 20. So do you cut 20 pigs? Well unless you can sell 10 more pigs worth of every single kind of cut, then no, you should not cut 20 pigs. See, now it's getting complicated. 

Many times I'll recommend two ways of dealing with this - create new and different products with the "non-movers" to try and get more movement of those products that are not selling.  A very simple example of this is to produce sausages from your pork shoulder if you cannot move enough pork shoulder.  But, you do have to have a market for that sausage, or you're just putting money into a different dead item.

If you cannot move that sausage, and feel that strategy one is not going to work well for you and your current market, try strategy number two: restrict supply of those "best moving" items, call them limited supply, or rare items, and present alternatives to those customers that have been shorted the high-demand pieces.  Now you've created restricted supply, you can charge more for the high-demand products, and hopefully you can entice your customers to try items that are outside of their comfort zone and begin supporting the "whole animal" movement.  

In the end, you'll need to find a balance, especially if that unique product is a profitable one. As you build up slower sellers in your inventory, learn sales techniques that will help you unload that inventory at once. This is our final strategy to highlight: high volume spot sells.  Spot selling is a one-time movement of large quantity.  You may try building a network of customers that might not regularly buy your product, but in a pinch will take a large volume of product at a discounted price.  What's worse, sitting on a large quantity of pork leg, or moving that inventory at a discounted rate so you can continue selling that highly profitable rib, or bacon?  That's a business decision you'll need to make, but you may be surprised at the increased overall profit by discounting your slow movers at certain times of year in order to continue steady flow of your money-makers all year.

What are some strategies that have worked for you in the past???  We'd love to hear about them!

Chris FullerComment