Sixty-Two Days of Biscuits: Rotation, Expiry and a Scheme Order
A supermarket in Hubballi carries about 4,200 SKUs across eight aisles. You are the stock assistant in charge of the biscuit and snack category. On 12 November the category shows 62 days of stock cover against a distributor lead time of six days. While counting, you find 14 cases of cream biscuits with a best-before date of 28 December, 9 cases marked August of next year, and 3 opened cases stacked at the front of the shelf. The godown behind the store is unventilated and reaches 34°C in the afternoon. Sales staff say they push new stock to the front because it 'looks neat and fresh'. The store owner wants to place a fresh festive order worth ₹85,000 with a scheme of 8% extra quantity, and asks you whether to go ahead. Monthly sales of the category are ₹38,000 at cost price.
1. Explain what has gone wrong in this category and identify which of the three stock groups is the most urgent to act on, with reasons.
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Root causes, not 'slow sales'
- Ordering is disconnected from lead time. Cover of 62 days against a 6-day lead time means roughly ten times the needed buffer. With a shelf life of about 90 days, stock ordered today must sell before its own best-before date, so the ordering rule itself creates expiry.
- Rotation is reversed. Putting new stock in front is LIFO. The oldest case is never reached, so it ages in place and the front-facing date always looks recent - which hides the problem from a casual look.
- Opened cases at the front lose the protection of the carton, absorb moisture in a humid godown-to-shelf trip, and are hard to count, so records drift.
- The 34°C godown speeds up fat rancidity in cream-filled biscuits. Quality falls before the printed date, so the date alone understates the risk.
Urgency ranking
- 14 cases dated 28 December - highest. Shelf-life loss is irreversible; the only recoveries are a discount push, bundling, or a return to the distributor within the allowed window.
- 9 cases dated August next year - safe if moved to a cool, dry, FIFO position.
- 3 opened cases - a housekeeping and counting issue, fix today but low value.
The fix is procedural - a date-check routine, FIFO loading from the back, and a reorder point - not a demand problem.
2. Should the owner place the ₹85,000 order? Support your advice with the arithmetic and the trade-offs.
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Current position (at cost)
- Monthly sales ≈ ₹38,000, so daily ≈ ₹1,267.
- 62 days of cover ≈ ₹78,500 already sitting in stock.
- A 6-day lead time plus a sensible safety buffer (say 5 more days) needs about 11 days of cover ≈ ₹14,000.
What the order does An ₹85,000 order would take cover to roughly (78,500 + 85,000) ÷ 1,267 ≈ 129 days, far beyond the shelf life of cream biscuits. The 8% extra quantity is worth about ₹6,800 of goods - but it also adds volume that must be stored, dated, and sold before expiry.
Held cost versus scheme gain Carrying ₹73,000 of avoidable stock for two months, in a 34°C godown, plus write-off risk on the short-dated cream line, outweighs ₹6,800 of free goods. The scheme rewards buying more of exactly the item with the shortest life.
Recommendation Do not place the full order. Order only proven fast-movers to a value of ₹12,000–15,000, ask the distributor for phased monthly delivery at the same scheme rate, and push the 14 near-expiry cases first through a visible bundle offer. Revisit bulk buying only for long-life lines such as glucose or Marie biscuits, after the godown ventilation is fixed and FIFO is running.
3. Name three numbers you would review every week to check whether the fix is working, and say what each one catches.
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- Days of stock cover by sub-category (stock at cost ÷ average daily cost of sales). Target roughly lead time plus safety, around 10–12 days. This catches the ordering error, because cover creeping up is the earliest warning that expiry is being created again.
- Value of stock within 30 days of best-before (₹). This catches rotation failure. If FIFO is really happening, this figure stays small and stable; if it climbs, someone is again loading new stock in front.
- FIFO compliance from a spot check - take ten facings at random and check that the front pack's date is the earliest in the row. Report as a simple 8/10 score. This catches behaviour, which the money figures only reveal weeks later.
Why these three and not sales alone Sales hide the problem: a store can sell well and still write off stock. Cover catches buying, near-expiry value catches rotation, and the spot check catches daily discipline. Together they cover the three failure points in the chain - order, store, shelf.