Managing Near-Expiry Products: A Guide for FMCG Distributors

There are 1,000 boxes of product in the warehouse. The total balance on the report looks correct, but 300 of those boxes could become unsellable within a month. And the sales agents do not know which lot to sell first.

The problem is often detected only a few days before the expiration date. At that point the distributor is left with limited options, such as selling the product at a deep discount, returning it to the supplier, or writing it off.

Expiry-date control is not only about checking the dates in the warehouse. The process must join up the stages of receiving, placing, ordering, releasing from the warehouse, and returning the product.

Why is the expiration date important?

Under the legislation of Uzbekistan, the shelf life of a food product is defined as the period during which the product is fit for use based on the established safety requirements. After the expiration date, the product can be dangerous to human life and health.

According to the Law "On Protection of Consumer Rights", the production date, expiration date, and storage conditions must be indicated on a food product. It is forbidden to accept and sell goods that have no production date or expiration date, as well as expired goods.

An expired product is therefore not only a financial loss. It is a matter of food safety, customer confidence, and compliance with legal requirements.

Where does the problem begin?

Losses related to the expiration date usually begin much earlier than the product's final sell-by date.

A distributor may purchase more product than there is demand for. In the warehouse, batches of the same product that expire on different dates get mixed together. The warehouse then releases stock on a first-come, first-served basis, without taking into account the earlier expiration date of a batch that arrived later.

In another case, a product close to its expiration date is identified in the warehouse, but this information does not reach the sales department in time. The agent keeps selling the usual assortment while the at-risk stock sits idle.

Common causes are:

• not counting products by batch;

• failing to enter the expiration date at receiving;

• looking only at the total balance and not analyzing the age of each batch;

• not linking the purchase plan to the real sales rate;

• releasing product from the warehouse in the wrong order;

• slow exchange of information between the sales, purchasing, and warehouse departments;

• mixing returned products with saleable stock;

• non-compliance with storage conditions.

Each batch must be treated separately

The same product code does not mean that all its boxes are in the same condition. If a product is received more than once, the production date, expiration date, and storage history of each batch may differ.

At a minimum, therefore, the following information should be recorded when goods enter the warehouse:

• product name and code;

• lot number;

• date of manufacture;

• expiration date;

• quantity received;

• supplier;

• the warehouse and storage location;

• the required storage conditions.

When receiving a product, the date on the package must be compared with the information on the document. If the date is illegible, the packaging is damaged, or storage conditions are suspected of having been violated, the product should not be added to saleable stock straight away.

Such a product should be kept in a specially designated place until the inspection is complete.

Use FEFO, not FIFO

FIFO means that the product which enters the warehouse first is released first. This method can work when all batches expire in the same order in which they arrive.

For FMCG products, the FEFO principle — releasing the product with the earliest expiration date first — is more important.

For example, a batch arriving in the warehouse in January may be valid until December, while a batch arriving in February may be valid only until October. Under FIFO, the January product is released first. Under FEFO, the second batch, which expires in October, should be sold first.

The Codex Alimentarius manual of the FAO and WHO also recommends using the FIFO and FEFO principles for stock rotation based on label and shelf-life dates. The goal is to reduce food waste.

For FEFO to work, the products must also be placed correctly within the warehouse itself:

• batches close to their expiration date are placed where they are easy to reach;

• the batch number and date are kept visible;

• different batches are not mixed together;

• it is clear to the warehouse worker which batch should be released;

• the batch is checked again when the order is picked.

How much advance warning is needed?

It is not enough to apply a single "30-day warning" rule to all products. The lead time required depends on the total shelf life of the product, the sales rate, the delivery period, and customer requirements.

For example, some retail chains will not accept a product that does not have a certain remaining shelf life. If such a requirement is set out in the applicable contract, the distributor must establish its own internal control limit in advance.

Products can be broadly divided into four groups:

Exact day limits are set separately for each product category. It is not correct to apply the same limit to dairy products, beverages, canned goods, and household chemicals.

Calculate how much stock will sell before the expiration date

The single figure "45 days until the end of the period" is not enough on its own to make a decision. You also need to calculate how many units can be sold during that period.

A simplified example:

• stock balance: 600 pcs;

• average daily sales: 10 units;

• time until expiration: 40 days.

At the current rate, about 400 units will be sold in 40 days. So there is a risk of 200 units being left in the warehouse.

The calculation is as follows:

Risk balance = available stock − expected sales before the expiration date

This is only an estimate. Seasonality, promotions, holidays, demand in the area, and the acceptance requirements of points of sale also affect the result.

Even so, such a calculation reveals the problem before the expiration date arrives.

What to do with products nearing expiration?

The first action should not be to give a big discount straight away. First, determine where and why the product is selling slowly.

Transfer the product to another area or warehouse

A product may sell slowly in one warehouse while demand for it is high in another. By comparing the balance in each warehouse section with the sales rate, the product can be moved to the area where it is needed.

The relocation cost must be lower than the expected loss. Otherwise, the product is simply moved to another warehouse and the problem is not solved.

Assign specific tasks to sales agents

The agent should receive specific information, not a general command to "sell more of this product":

• which product and batch is the priority;

• in which regions it is in demand;

• how much to sell;

• how soon a result is expected;

• which customers can take the product.

It is also risky to judge an agent only by the quantity shipped. If too much product is pushed onto a point of sale, it can later be returned to the distributor.

Temporarily reduce purchasing

Buying a new batch of the same product at the previous volume while near-expiry stock is still in the warehouse only makes the problem worse.

Before placing an order, the purchasing department needs to see the batch age and the sales rate, not just the total balance. If necessary, the next purchase is reduced or delayed.

Apply a promotion or discount, with a calculation

A discount can help sell a product faster, but how large a discount can be given depends on the margin.

Promotional costs should be weighed against the potential loss from writing the product off. When giving a discount, the customer must not be given false or hidden information about the product's shelf life.

Arrange a return with the supplier

If the contract includes a return or exchange option, the supplier should be contacted before the expiration date. In the last few days there may not be enough time to process the request and ship the product back.

It is best to define the return terms in advance and in writing:

• the minimum remaining shelf life required for a return;

• who covers the cost of transportation;

• whether the product will be replaced or credited to the account;

• requirements for packaging and storage conditions.

Separate expired product from saleable stock

Expired or questionable product should not be stored together with active stock. There is a risk of it being added to an order by accident.

Such a product:

• is removed from the stock available for sale;

• is moved to a separate area;

• is recorded in a document with its quantity and batch;

• has the cause of the problem identified;

• is returned or written off according to the applicable requirements and company procedures.

The distributor should not decide how to dispose of an expired product based on guesswork. Depending on the type of product and local requirements, the appropriate procedure is applied.

Storage conditions must also be controlled

The date on the package is valid only if the product is stored under the specified conditions. If the temperature, humidity, sunlight, ventilation, or sanitation requirements are violated, the product may lose its quality even before the printed date.

The following are controlled in the warehouse:

• whether the required temperature for the product is maintained;

• the humidity level;

• the operation of cooling equipment;

• protection from direct sunlight;

• interactions between products stored together;

• package integrity;

• protection against pests;

• storage conditions during transport.

It is not correct to release a product automatically when its storage requirements have been violated, even if it has not yet expired. First, the safety and quality of the product must be assessed in the prescribed manner.

Divide the tasks between departments

It is difficult to manage the problem fully when the expiration date is the responsibility of the warehouse alone.

A short report on near-expiry products can be reviewed every week. The report should consist of information that helps you make decisions, not just a list of products.

What indicators should be monitored?

Limiting control to only the value of products written off gives a delayed result. The following indicators are useful for detecting a problem early:

• available balance by batch;

• days until the expiration date;

• average daily or weekly sales of the product;

• how many days the current balance will last;

• expected at-risk stock;

• the monetary value of near-expiry stock;

• demand and balance in other warehouses;

• the quantity of returned products;

• the value of products written off;

• whether the cause of the problem lies in purchasing, storage, sales, or returns.

Allocating the cost of a written-off item by agent, warehouse, or purchasing department is not meant to assign blame. The point is to determine which process needs to be fixed.

How can Sales Doctor help?

Sales Doctor lets you view sales, order, inventory, returns, and territory information in one system. By comparing how much of a product is left and where, together with its sales rate, a manager can identify areas with overstock.

This information makes it easier to direct near-expiry products to areas with high demand, revise the next purchase, and assign a specific task to the sales team.

The availability of batch number, expiration date, and automatic alerts depends on how Sales Doctor is configured in your company. These requirements should be checked separately with Sales Doctor before implementation.

The system itself does not extend the shelf life of a product and does not eliminate losses on its own. The result depends on correct input of data, compliance with the FEFO procedure, and timely action by the departments.

Practical checklist

Answer the following questions to assess your process:

• Is each batch of product recorded separately?

• Is the expiration date checked during shipment?

• Is product released from the warehouse based on FEFO?

• Is there a warning threshold for near-expiry stock?

• Is the remaining balance analyzed together with the sales rate?

• Does the sales department receive timely information about at-risk stock?

• Does new purchasing take into account the expiration of existing batches?

• Are expired products stored separately?

• Are the reasons for returns and write-offs analyzed?

• Is the task of each department defined in writing?

If the answer to several questions is "no", you need to review control not only at the inventory stage but across the whole process, from receiving the product to selling it.

FAQ

What is FEFO?

FEFO is the principle of releasing first the product that expires first. It takes into account which batch expires earliest, rather than when the product arrived in the warehouse.

What is the difference between FIFO and FEFO?

FIFO releases first the product that entered the warehouse first. FEFO gives preference to the batch that expires first. FEFO is more important for FMCG products with expiration dates.

Can a product be sold if it is close to its expiration date?

The product can be sold if the expiration date has not passed, the storage requirements have not been violated, and the conditions agreed with the point of sale have been met. It is not allowed to give the buyer incorrect information about the product or to hide the expiration date.

How many days in advance should notice be given?

There is no single term. The limit is determined by the total shelf life of the product, the sales rate, logistics, and customer acceptance conditions.

What should you do with an expired product?

It should be removed from the stock available for sale, stored separately, and documented. The next action is determined by the type of product, the contract with the supplier, and the applicable requirements.

Sources

• Food Quality and Safety Act — shelf life and food-safety concepts.

• Consumer Protection Law — requirements for the date of manufacture, expiration date, storage conditions, and disposal of expired products.

• Codex Alimentarius: Guide to Food Hygiene — FIFO and FEFO principles, date checks, and advice against selling expired food.

• WHO: Warehousing and stock management — FEFO definition, batch and shelf-life placement practices.