How AI is transforming F&B inventory management

Artificial intelligence (AI) is increasingly emerging as a pivotal force in the food and beverage (F&B) industry, transforming not only operational efficiency but also sustainability practices.

If you are an entrepreneur or a tech-savvy executive seeking to optimise your supply chains, learn how the integration of AI in inventory management is proving to be a game-changer, particularly in forecasting stock levels and reducing waste.

Inventory management in the F&B sector has been fraught with challenges. Businesses often overstock perishable items to avoid stockouts, leading to significant waste and financial losses.

By leveraging complex algorithms that analyse vast amounts of historical data, market trends, and consumer behavior, AI can predict the optimal time to restock materials and determine the right quantities to keep on hand.

Alexander Ponomarev, CEO of point of sale and restaurant management software company Syrve spoke to Gulf News saying,

For instance, a beverage manufacturer using AI can analyse weather patterns, local events, and seasonal trends to forecast demand for specific products. If a popular outdoor event is approaching, AI can suggest increasing stock levels for refreshing drinks, ensuring that the company meets consumer demand while minimising the risk of excess inventory.

AI also offers innovative ways to engage consumers, further driving sustainability efforts. With the rise of personalisation in marketing, companies can use AI to analyse consumer preferences and behaviours, tailoring their offerings to match what customers want.

The application of AI in inventory management aligns seamlessly with the principles of regenerative investment, a concept gaining traction among environmentally-conscious entrepreneurs. Regenerative investment focuses on creating systems that not only sustain but actively improve ecological health. By utilising AI to optimise supply chains, businesses can significantly reduce waste levels, thereby contributing to a more sustainable future.

“According to the UN 20230 Sustainable Development Goals, the food tech industry plays one of the key roles in creating solutions to fight food waste globally.

“In Middle East and North Africa alone the food waste is estimated at $3.5 billion (Dh12.8 billion) in costs. We believe tech can address this through a detailed and accurate AI forecasting, preventing the over-stocking of the food within F&B venues,” added Ponomarev.

Take the case of a plant-based food company that implements AI solutions to monitor inventory in real-time. Instead of relying on traditional methods that often lead to spoilage, the AI system continuously assesses sales patterns and environmental conditions. This allows the company to make informed decisions about production schedules, ensuring that ingredients are used efficiently and minimising food waste.

“Practically speaking, restaurants can optimize their ingredient stock levels by leveraging AI algorithms that analyse historical sales data and identify demand patterns to generate accurate forecasts.

“This helps prevent wasteful over-ordering and reduces the risk of running out of popular dishes, thereby minimising customer disappointment. This approach significantly reduces waste, contributing to environmental sustainability,” added Ponomarev.

The financial implications of AI-driven inventory management extend beyond sustainability. By accurately predicting stock needs, you can optimise your financial resources and minimise losses due to overproduction or stockouts. This precision not only benefits the environment but also safeguards investor interests.

“Consider a small brewery that traditionally held a large inventory to buffer against demand fluctuations. With AI tools in place, the brewery can reduce its stock levels while maintaining customer satisfaction. By only producing what is needed, the brewery saves on storage costs, reduces waste, and increases profit margins,” added Edward.

“Moreover, by leveraging AI, businesses can now predict customer demand with up to 98 per cent accuracy, which can be adjusted manually adding into consideration some of the additional factors like holidays, traffic patterns, weather shifts, televised sports, cultural events, and even seasonal trends,” added Ponomarev.

Despite the promise of AI in the F&B sector, some challenges remain. Integrating AI solutions into existing operations can require significant upfront investment and a cultural shift within organisations. Additionally, the reliance on data raises questions about privacy and security, especially as businesses collect consumer information to enhance their predictive capabilities.

Hitesh Sharma, founder and managing director of cater services company Taste Studios have shared insights with Gulf News as to how the integration of AI will increase efficiency, minimise financial losses, and waste reduction.

“While this approach works well, it’s a very manual process and prone to human error, especially when you’re dealing with a high volume of orders or complex menus. AI can really help streamline this, reducing the chances of mistakes in calculations, and ensuring we’re getting the quantities right every time. Plus, it takes a lot of the pressure off our team and saves them a significant amount of time.

“AI’s ability to predict demand based on previous data and trends is a game-changer. Right now, we track ingredient usage down to the gram for things like meats and curries, but it’s still a manual process. With AI, we’ll be able to automate a lot of that — predicting exactly when and how much of a particular ingredient we need to order based on real-time data and future bookings. We’re expecting AI to cut down our manual inventory work by at least 50 per cent, and that’s a huge win when it comes to both reducing food waste and minimising financial losses.

“The biggest challenge with manual calculations is that they rely on experience and the availability of skilled individuals. If someone isn’t familiar with the quantities or a particular menu, there’s room for error, and mistakes can lead to either shortages or surplus.

“That’s where AI comes in — it’s consistent, accurate, and reliable. It can handle a massive amount of data instantly, which frees us from the slower, more error-prone human side of things. We’re not saying the human element will disappear, but AI is definitely a more efficient way to handle the back-end of our inventory and menu calculations.

“AI is going to be a huge time-saver for us when it comes to curating menus. Right now, creating menus manually — especially when we have complex or large-scale events — takes up a lot of energy. You have to go through a lot of data, think about portion sizes, the number of guests, and so on. AI will not only automate these calculations but also offer diverse combinations that we might not have thought of. It’s like having a fresh perspective on menu design.

“The ultimate goal is efficiency. AI will allow us to focus more on creativity and client experience rather than spending time on repetitive calculations and inventory management. By minimising errors and optimising how we handle food orders, we’re aiming for a more sustainable, waste-free approach. We’ve always been about reducing waste at Taste Studio, and AI is a perfect tool to help us push that ethos even further.”

“Inaccurate forecasts could lead to over or under purchasing inventory or ingredients, which can put businesses at risk due to wastage, spoilt perishables or short supply of essential F&B supplies.

“We effectively use AI in our Web Prol'IFIC Hospitality ERP application to identify outliers in purchasing, inventory, consumption, and expiry trends. Many of our customers benefit from this technology by avoiding the need to manually review multiple reports and avoid the risks of human error.

“Instead, they rely on AI-driven insights to control purchase costs, monitor purchasing efficiency, and address critical items, such as those nearing expiration or not moving out of inventory. This ensures timely action and better inventory management.”

As the F&B industry continues to evolve, the role of AI in promoting sustainability will only grow. With increased awareness of environmental issues and consumer demand for sustainable practices, entrepreneurs and executives who harness the power of AI will be well-positioned to lead the charge.

As the food and beverage industry grapples with pressing environmental challenges, the adoption of AI technologies is not just advantageous; it's becoming essential. The urgency for sustainability is more pronounced than ever, with consumers increasingly demanding transparency and responsible sourcing from the brands they support. Companies leveraging AI to enhance their operational efficiency while minimising their ecological footprint are likely to emerge as leaders.

The intersection of artificial intelligence and sustainable practices in the food and beverage sector represents a significant opportunity for innovation. By forecasting demand accurately and reducing waste through regenerative investment strategies, businesses can enhance both their environmental impact and financial viability. As AI technology advances, the potential for a more sustainable and profitable F&B industry is not just a possibility; it is an imminent reality.