How to Manage Catch Weight Inventory

For a pretty straight-forward concept, catch weight management generates a fair amount of questions:

• What is catch weight management?
• When is it required?
• What processes are affected by it?
• What benefits can it provide?
• Which software solutions support it?

For companies that deal with certain food or other variable weight items, supporting strong catch weight management in your food distribution software is downright critical. When you buy in bulk, and your end product weight varies, capable catch weight management is a pre-condition for effectively managing business processes (i.e. controlling inventory, managing costing, minimizing taxes, and accurately invoicing customers).

What Is Catch Weight Management?

To put it simply, catch weight management is a tracking approach that allows for the identification of both an average per item quantity/weight as well an actual per item quantity/weight.

The idea of an "actual per item quantity" clearly seems to makes sense on the surface. But the additional requirement for an "average per item quantity" tracking metric might raise some questions: Average of what? Why would you need to use an average versus an exact weight? An example can help illustrate.

Consider a sample order process that relies on catch weight management:

Step 1: Receive the Order

Your customer calls about ordering a 12 count case of frozen turkeys. You don't yet know which turkeys are going to be shipped, as your warehouse workers will pick the case when the order is ready to ship. But you are able to let your customer know the average weight of a turkey is 15 lbs and they will be billed $1.50 per pound, with the invoice total based on the exact weight of the case that is shipped. The estimated cost is $270 for the expected 180 pounds of turkey. That all sounds great to your customer and they give the order the green light.

Step 2: Provision the Product

You internally relay the order for a case of turkeys to the warehouse. Your warehouse selects a specific case of turkeys to ship. The turkeys are weighed and it turns out you've got a set of slightly skinny turkeys. The total weight is discovered to be only 150 pounds, rather than the estimated 180. Not a problem with catch weight management. That's still well within the reasonable range to meet your customer's expectations and the turkeys are shipped. Away they go!

Step 3: Bill the Customer

Knowing your customer would be displeased to pay for 30 pounds of turkey which they did not actually receive, you leverage your catch weight tracking system to bill the customer based on the exact weight, rather than the original estimate derived from the average weight. The cost of 150 pounds of turkey works out to $225, which is reflected on the final invoice that is sent to your happy, turkey-loving customer.

Catch Weight Inventory Illustrated

It might seem strange that an inventory unit can have multiple weights listed. However, because the average weight of a unit may differ from the exact weight on an item by item basis, catch weight management is required. Consider the difference in how catch weight tracking would lead to different average and exact weights for the same case of turkeys.

That's catch weight management in action. Not so tricky after all. Again, the basics of catch weight management entail a dual quantity inventory tracking system allowing for the data storage of an exact and average weight.

Side note: You've likely heard the terms "catch weight" and "nominal weight" used more often than "average weight" and "exact or actual weight." Actual weight is the same as catch weight. And average weight is often referred to as the nominal weight.

When Is Catch Weight Management Required?

Catch weight management is a common requirement for food manufacturers, distributors, and retailers. In fact, any company that needs to convert from a relative quantity (eg, case, box, carton, pallet) to a line item price determined by exact weight is a likely candidate for catch weight management.

However, unit of measure conversion scenarios are not the only instances where catch weight management comes into play. Some products are indeed purchased in the same unit as they are sold. But due to processing or environmental factors, unit weight may decrease between the time the item is sourced and brought to market. For example, grain suffers some shrinkage due to evaporation over a period of storage.

Addressing the Business Challenges of Catch Weight Management

Catch weight management is often thought of as an inventory feature. Without a doubt, it definitely is that. But the ramifications of catch weight management extend beyond the inventory module.

To get an idea of the breadth of catch weight tracking across the organization, I reached out to Mark Miller, Vice President of Supply Chain at AFS Technologies--a company whose ERP product is frequently chosen by businesses looking to support catch weight management. Mark noted that whether a customer is selling poultry, fertilizer, carbon fiber rolls or any other product that might require catch weight tracking, they must address the functionality "throughout the ERP and warehouse management system (WMS) process to seamlessly manage catch weights." Ultimately, he indicated that without broad, cross-functional software support, "Accurate inventory cost and customer pricing are almost impossible to deliver."

So which workflows and software modules must be adapted to support a catch weight approach? The list includes:

• Purchasing
• Shipping/receiving
• Estimating
• Stock labeling
• Job costing
• Production planning and MRP
• Price determination
• Invoicing

Joe Scioscia, Vice President of Sales at Vormittag Associates, also shared a run-down of some of the most important challenges they help their customers solve via the catch weight management features in S2K Enterprise. He identified that catch weight management was critical to support accurate:

• Billing,
• Tax charge application,
• Stock level verification, and
• Inventory valuation.

Joe was candid about the net effect for companies who don't have sufficient tools to meet the listed challenges, noting that their competitiveness, customer satisfaction, and, indeed, overall profitability all suffer.

Which Options on the Market Support Catch Weight Tracking?

Given the importance of catch weight management features to many manufacturers, distributors, and retailers, it shouldn't be surprising to find out that there is a wide variety of choice when it comes to sourcing software options.

Here are some popular software products which support catch weight management: