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This article is sponsored by Cin7, an all-in-one production, inventory and order management platform that helps product businesses—from emerging food and beverage brands to established manufacturers—optimize operations at every stage of the supply chain. Save 50% off your first 3 months. Learn more about Cin7.

Managing production and inventory as a growing food and beverage brand can feel like playing a never-ending game of Tetris—except the blocks are your ingredients, production runs, packaging, and finished goods. Whether you’re producing in-house or relying on a co-manufacturer, the systems you use to manage purchasing, production, inventory, and sales orders can be the difference between scaling efficiently or falling behind.

In this guide, we’re diving deep into production and inventory management best practices for food and beverage brands that either manufacture their products in house or work with co-manufacturers. We’ll explore how to streamline production workflows, reduce stockouts, and build more resilience into your supply chain—without overcomplicating your operations.

Production & Inventory Management for Manufacturers

For food and beverage brands that produce in-house or manage their own manufacturing facility, production and inventory management is at the heart of profitability. You’re not just tracking finished goods—you’re juggling raw materials, packaging, batch runs, labor hours, equipment, costs, waste, and often multiple product variations. A single error in your stock levels or production process can trigger a cascade of delays across production and fulfillment, 

The inventory and production challenges can come in any forms including:

• Lack of visibility into both the materials you have on hand and those in the pipeline
• Inconsistent batch quality
• Wasted ingredients
• Downtime for both labor and machinery
• Bottlenecks from lack of labor or machine availability 
• Packaging and labeling errors
• Aligning production schedules with real-time demand

Without a software solution in place, you’re left relying on spreadsheets, guesswork, and manual checks—which don’t scale.

This is where a manufacturing and inventory management software becomes essential. Platforms like Cin7 help simplify the complexity of production by integrating supplier management, raw material tracking, labor and machine hour tracking, BOMs, purchase orders, fulfillment, and more into a single system. This allows you to reduce waste, stay ahead of reorders, and make smarter production decisions as you grow. Cin7 also gives you reporting to not only meet compliance and regulation requirements but also reports that help you optimize throughout the production and sales process.

1. Build Bills of Materials (BOMs) for Every SKU

A BOM is a detailed list of raw materials/ingredients and components required to make a product. It’s the foundation of a reliable production process.

What to do:

• List every component used to create each SKU—ingredients, packaging, and labels.
• Include yield loss or overage percentages to account for production variability.
• Digitally link BOMs to your inventory system so that material quantities are automatically deducted during production.

This step ensures consistency and makes it easier to forecast future needs.

2. Separate and Track Raw Materials, WIP, and Finished Goods

To maintain clarity and control, inventory should be managed in three categories:

• Raw Materials: Everything needed before production begins.
• Work in Progress (WIP): Items that are partially completed.
• Finished Goods: Products ready to be sold or shipped.

Use clear labeling and warehouse zones for each category, and ensure your system reflects each movement in real time. This will improve accuracy and reduce miscounts.

3. Set Reorder Points and Minimum Stock Thresholds

Running out of a key ingredient or shipping box can grind operations to a halt.

How to set up:

• Determine how much stock you need to avoid disruptions based on past usage and supplier lead times.
• Define a “minimum stock level” for each raw material and finished product.
• Set reorder points to trigger alerts or POs before hitting critical low stock.

This process prevents last-minute scrambles and helps you plan with confidence.

4. Manage Inventory Across Multiple Locations

If you produce in one place but store ingredients or finished goods elsewhere, it’s critical to have location-level visibility.

Tips:

• Track inventory by location in your system—warehouse, kitchen, co-packer, etc.
• Use internal transfer orders to move stock and keep records clean.
• Ensure team members at each site follow the same naming and tracking protocols.

Multi-location management helps you avoid duplicate orders and consolidate materials efficiently.

5. Use Batch and Expiry Tracking for Quality Control

For perishable or regulated goods, tracking by batch and expiry is non-negotiable.

What to do:

• Assign batch numbers and expiration dates at the time of receipt or production.
• Rotate stock using FIFO (first in, first out) or FEFO (first expire, first out). Look for a system like Cin7 that allows you to do both FIFO and FEFO.
• Keep batch records for traceability in case of recalls or quality issues.

This protects your customers, your brand, and your bottom line.

6. Track Labor and Machinery Availability

You may have the ingredients you need but if you don’t have the labor available or the machinery needed is currently in use for another SKU or batch, you’ll run into production inefficiencies that cost you money. Conversely, excess machinery costs you capital and excess labor will drive up your cost of goods sold (COGs).

• Map out machines, machine hours, labor and labor hours needed for each product and batch. Input this information into your software solution
• Track labor hours and availability and available machine hours
• Manage production schedules and runs with a technology solution that can alert you of potential bottlenecks before they arise. 
• Forecast demand and add labor or machinery as needed.

7. Standardize Label Files and Use Barcode Technology and Label Verification

• Use version-controlled templates: Ensure all label designs are locked and only editable by authorized personnel.
• Store all artwork and copy centrally in a software solution
• Use barcode technology to limit human error
• Match printed barcode/QR code to the production run. Systems like Cin7 automatically associate the correct label with each SKU.

8. Connect Production to Sales Forecasting

Production should align with real-world demand, not just internal schedules.

How to align:

• Analyze past sales and seasonal trends to forecast future production needs.
• Connect ecommerce and wholesale order data to your inventory system.
• Adjust production runs proactively to match inventory velocity and avoid excess stock.

A connected system ensures your products are made when—and only when—they’re needed.

In summary: For founders managing their own production, inventory is where cash flow, efficiency, and growth intersect. Start with the fundamentals—clear BOMs, accurate stock tracking, and reorder automation—and scale from there. Tools like Cin7 can help you centralize all of this, and even automate a lot of it for you, but what matters most is building the right process for your team and staying disciplined as you grow.

Production & Inventory Management When You Use A Co-Manufacturer

Working with a co-manufacturer changes how you manage inventory. Instead of overseeing production in-house, you’re coordinating with a third party—often with less day-to-day visibility. But even if you’re not on the factory floor, you still need to stay on top of what’s being produced, when it’s happening, and what materials are required to support it.

There are generally two models when working with co-manufacturers:

1. Tolling: You supply the ingredients and packaging; they provide the labor and equipment.
2. Full-Service: The co-manufacturer sources everything for you and delivers finished goods.

Regardless of the setup, visibility is key. You need to know what inventory is at the co-manufacturer, what’s currently in production, and what’s ready to be received or shipped. Without a system in place, it’s easy to lose track of materials, delay reorders, or miscalculate your inventory on hand.

Tracking Off-Site Production

To manage outsourced production effectively, create a system for logging:

• What materials you’ve sent to your co-man.
• What stage each production run is in.
• When finished goods are expected and how much will be received.

Inventory management platforms like Cin7 can help by letting you create production jobs tied to co-manufacturing. These jobs can link to your raw material inventory and automatically deduct ingredients and packaging when production is marked as complete. That keeps your records clean and ensures accurate inventory and COGS tracking—even if the work happens off-site. These systems also help you manage purchase and delivery of suppliers to the co-manufacturer and track inventory transfers. 

Planning Around Lead Times

One of the biggest mistakes founders make is ordering reactively—waiting until stock is low to request a new run. Instead, use sales data and historical lead times from your co-man to build a proactive reorder schedule.

What this looks like in practice:

• Forecast sales over the next 60–90 days.
• Determine when production should be scheduled to maintain safety stock.
• Account for shipping and production delays by working backward from your delivery deadline.

A clear planning process helps you avoid out-of-stocks, emergency air shipments, and frustrated customers.

Managing Inventory Ownership and COGS

A common source of confusion is ownership: once ingredients or packaging are delivered to your co-man, do they still count as your inventory?

The answer: they should—but only if you’re tracking correctly.

Designate a virtual location in your inventory system (e.g., “Held at Co-Man”) so materials show up in your records even when they’re not physically in your facility. This ensures your balance sheet reflects accurate inventory levels and lets your team plan without second-guessing what’s available.

When it comes to cost tracking, don’t just rely on the invoice from your co-man. Your true Cost of Goods Sold (COGS) often includes:

• Raw materials
• Packaging
• Freight to and from the co-man
• Assembly and production fees

Bundling these costs into a single production job in your inventory system gives you a clear, all-in cost per unit—so you can price and plan with confidence.

Bottom line: Co-manufacturing simplifies production, but adds complexity to inventory tracking. By implementing a process that tracks materials, manages ownership, and plans around lead times, you can stay in control—without ever setting foot on the production floor. And with tools like Cin7, that process becomes streamlined, automated, and scalable.

Inventory is Your Growth Engine

Whether you manufacture in-house or partner with a co-manufacturer, inventory management is one of the most critical operations in your business. Getting it right means more efficient production, stronger margins, and a better customer experience. Getting it wrong means backorders, overstock, and cash flow issues.

As you scale, relying on spreadsheets and disconnected tools just won’t cut it. That’s why systems like Cin7 exist—to give growing food and beverage brands the power and flexibility to manage inventory and production across their entire supply chain, from purchasing to manufacturing to inventory and warehouse management and lastly to sales orders and fulfillment.

Ready to upgrade your inventory system?

Check out Cin7’s manufacturing and inventory management solutions and see how it can transform your operations from reactive to proactive. Foodbevy readers save 50% on their first 3 months.