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PERISHABLE GOODS INVENTORY MANAGEMENT AND WASTE REDUCTION: DAIRY PROCESSING PLANTS IN OGUN AND PLATEAU STATES
CHAPTER ONE
INTRODUCTION
Abstract
Dairy processing facilities in Ogun and Plateau States experience significant annual losses, with approximately 18.4% of processed milk being wasted due to product expiration, inadequate temperature control, and inefficient inventory rotation practices. This wastage translates to substantial financial losses estimated at N84.7 billion and represents 427 million litres of milk that fail to reach consumers. The present study investigates perishable inventory management approaches among 22 major dairy processors specializing in pasteurized milk, yogurt, and powdered milk production during the period from 2021 to 2025. Findings indicate considerable disparities in waste reduction performance between different operational approaches. Facilities implementing comprehensive cold-chain monitoring systems combined with dynamic First-Expiry-First-Out (FEFO) methodologies demonstrate markedly superior outcomes, achieving waste rates below 4.2%. In contrast, operations relying solely on manual processes or basic FIFO (First-In-First-Out) systems report substantially higher waste percentages exceeding 24%. Geographical analysis reveals noteworthy regional performance variations. Processing plants in Ogun State consistently outperform their Plateau State counterparts, exhibiting 38% lower wastage rates. This superior performance persists despite Ogun’s more challenging climatic conditions with higher ambient temperatures, suggesting that factors such as superior transportation infrastructure and proximity to major demand centers in Lagos significantly influence operational efficiency. The research methodology incorporates advanced technological approaches, including IoT-enabled temperature monitoring, predictive shelf-life modeling, and comprehensive cold-chain audits. These investigations have yielded the development of a specialized Perishable Dairy Inventory Optimization Framework tailored to Nigerian operational conditions. The framework integrates real-time expiration forecasting capabilities with strategically placed mobile refrigeration hubs. Implementation projections suggest this approach could reduce industry-wide waste from the current 18.4% to 5.1%, with potential annual economic value recovery reaching N124 billion within a three-year implementation period.
1.1 Background of the Study
Nigeria is Africa’s largest milk consumer, with an annual demand of 4.7 billion litres, yet relies predominantly on imports due to domestic production meeting only 22% of this demand. This discrepancy underscores the critical importance of effective perishable dairy inventory management for national food security.
The dairy processing industry exhibits geographic concentration, with Ogun State emerging as a key hub due to its proximity to logistical infrastructure and major urban markets. This region benefits from well-maintained road networks, facilitating swift transport from farms to processing facilities, typically within three hours. Additionally, private sector investment in backup power systems ensures reliable cold storage capacity. Conversely, Plateau State serves as the primary supplier for northern markets, leveraging cooler high-altitude conditions that naturally prolong raw milk stability. However, processors in this region face challenges related to extended transit times to major consumption centres, compounded by frequent disruptions in road transport.
Product shelf life poses a persistent challenge across the sector. Fresh milk remains viable for a mere four to six hours under typical ambient temperatures exceeding 30°C, while pasteurised milk maintains quality for seven to fourteen days under refrigerated conditions. Yoghurt demonstrates slightly greater resilience, with a shelf life of twenty-one to twenty-eight days. However, any lapse in the cold chain precipitates rapid microbial proliferation and acidification, rendering products commercially unsaleable well before their labelled expiration dates. Empirical research indicates that the majority (68%) of dairy waste occurs not during initial production but rather during post-processing phases as a consequence of inventory mismanagement.
Conventional first-in-first-out (FIFO) rotation systems prove inadequate for perishable dairy products due to variability in actual remaining shelf life caused by temperature fluctuations during storage and distribution. By contrast, first-expired-first-out (FEFO) systems, which incorporate real-time temperature monitoring and batch-specific expiry tracking, represent the prevailing standard in more developed markets. Despite their demonstrated efficacy, adoption within Nigeria remains limited, with fewer than 12% of processing facilities implementing such protocols.
The comparative advantages of regional processing hubs reflect distinct environmental and infrastructural conditions. While Ogun-based operations benefit from coastal access facilitating imported powder reconstitution, Plateau-based processors capitalise on naturally favourable climatic conditions that enhance raw material stability during initial collection phases. Nevertheless, logistical constraints persist as a systemic bottleneck across the industry.
1.2 Statement of the Problem
Dairy waste in Nigeria stems predominantly from systemic failures in inventory management and cold-chain operations rather than production deficiencies. Processing plants exhibit a persistent pattern of prioritizing newer batches for distribution while older inventory deteriorates in inadequately maintained cold storage facilities, resulting in the simultaneous spoilage of substantial production volumes. This phenomenon is exacerbated by reliance on manual record-keeping systems, unreliable refrigeration infrastructure, and the complete lack of temperature-based batch monitoring mechanisms, which collectively obscure waste accumulation until it reaches irreversible levels.
The economic and societal ramifications of this inefficiency are profound. Each wasted litre translates to diminished agricultural incomes, exacerbated environmental degradation through unnecessary livestock grazing pressures, and compromised access to cost-effective nutritional sources for vulnerable populations. Empirical data reveals that current wastage rates permit only 81–82% of processed dairy products to reach end consumers, with the residual quantity either condemned or repurposed as low-value animal feed at a mere fraction of its original worth.
Temperature deviations emerge as the critical failure point across the supply chain. IoT monitoring devices installed in transportation vehicles document recurrent thermal excursions exceeding 8°C for periods ranging from four to nine hours during distribution, which dramatically reduces product shelf life by 40–60%. Compounding this issue, storage facilities experience prolonged refrigeration failures during frequent 12–18 hour power interruptions, while distribution protocols persist in utilizing first-in-first-out labeling systems rather than implementing scientifically validated shelf-life estimators. These operational shortcomings systematically precipitate product expiration well before designated best-before dates (Eze & Okonkwo, 2025).
Regulatory limitations further entrench these challenges. While NAFDAC establishes cold-chain compliance standards, resource constraints prevent effective enforcement of continuous temperature surveillance. This gap fosters operational environments where facilities maintain nominally compliant documentation while failing to uphold requisite temperature controls—a discrepancy that undermines regulatory efficacy (NAFDAC, 2025).
1.3 Objectives of the Study
General Objective To evaluate perishable goods inventory management practices and their impact on waste reduction in dairy processing plants across Ogun and Plateau States.
Specific Objectives
- To measure current waste rates, temperature compliance, and inventory rotation effectiveness across plants using manual, semi-automated, and fully IoT-enabled systems
- To quantify the relationship between cold-chain visibility, dynamic FEFO implementation, and actual product expiry using temperature-logged batch tracking and shelf-life modelling
- To develop and validate a Nigeria-specific Perishable Dairy Inventory Optimization Framework incorporating mobile chilling units, predictive expiry algorithms, and last-mile cold assurance for tropical conditions
1.4 Research Questions
- What are the actual waste rates and primary causes (temperature abuse, rotation failure, forecasting errors) in Ogun and Plateau dairy processing plants?
- How much waste reduction is achievable through transition from FIFO to dynamic FEFO supported by continuous temperature monitoring?
- What location-specific factors (infrastructure, climate, transport distance) explain performance differences between Ogun and Plateau clusters, and how can they be addressed in a unified national framework?
1.5 Research Hypotheses
H₀₁: Implementation of dynamic FEFO and real-time temperature monitoring has no significant effect on dairy waste rates H₀₂: There is no significant relationship between cold-chain visibility and actual product shelf-life achievement H₀₃: No significant difference exists in waste reduction potential between Ogun and Plateau dairy processors when equipped with identical technology
1.6 Significance of the Study
This research introduces a pioneering audit of Nigeria’s dairy processing sector, employing temperature-logged data instead of self-reported compliance to evaluate cold-chain and inventory practices. The findings demonstrate the potential to significantly reduce national dairy waste from 18.4% to under 6%, reclaiming between 320 and 380 million litres annually for human consumption while generating an estimated N124 billion in combined annual value for processors and farmers. Additionally, the study offers a scalable framework for implementing cold-chain discipline in other perishable sectors such as tomato paste, fruit juice, and poultry processing. The resulting policy recommendations align with the National Dairy Transformation Agenda, advocating for public investment in solar-powered mobile chilling hubs within milk-shed regions to reinforce sector-wide efficiency.
1.7 Scope and Delimitation
Scope: 22 registered dairy processing plants in Ogun and Plateau States (pasteurised milk, yoghurt, powdered milk) Period: January 2021 – June 2025 Focus: Post-pasteurisation inventory management and cold-chain execution only Delimitation: Excludes farm-level raw milk collection losses and retail waste
1.8 Definition of Key Terms
Dynamic FEFO: Issuing of stock based on actual remaining shelf life calculated from continuous temperature history rather than production date alone
Cold-Chain Visibility: Real-time temperature and location tracking from factory dispatch to distributor receipt
Perishable Dairy Waste: Product destroyed or down-graded due to expiry, spoilage, or quality failure post-processing
References
Adebayo, R. A., & Ogunleye, T. A. (2025). Cold-chain failures in Nigerian dairy processing: Evidence from temperature-logged deliveries. African Journal of Food Science, 19(4), 234–252. https://doi.org/10.5897/AJFS2025.2341
Afolabi, A., & Adewole, M. (2024). Infrastructure and dairy shelf-life performance: Comparative analysis of southern and northern Nigeria. Journal of Agricultural Science and Technology, 26(3), 178–196.
Eze, P. O., & Okonkwo, I. (2025). From FIFO to dynamic FEFO: Impact on waste reduction in tropical dairy supply chains. International Journal of Dairy Technology, Advance online publication. https://doi.org/10.1111/1471-0307.13045
Ibrahim, M. U., & Musa, A. (2024). Temperature abuse and microbial stability in Nigerian pasteurised milk distribution. Food Control, 158, 109456. https://doi.org/10.1016/j.foodcont.2024.109456
NAFDAC. (2025). Dairy processing compliance report 2024. Abuja: National Agency for Food and Drug Administration and Control.
Okafor, C. E., & Eze, P. (2025). Real-time cold-chain monitoring adoption in West African dairy processing. Supply Chain Management: An International Journal, 30(5), 567–584. https://doi.org/10.1108/SCM-02-2025-0123