Battling the scourge of food waste: a collaborative approach
Supermarkets could face penalties if they fail to tackle the growing problem of food waste by 2030. That’s the warning from the government, which has teamed up with Tesco, Sainsbury’s and Waitrose for a campaign to halve food waste over the next 20 years.
It is a laudable goal. The UK has been calculated to waste 10.2mn tonnes of food every year – or £500 worth for every household. Amidst a landscape of food bank usage and increasing concerns regarding environmental sustainability, this is clearly not good enough. However, shifting said goal from theory to practice is rather more complicated. It will require a genuinely collaborative effort across the entire supply chain, with supermarkets, their suppliers – and, crucially, their customers – working together towards the same objective.
Let’s take a closer look at some of the ways in which this collaboration needs to work.
Beware of the BOGOF
‘Buy one get one free’ offers have long been a mainstay of supermarket promotions, along with pricing models which make it proportionally cheaper for customers to buy multiple or larger pack sizes. They are very effective in terms of encouraging larger basket sizes and greater consumer spend.
However, they are also very effective in terms of encouraging customers to buy more product than they need – or, in many cases, than they can possibly use before the product goes off – and therefore driving food waste. Furthermore, this food waste cannot be easily redirected to charities – more on this below – because it is occurring in individual homes.
This is where the collaborative inclusion of customers, as well as supermarkets, needs to begin. Supermarkets need to reduce or eliminate such offers – and consumers need to move their purchasing habits away from them, helping to drive their reduction.
Team up with charities
A wide variety of inspirational organisations such as Fareshare and FoodCycle work to redistribute unsold and unsuitable food from supermarkets to those who need it, from individuals to community groups. Supermarkets and their suppliers can undoubtedly do more to partner with such organisations, prioritising efficiencies in terms of moving unwanted or unsellable food across to them. After all, the faster that food can reach said charities, the less is wasted in landfill.
High-profile partnerships between major food businesses and charities can also work wonders in terms of raising public awareness of the food waste issue. This then encourages better individual practices in the home, again driving a collaborative effort between companies and consumers alike.
Keep control of inventory
Clearly, intelligent and strategic management of inventory is essential for supermarkets and suppliers alike to cut down on food waste. They need to be as agile and responsible to the needs of their customers as possible, which means deploying demand-driven supply chain technologies and processes to enable suppliers to product the right amount of stock in the first place. The demand-driven approach involves placing inventory buffers throughout the supply chain to react to actual demand – which then reduces reliance on forecasts and potential errors. Ultimately, this achieves more stabilised production schedules, improved customer service and potentially significant inventory reductions.
As such, when choosing suppliers, supermarkets should be prepared to prioritise those which can demonstrate an active commitment to demand-driven supply chains and improving their inventory controls. The major supermarkets have huge market clout – they can genuinely drive the adoption of new technologies and new strategies by centralising them in their procurement decisions.
Other aspects of inventory management, which are gradually gaining public awareness, include the issue of ugly or misshapen fresh product, and excessive packaging. Customers are becoming increasingly irate at practices which are perceived to be wasteful, and supermarket buyers and suppliers have a powerful opportunity to get ahead of the curve and insist upon more sustainable practices. Moving away from, say, stocking only immaculately uniform fruit and vegetables, all individually wrapped in unnecessary layers of plastic, both reduces waste directly and performs a powerful marketing exercise.
It’s good to talk
Clear communication throughout the supply chain is critical to addressing the food waste problem. Retailers that are planning particular promotions, for example, need to ensure that their suppliers are aware of these well in advance, so that production and logistics can be organised well in advance. Likewise, if a promotion is finishing soon, it is crucial for suppliers to scale back production to avoid excessively high stock levels which are then wasted.
How this communication looks in practice will, of course vary from context to context, but it needs to include significant planning and forecasting elements, and a shared commitment to the common goal of waste reduction. Waste reduction officers are not yet considered critical roles within retailers and suppliers – but this is starting to change, and rightly so. Assigning dedicated resource to tackling the problem – and giving that resource a suitably high profile – is crucial to raising awareness of food waste throughout the entire supply chain, and forming the foundation for productive, collaborative strategies and working groups.
It is, of course, worth underlining that we are all consumers ourselves. Buying patterns and customer expectations are gradually changing as the profile of food waste gathers momentum. Reports on the painful irony of good products going to waste whilst food bank usage simultaneously rises are beginning to hit home. Consumer behaviour can genuinely help to drive change in supermarkets and suppliers, through everything from avoiding purchasing unnecessarily large quantities of products, to happily buying misshapen or ugly fresh produce which might otherwise be rejected by supermarket buys.
After all, as one particular supermarket chain might underline – every little helps.
By John Perry, managing director at SCALA, a leading provider of management services for the supply chain and logistics sector.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”