Stop the waste! – Optimizing the food supply chain

Posted on 2014/04/14 by David Weaver

Many of you may have heard this from your parents while growing up: “there will be no dessert tonight if you do not finish your vegetables/clean your plate/…” and so on. I don’t know about you, but I always found a way to hide the broccoli and enjoy my dessert at the end of the evening! Just when I thought the threats were over, having moved to Germany for college, I was informed by my German classmates that if one does not clean his plate, the next day will be cloudy and rainy! The valiant efforts of parents, friends and colleagues across the globe to try and curb food waste are commendable, the fact is however, food waste remains a real problem.

Food waste can be defined as any food that is meant for human consumption that, at one stage or another, was removed from the supply chain process. In a Worldbank Infographic from 2014, it is estimated that approximately 1 billion metric tons of food is wasted or lost, which amounts to approximately 1/3 of the total food produced for human consumption. 56% of this waste stems from developed countries, and the other 44% of waste comes from developing countries. In North America and the Oceania regions, 1,520 calories are wasted per person, per day. 61% of this waste happens at the consumer level.

Consumers are however not the only source of food waste, as retailers, wholesalers and producers struggle with the challenge of creating an efficient food supply chain. In developing countries for example, much of the food waste and loss occurs in the earlier stages of the supply chain. Limitations in harvesting techniques as well as poor storage and cooling facilities lead to a large amount of wasted food. In developed countries, the problem shifts to the later stages of the supply chain, including consumers, retailers and wholesalers. At the consumer level, “best before,” “use by,” and “sell by” dates can be helpful in determining whether a food product is still okay to eat, however, these dates also create confusion. In the United Kingdom, for example, it is estimated that 20% of food wasted in households is a result of confusion about expiration dates. At the wholesale and retail level, a lack of coordination and communication amongst key supply chain players is cited as a top contributing factor to food waste.

Based on the facts above, it is clear that the food supply chain is deserving of some attention. Creating awareness and bringing together experts from the various food supply chain stages is one way to combat food waste and increase coordination. On May 7th & 8th the ‘Save Food World Congress’ will be held in Düsseldorf, Germany. The ‘Save FoodCongress’ is organized in close cooperation with the ‘Food and Agriculture Organization’ as well as the ‘United Nations Environment Programme’ (UNEP). The Congress provides an opportunity for stakeholders in the food supply chain, including packaging firms, logistics managers and retailers to come together and discuss new measures to increase supply chain efficiency in the food branch. Congress organizers have set the goal of reducing food waste by 40% by the year 2020.

Another effective weapon in the fight against food waste is the utilization of available technology. Wholesalers for example, can decrease food waste by improving their demand planning and inventory management processes with intelligent software solutions. Okle, a medium-sized food wholesaler located in Singen, Germany, has done just that, and the results have been quite positive. Okle plays a major role in independent food retail and specialized trade in Germany. The wholesaler supplies more than 450 retailers with over 11,000 different products including dried, fresh and frozen goods.

It was a dissatisfying quota of write-offs (too much waste!) that motivated Okle to search for an inventory management solution that could increase its efficiency and reduce waste. Through implementing an intelligent inventory optimization software system, Okle was able to reduce its stock levels by 12% while increasing its service levels and reducing waste, all within the first year of use. Based on the successful results realized by Okle, I would say it is time we turn our attention toward today’s technological advancements and away from silly threats such as rain and clouds in the quest for an optimized food supply chain.

I encourage you to request a copy of the Okle success story to read about the benefits that can be gained through implementing today’s intelligent inventory management solutions.