The Intelligent Food Supply Chain Can Reduce Waste

Stephen DeAngelis

July 08, 2019

People not only need to eat most people love to eat. They enjoy the tastes, textures, aromas, appearance, and even sounds of the foods they eat. They appreciate variety — as they say, variety is the spice of life. Nevertheless, most people give little thought to how their food gets to their tables. Alicia Dimas, Content Executive at the Chartered Quality Institute, observes, “A complex and sophisticated global food supply chain is needed to deliver the variety of foods consumers have come to expect on supermarket shelves.”[1] In addition to variety, consumers expect their food to be both safe and fresh. In order to ensure that’s the case, stakeholders need end-to-end supply chain visibility and accountability. Having such a capability also reduces waste and, when recalls become necessary, decreases the impact of the recall. Little wonder the food industry is pushing hard for a digital supply chain. Heinz Strubenhoff (@HStrubenhoff), a Senior Private Sector Specialist at the World Bank, explains, “Worldwide, 570 million farmers and millions of agribusinesses, traders, and retailers supply 7.6 billion people with food. Digital solutions will dramatically reduce time, costs, and waste in today’s highly complex food supply chains.”[2]

Fighting food waste in the supply chain

The global population is predicted to top out northward of 9 billion people later this century. Feeding all those people, while simultaneously confronting the effects of climate change on agriculture, is a major concern. Reducing food waste could dramatically impact our ability to feed a growing population. Krishna Thakker (@krishna_thakker) reports, in the U.S. alone, “Food waste costs retailers about $18.2 billion a year, according to Refed, a nonprofit organization dedicated to fighting food waste in the U.S. In total, food retailers generate 8 million tons of waste a year and 23% of total landfill waste comes from containers and packaging, according to the Environmental Protection Agency.”[3] Strubenhoff notes that the food waste problem affects both rich and poor countries, but in very different ways. He explains, “Roughly a third of the edible parts of produced food is lost in supply chains. In poor countries, more food is lost on farms or between the farm and market due to lack of regular market access, inadequate post-harvest storage, poor transportation, and lack of food processing facilities. In rich countries, more food is lost in retail shops and consumers homes.” Combating waste requires the active participation of all stakeholders, including farmers, aggregators, processors, wholesalers, retailers, and consumers. Changing consumer behavior may be the most difficult end to achieve.

Reducing waste with an intelligent supply chain

Both Karl Pearson, a famous statistician and founder of mathematical statistics, and Peter Drucker, a well-known management consultant, have been attributed with the statement, “That which is measured, improves.” Visibility and implementation of a digital supply chain allows the food journey to be followed, measured, and, hopefully improved. Measuring begins with sensors. Matt Leonard (@Matt_Lnrd) reports, “Applying sensor technology to the food supply chain to increase traceability could reduce food waste by between 5% and 7%, according to a new report from the World Economic Forum (WEF).”[4] The other thing sensors can help accomplish is identifying who is accountable. There is an old saying that goes, “When everybody is responsible, nobody is responsible.” Leonard notes, “Enhanced food supply chain traceability will make it easier to identify where losses are occurring, so the issues can more quickly be addressed. ‘Once the primary causes of food loss and waste have been identified … the appropriate stakeholder can better address the problem,’ the [WEF} report said.”

Beyond sensors, technologies involved in the digital supply chain include the entire Internet of Things (IoT) ecosystem (i.e., sensors, connectivity, and analytics), and, increasingly, blockchain. The analytics part of the ecosystem is provided by cognitive technologies (i.e., AI platforms). Together these technologies can provide much greater visibility and accountability. Strubenhoff writes, “Imagine for a moment the potential global impact of halving food waste. About 1.3 billion tons of food is wasted annually. (Ignore for a moment that measuring food waste in value chains is difficult and not yet fully solved.)” He rhetorically asks, “How many of today’s 800 million malnourished people could benefit if we also assume that waste is transformed into supply?” His answer:

“Assuming that about 200 kg of food is needed per person in cereals-based diets, 650 million tons of food not wasted but suitable for consumption can feed 3 billion additional people. This is more than three times the number of today’s malnourished. There isn’t a linear relationship between food waste and hunger, but it is clear that there is no shortage of food in the world today. At the same time, a 50 percent food waste reduction would save 2.2 Gt of carbon emission equivalents. This is more than a third of emissions in the United States, the second largest carbon emitting economy in the world.”

He believes the goal of reducing food waste by 50% is achievable. He notes, “Creative entrepreneurs and innovators are already showing the ways to digitize food supply and greatly reduce waste.” Digital technologies he discusses include mobile platforms that link farmers to retailers, productivity solutions that deliver weather forecasts, market information, finance, and improved farm practices to farmers, technologies that monitor the journey of fruits and vegetables to ensure their freshness, and apps that help charity organizations collect food at retail outlets and distribute it to thousands of people in need. Arlene Karidis (@Karidis1) adds, “Technology is playing a key role in reducing and preventing food waste across the supply chain and from one business type to another. It’s facilitating data sharing and insight gleaned from that data at unprecedented speeds. Online tools enable restaurants to order and do inventory smarter and more efficiently. Vendors gain insight into customers’ buying habits, assisting in their long-term planning. And businesses with excess food are matched with nonprofits to move perishables quickly.”[5]

Concluding thoughts

Leonard asserts, “The inefficient supply chain is one of the main reasons for food waste.” Obviously, implementing a digital supply chain can help address some inefficiencies. Strubenhoff concludes, “Reducing food waste along food supply chains can help to reduce hunger and malnutrition. It can also help to reduce the carbon footprint of today’s complex — and grossly sub-optimal — food distribution systems. Digital solutions can optimize the amount of food we buy and dramatically reduce waste. … If we can find ways to encourage creative entrepreneurs to develop solutions to reduce food waste and carbon emissions in places like China and India, 10 billion people could eat well and live comfortably on our planet.”

Footnotes
[1] Alicia Dimas, “Keeping track of the food journey,” Supply Chain Digital, 1 June 2019.
[2] Heinz Strubenhoff, “The digital revolution—a new weapon against food waste, hunger, and emissions,” Brookings Institution, 6 September 2018.
[3] Krishna Thakker, “Food waste is an $18.2B problem grocers are struggling to solve,” Grocery Dive, 22 October 2018.
[4] Matt Leonard, “Report: Sensors can reduce food waste by 7%,” Supply Chain Dive, 29 January 2019.
[5] Arlene Karidis, “How Technologies are Cutting Food Waste Across the Supply Chain,” Waste360, 29 March 2018.