Each year, some 1.3 billion metric tons, or one-third of all the food produced, is lost or wasted throughout the entire supply chain according to the United Nations’ Food and Agriculture Organization.
Looking at global trends such as the growth in the world population the best usage of resources becomes even more important. What role or impact does supply chain planning have in this topic? The recent blog from Richard Howells ‘How to feed 10 Billion People or the Supply Chain Challenge of the Future’ looks into this from the viewpoint of food manufactures and gives interesting food for thought.
But what contribution is possible within the retail part of the supply chain? Even if the share of retail is only estimated with 5%, this results with above numbers in 6.5 million metric tons or 65 billion kilogram food wasted (plus CO² emission for disposal) -a gigantic number.
How is it possible to reduce waste as a retail company? This is also on the agenda of many leading retail companies. Last week some of the world’s biggest food retailers announced their participation in 10x20x30, a global effort to halve food loss and waste by 2030.
Surely one possibility to have less waste is better planning. The better you know what you are going to sell, the better you can plan your replenishment quantities, the less needs to be thrown away. Knowing what consumers really want and when -this is the ultimate driver for a better and automated replenishment and is key for having less waste. And this is something that in many ways software is able to handle much better than traditional manual planning procedures – even for those delicate and difficult products such as fresh food with all its difficulties around short shelf life.
You don’t believe this? Going away from manual reordering in the stores to an automated replenishment planning system based on true consumer demand is for example what Migros, one of the leading Swiss retail companies did.
They implemented SAP Forecasting and Replenishment for their fresh foods such dairy and bakery items, convenience foods, fruits, vegetables and meats. The results – up to 20 % less waste. In addition, product availability has increased because the right quantities are delivered to the stores, meaning happier customers. Plus, store associates do no longer have to spend time with manual ordering routines for these products.
So, meeting sustainability goals can contribute to many aspects in retail organization.
More information about SAP Forecasting and Replenishment can be found here.