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Smart Reduction of Consumer Food Waste: Using technology for the benefit of retailers and consumers

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Capgemini and The Consumer Goods Forum, through this End-to-End Value Chain Learning Series, aim to identify the challenges and opportunities that food retailers face and the important role they can play in reducing food waste among consumers.

Smart Reduction of Consumer Food Waste: Using technology for the benefit of retailers and consumers

The main objective of this report is to identify the challenges and opportunities that food retailers face and the important role they can play in reducing food waste among consumers.

INTRODUCTION

In the film 'Just Eat it—A Food Waste Story' leading food waste expert Dana Gunders said: 'Imagine walking out of a grocery store with four bags of groceries, dropping one in the parking lot, and just not bothering to pick it up. That's essentially what we're doing.'

The world produces enough food to feed every one of us, yet almost one billion people live in hunger. Between one third and half of all food produced globally is wasted or lost along supply chains every year. That's enough to feed twice the number of hungry people in the world. Producing food that will be lost or wasted means wasting human labor, money, land, energy, and water. To put things in perspective, in order to produce food that is never consumed, a surface area larger than Canada and India combined is used, three times the water volume of Lake Geneva is squandered, and roughly 20% of total deforestation is caused. Stunningly, if food losses and waste were a country, it would be the third largest greenhouse gas emitter in the world, as well as a significant contributor to climate change.

But what if we start seeing food loss and waste not only as a problem, but also as a source of untapped opportunity? By forcing us to think differently, problems can become enablers of policy change, social development, environmental governance, and business innovation. Many inventions in the food and beverage industry, including pasteurization, canning, controlled fermentation, and refrigeration, came to exist as a result of trying to solve a pressing problem.

The need to keep food fresh led to ice harvesting practices in the 1830s, which resulted in the commoditization of ice, which then paved the way for the acceptance of artificial refrigeration. During the Roman Empire, the aversion to wasting any part of the animal led to the creation of food products that are still consumed today. During the late Middle Ages, roughly 80% of the average household income was spent on food and drink in most of Western Europe. People would mix leftovers with the most disparate ingredients available, creating dishes such as sammelsur in Germany and salmagundi in England.

Tackling food loss and food waste today would accomplish more than simply increasing the availability of food to feed our growing population. It would also improve the sustainability of our food supply chains, increase the resilience of our grocery-retailing businesses, and lead to innovation. Besides, who knows what new culinary and technological creations could come of it?

In contrast to households, the proportion of food discarded by retailers is lowest, at around 5%. Retailers have been at the heart of initiatives to reduce food waste, stimulating consumers to accept misshapen or imperfect produce, donating surpluses to food banks and clearing up confusion about expiration dates. The research of Champions, demonstrates that food companies along the supply chain can obtain a median of USD 14 in return for every dollar invested in reducing food losses and waste. Retailers in particular can obtain a median of USD 5.1 for every invested dollar by using simple and low-cost methods such as meeting regularly with suppliers, introducing or increasing daily communications with suppliers, linking forecasting methods to order planning processes, developing tools to assess underperforming lines, improving tools to increase the accuracy of order amendment, and reviewing progress on a regular basis.

'The digital era has brought a profound opportunity for change in the consumer food industry. More than ever before, digital technology is empowering producers, retailers and consumers alike to revolutionize their operations and unlock ways to reduce waste and meet the needs of a growing global population.'–Kees Jacobs, Capgemini

'Disruption is an important agent for innovation in the consumer food business. With the goal of better lives through better business, the future is bright for digital innovations that will ultimately reduce waste, increase value to retailers, and contribute to the health and wellness of consumers.'– Ruediger Hagedorn, The Consumer Goods Forum

DISRUPTING ORGANIZATIONAL AND REGULATORY SOLUTIONS IN THE DIGITAL ERA

There are numerous initiatives to reduce food waste, but the market has yet to realize a systemic change through which food waste is not only treated but instead avoided whenever possible. Fragmented approaches to reducing food waste may only cause a shift in the place and time in which it occurs. In some cases, supermarket donations to food banks end up being wasted by the food banks since they contain products for which the food banks don't have recipients. Matching supermarket supply with the demands of food banks can result in food waste reduction by using one of the most ubiquitous forms of Information Technology—the app. In the UK, a food bank app has been developed through which food banks can adjust their food needs in real time, allowing donors to see the availability of required products on a Traffic Light dashboard: urgent products colored in red, items in short supply in yellow, and those currently well stocked in green. By using this app, Canterbury saw a one-hundred percent increase in donations of needed products in just one month. Other apps such as Food Storage and Shelf Life, help consumers reduce waste by providing storage- and shelf-life information about more than 350 food products.

HOW CAN TECHNOLOGY HELP?

Technology may not solve the problem of food loss and waste on its own. The potential benefits of radio frequency identification technologies (RFID) are constrained by the lack of uniformity in global standards, high costs, lack of trust, misinterpretation of data, and a lack of collaboration in the supply chain. Combining organizational, regulatory, and technological solutions is key. Getting the right algorithm to tackle food loss and waste requires not only taking into account the individual interests of supply chain stakeholders, their motivational drivers and willingness to reduce food losses and waste, but also innovative technologies. Technology can catalyze behavioral change by acting as a tool for information exchange and transparency among the supply chain partners, thereby fostering trust-based collaborative relationships.

Could, then, an IT-driven supply chain transformation contribute to solving food waste by consumers? IT has helped optimize supply chain operations from the back-office to the point of sale by improving supply chain visibility and collaborative partnerships leading to enhanced food quality and safety. Reduction of food losses has been achieved thanks to the quicker response time of stakeholders that is made possible by automating ordering processes, streamlining payment mechanisms, scheduling warehousing, monitoring delivery, controlling systems for quality assurance, collecting products' data, and tracking bar codes, among others. However, the use of IT has been scarce in tracking food products up until their consumption or end-of-life.

The focus has been mainly to streamline the logistical and transport process from the manufacturer to the retailer.

CONCLUSION

Reducing food waste might look like too huge a problem for a single company to tackle, but experience shows that the smallest efforts can have broad ramifications and inspire others to join the cause. Collaboration with consumers is more possible now than ever before, especially since buying food is no longer merely a necessity, but also an act of cultural expression through which consumers reward companies that reflect their own principles. To increase the chances

of successfully reducing food waste, we must realize that retailers are no longer subject to an isolated linear business structure. They are, rather, an integral part of society and of a network of industries interconnected through information technologies. The smart use of information technologies along food supply chains creates opportunities to spur the adoption of common standards, supply chain transparency, and real-time information-sharing practices. If real time is the new standard for business insights, now is also the real time to cut food loss and waste.

Food waste reduction is part of a larger effort to improve the sustainability of our global food systems. Each of us has something to win, either through economic profit or environmental and social benefits. Several initiatives to reduce food loss and waste have proven financially sound and, even though food waste by retailers represents only about five percent, they too can earn significant benefits. Retailers have the tools and insights to change consumer knowledge, mind-set, and behavior. Less food lost and wasted would alleviate the burden on the environment caused by agriculture, transport, and the disposal of food that is never eaten. Even so, reducing food waste is not only about profit, logistics, or the environment. It is also a fundamentally moral choice.

Food retailers can help consumers reduce their food waste by:

  • Understanding why some products are landing in consumers' dumpsters instead of on their plates.
  • Increasing the transparency and information consumers have regarding food production processes.
  • Making the information about products easy to understand.
  • Applying information technologies to help consumers quantify the amount of food wasted at home.
  • Helping consumers build a tailored strategy to cut food waste at home.

The use of (information) technology to address environmental, social, and business issues is now ubiquitous and certainly valuable, but is not, on its own, the 'goose that lays the golden eggs.' Sometimes, a greater issue is the ability to change deeply entrenched mindsets and to challenge the status quo.

Eating food is one of the most natural acts of human beings. What would you say wasting food would be?

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