Lack of Visibility and Other Challenges of the Food Supply Chain – (Waste Matters! Part 4)

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Ever since Spend Matters began this “Waste Matters!” series, which focuses on food waste in the supply chain, I have been surprised by how much information I am finding on the subject. Major sources around the world are covering the issue, and people are paying attention. We have also had some great feedback from our readers – thank you for that! You can check out our previous installments of the series here, here and here.

FREE Research: Customizing Your Supply Chain

Today, I will begin to share my takeaways from a recent conversation with food supply chain expert Kevin Brooks. Kevin serves as Senior Vice President of Marketing at iTradeNetwork – a provider of supply chain management solutions for the food industry. Kevin has years of experience working with companies in the food and beverage supply chain, and he told me about the many challenges facing the industry that leads to wasted food. These challenges include the following, which I will talk about in detail in this article and future installments of the series:

  • Visibility issues
  • Uniqueness and complexity of supply chain
  • Intermediaries between producer/grower and consumer
  • Last-minute changes in food orders
  • Consumer demands: for both quality and quantity

There are others, actually. But because there are so many challenges, and much discussion to be had around each, we decided to split this article into various parts. In today’s post, I will talk specifically about visibility issues and how, consequently, they cause food waste.

Lack of Visibility Leads to Over Ordering

A main issue Kevin hears about from the industry is the lack of visibility in the food supply chain. While, yes, many companies are doing their best to gain visibility on their supply chain, it still remains weak, he said. If grocery stores do not understand how much product they need, how high or low demand is for certain foods and when food supplies will arrive, obviously problems will occur. Over ordering is one such problem.

However, the worst thing is for a retailer to run out of stock, Kevin said. So sometimes, over ordering is a positive and a necessity for a retailer. Imagine, for example, a customer comes to a grocery store during the holiday season to buy, let’s say… cranberries. This is a hot item at this time of year – both for Thanksgiving and Christmas meals. But, if the grocery store sold out of cranberries before that customer got to the store, it could prove bad for business. That customer may think twice before returning to the same store next holiday season, remembering what happened to them last time.

To avoid this from occurring, what can food retailers do? Over order. From a retailer’s perspective, it’s better to have more products than not enough and continue to sell goods instead of fail to meet customers’ demands. Not having total visibility over their business is the main reason food retailers over order, Kevin said. And, because over ordering occurs, some food is not sold, but wasted.

A lack of sophisticated forecasting also plays a role in food waste. Kevin said specifically for perishable goods, forecasting is difficult due to “wide swings in pricing, product available, quality, etc.” This adds to the visibility issue in the food supply chain.

Stay tuned for more in our Food Matters! series. In future posts, I will touch on the extreme complexity of the food supply chain, consumer demands and my key takeaways from the discussion with Kevin. I will also talk about how food recalls throw a wrench into the mix and and how they impact the amount of wasted food.

 

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