The (Extreme) Complexity of the Food Supply Chain (Waste Matters! Part 5)

The food supply chain isn’t like other supply chains – it is far more complex. This point became increasingly clear during my recent conversation with Kevin Brooks, senior vice president of Marketing at iTradeNetwork – a provider of supply chain management solutions for the food industry. (You can check out my previous post about Kevin’s expert insights here.) The clock is ticking, and food suppliers need to deliver perishable goods fast, but changes to POs and other issues facing the supply chain make that task difficult.

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Kevin told me that in other industries, product orders remain fairly stable (the number of units or cases and its delivery location remain the same from when the order was entered to when it is fulfilled). However, orders in the food industry change often, with buyers deciding they want a different quantity of a product, change their mind on where that product should be delivered, etc. Take this example: A food buyer decides instead of 10 crates of grapes, they now want just 5. Or, how about half those grapes go to a certain distribution center, the other half go to a different location. This is all happening after the order is entered and while the order is en route for delivery, Kevin said. This clearly poses some problems for suppliers, making it more difficult to deliver a product on time (and while it is still fresh).

Another aspect that makes the food industry unique is that companies are not paying food suppliers until they receive the product. Again, this creates another problem for suppliers. Again, using the example above, what happens to those 5 remaining crates the buyer decided they no longer want? Can the crates of grapes be sold to another retailer? Or will they go bad, and ultimately wasted, before they make it to store shelves?

7 Changes to Every Produce PO

On average, there are 7 major changes to every purchase order for fruits and vegetables after the initial PO is made, according to Kevin.

“You get the level of complexity here,” he said. “You have so many changes happening among so many commodities, and there is a ticking clock on these items. That’s how you get so much waste.”

Other than a buyer changing its mind, you also have additional issues that pop up while food is en route to be delivered. Weather is one. A major snowstorm, for instance, could halt truck deliveries, delaying the fresh food aboard from actually reaching a store or consumers.

“Losing Value Hour by Hour”

This complexity brings up another major point: We are not talking about clothing supplies, non-perishable items, or other products that have a long shelf life. The food supply chain is made up of products that literally are losing value hour by hour, Kevin pointed out. If a food product is not delivered in time, it can go bad, spoil, rot, what have you, and is wasted. It cannot be sold. A customer is not going to buy an expired food product or a rotten piece of produce. Plain and simple.

Stay tuned for our next installment of Waste Matters! We will talk about the cost of wasted food for food retailers. You can also check out our previous articles in this series below.

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