“Eating the Cost” of Wasted Food – And Sometimes, That’s OK (Waste Matters Part 6)

Food is wasted at grocery stores. This is a fact of the food supply chain. We have talked about this in previous posts in this series, sharing expert insight from Kevin Brooks, senior vice president of marketing at iTradeNetwork – a provider of supply chain management solutions for the food industry, who explained many reasons how and why food gets thrown out. Today, we continue this conversation, with Kevin pointing to the importance of quality produce for grocers. In the end, quality is often more important to retailers than (an overabundance of) quantity.

Produce: A "Merchandising Visual"

Produce: it’s one of the main things that draws consumers to a specific grocery store. People chose a store based on location, price and produce quality, Kevin said. Because of this, grocery stores are focused on the quality of their produce, and sometimes this means being more concerned about the quality than quantity (over stock, that is).

FREE Research: Customizing Your Supply Chain

I've talked about this a bit in previous articles, but Kevin called quality produce, and an abundance of it, a “merchandising visual” for a grocery store. Having a good-looking produce section that is fully stocked with fresh products will get customers in a store. A customer isn’t likely concerned with, or even thinks about, a store having “too much produce” when they are shopping. They are looking for stocked shelves, and to respond to this demand, grocery stores tend to over order produce to make absolutely sure they do not run out of fresh products. The fact that produce accounts for between 10% and 15% of grocery store sales, makes it a key item.

But again, as I mentioned in previous articles in this series, having more products than needed rather than running out, tends to be better for business. Produce going to waste is part of the business, food retailers know this. Kevin said this waste (or “shrink” as the industry calls it) and the cost it produces is built into food retailers’ business model.

“You will take the cost of waste as long as your quality is good,” he said.

Lessons Learned

What I learned in my discussion with Kevin is:

  1. The food supply chain is complex and complicated
  2. Because of this, food waste at the retail level is inevitable
  3. Food retailers accept this, to a degree

The conversation with Kevin shed so much light on the food industry and its challenges. (You can check out other articles detailing Kevin's insight here and here.) There are many moving parts in the supply chain that making positive changes in the industry to reduce waste is tough – harder than I originally thought. We can’t just sit back and say “How on earth is this happening!?” or “Something must be done!” and think its a simple task.

My conversation with Kevin made me think differently about the whole issue, too. Grocery stores don’t want to waste food – it costs them money. But, they also know it’s part of running a food businesses. And, sometimes, quantity of quality products is more important than worrying about waste. Kevin told me being “lean” in the food supply chain is nearly impossible. I now understand why.

In our next installment of this Waste Maters! series, we talk about the impact recalls have on the amount of wasted food in the US. 

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First Voice

  1. Rod Averbuch:

    The large amount of fresh food waste is a lose-lose situation for the environment, the struggling families in today’s tough economy and for the food retailers. There is no single cure, or silver bullet for food waste reduction therefore, we should address the food waste problem in every link in our food supply chain. For example, the excess inventory of fresh perishables close to their expiration on supermarket shelves, combined with the consumer “Last In First Out” shopping behavior, might be the weakest link of the fresh food supply chain.
    The new open GS1 DataBar standard enables applications that encourage efficient consumer shopping by offering him automatic and dynamic purchasing incentives for fresh perishables approaching their expiration dates before they end up in a landfill.
    The “End Grocery Waste” App, which is based on the open GS1 DataBar standard, encourages efficient consumer shopping behavior that maximizes grocery retailer revenue, makes fresh food affordable for all families and effectively reduces the global carbon footprint.

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