There’s a huge problem with hunger in this world.
Take a look at UN Food and Agriculture Organization estimates on chronic undernourishment.
They estimated 795 million of the 7.3 billion people in the world were suffering from chronic undernourishment in 2014-2016.
There are 11 million people undernourished in developed countries according to these estimates.
The problem in developing countries is even worse, with 780 million hungry mouths to feed!
Hunger and malnutrition are the number one risk to health worldwide. Each year the death toll exceeds that of AIDS, malaria and tuberculosis combined.
There is, however, enough food produced to feed every person in the world.
Waste Not, Want Not
Around a third of food produced for human consumption is wasted.
That’s 1.3 billion tons of food each year!
In 2012, the costs regarding food waste in the EU alone were estimated at 143 billion euros.
Food wasted by consumers is the biggest contributor to this problem, but the UN Food and Agriculture organization estimates 30-40% of food production is lost before it reaches the market.
There is a lot of information out there about reducing food waste in homes and once it has reached shops, but nowhere near as much about waste in the supply chain.
Not only will cutting down on food waste in the supply chain save businesses money, but it is a vital component in solving the world’s hunger problem.
Below we will introduce some ways to reduce waste, focusing specifically on the supply chain:
1. ‘Intelligent’ Packaging
The prototype of the ‘intelligent’ container was tested transporting bananas from Central America to Europe.
Bananas produce an interesting challenge, because they continue to respire after harvest. This produces large amounts of heat.
Pallets equipped with wireless sensors predicted which pallets were at risk of turning into a hot spot.
‘Intelligent’ container technologies include:
- The time temperature indicator (TTI): This is useful for determining if foods have been temperature abused. An irreversible change (such as colour change) will occur if the TTI experiences abusive conditions.
- Gas Indicators: Food can respire and may therefore change its own atmosphere when inside a package. Gas indicators monitor the composition of gases inside a package and typically signal presence or absence of oxygen or carbon dioxide.
- Biosensors: Foodborne pathogens are of great concern to the food industry. A biosensor can detect a substance (a pathogen in this case) and then transmit the information in a quantifiable manner.
2. Increasing hubs and decision points
Increasing hubs and decision points in the supply chain can help reduce waste.
Whilst increasing the number of hubs in the supply chain can have a negative effect on quality, consolidation processes have a negative effect on shelf life.
Each hub provides the option to install a decision point, however.
Orders can be reassigned at the decision points according to the FEFO (first expiry first out) strategy.
3. Packaging Considerations
The packaging of food products can have huge effects on shelf life.
One case study on a supply chain for vacuum-packed lamb within Europe had interesting results.
It showed that under vacuum-packed conditions, no specific spoilage organism could be detected.
There are plenty of other considerations when it comes to packaging. Below are three examples of packaging reducing waste:
- An unwrapped cucumber loses moisture and becomes dull and unsaleable within 3 days. With just 1.5 grams of wrapping, it will keep fresh for 14 days.
- Selling grapes in trays or bags has reduced in-store waste of grapes by 20%.
- In-store wastage of new potatoes reduced from 3% to less than 1% after bags designed specifically for this purpose were introduced.
4. Monitoring Temperature Control in Transport
Depending where products are placed a difference in temperature can occur during transport.
This causes a notable difference in quality and shelf life.
A case study on berries showed that position in the truck led to tremendous variations in quality.
This combined with differences in pre-cooling and transport temperatures resulted in 57% of the berries arriving at a packing house without enough shelf life for longer transport routes.
Using FEFO (first expiry first out) to re-assign pallets would help to avoid significant losses.
5. Making Good Distribution Decisions
Various distribution decisions can be made to reduce waste and increase revenue in the supply chain.
Products with shorter shelf life should be sent to higher turnover outlets. This way the products will be sold faster before reaching their due date.
A FEFO enabled supply chain can provide the information necessary for this.
There are plenty of other things to consider when making distribution decisions, such as supply and demand:
- Few buy watermelons if the weather is cold.
- Good weather can increase demand for barbecued meats.
- Demand for turkeys increases at Christmas.
6. Not Always Focusing on Cost
Food Retailers often operate on extremely high revenues but low profit margins.
Regardless, to focus on lowering cost of the supply chain is not always the best solution.
There’s an increasing market for organic foods, and this shows that consumers are willing to pay more for higher quality foods.
Barlean’s managed to increase turnover of organic oils by 40% towards the end of the 1990s.
They did this by identifying freshness as a way to differentiate from the competition.
By pressing on demand and delivering by express, they could provide only slightly processed oil.
This resulted in a lower maximum shelf life of only four months but a much fresher product.
Their competitors couldn’t compete on freshness because their distribution processes could take up to five months.
7. Production Location
Shelf life can influence the best place for industrial production of products.
Chilled salmon products is a great example.
These products have a shelf life of 14-16 days. Due to salmon’s high fat content, it’s difficult to remove bones until 4 days after harvest.
These first 4 days of production could be used to transport products for industrial production closer to consumers.
With a shelf life of around 12 days remaining it became possible to create systems ensuring lead times provided the market with sufficient shelf lives.
8. Consider Shelf Life
The mismatch of lead times and shelf life leads to waste.
Often with fresh food products this presents a significant problem, but there are various solutions.
‘Make to order’ flows are one way to solve this problem.
A wholesaler selling fresh poultry implemented a ‘make to order’ flow when retailers weren’t satisfied with shelf life.
The retailers ended up with another 3 days of shelf life after implementing this, allowing them to keep a safety stock, and reducing waste.
A producer of fresh crab found that in order to get products to stores with sufficient shelf life, logistics had to run smoothly and any problems would result in significant waste.
Because of this, they decided to operate a frozen supply chain for a large proportion of the production volume, significantly extending shelf life.
9. Type of Transport
Products with limited shelf life demand high frequency shipments.
That can cause problems with regards to intermodal transport.
This became clear when salmon producers considered using a sea-based solution instead of trucks to ship to factories in Europe.
Although the sea-based solution provided sufficient transport time, the low frequency of vessels would lead to delays incurring significant waste.
The Full Infographic
In this article, we have featured an infographic split up to support each section.
Below you will find the full infographic featured in this article. It’s licensed under the CC-BY-SA license.
You can feel free to use this infographic or any of its sections in your own material.
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May 17, 2017
Published by: Go Supply Chain Ltd