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Are retailers just displacing waste?

The Tesco boss, Dave Lewis, has called for food waste reporting to be made mandatory. He also heads a group called Champions 12.3, (named for UN sustainable development goal 12.3) which is backing international efforts to persuade countries to halve their food waste by 2030.

As the chief executive of one of the world’s biggest retailers Lewis has something of a bully pulpit from which to speak out. It doesn’t hurt his cause that Tesco has, in many ways, lead the way on this. It was the first retailer to publish its food waste data back in 2013, and since last year it has halved the amount of food wasted. Just 0.1% now gets binned.

Of course there’s good commercial sense behind Tesco’s achievement as well as concern for the environment. The thing is, SDG 12.3 isn’t just about what spoils on the retailer’s watch but also what rots in the supply chain and while with the consumer. So could retailers do more to reduce waste both before and after products reach them?

From every point of view waste is bad; the environment needs protecting, retailers profits need protecting and people need protecting. Waste is just what it says on the tin; stuff that’s not wanted, not needed, surplus to requirements. Of course we need to try and eradicate it.

But will it ever be possible to eradicate waste entirely? Unlikely, because forecasting is not an exact science and retailers will always strive to maximise sales. Maximising sales means good availability so displays always look inviting and there’s always produce on hand when shoppers want it. High availability levels almost always link to higher rates of spoilage. So how do you maximise sales of foods whilst minimising waste? It’s this conundrum that causes supply chain executives around the world to work long hours, to test themselves constantly, to try to do better and, occasionally, to lose sleep.

Once retailers were simply concerned with the impact that waste had on profits. Now there’s the added pressure of public opinion particularly amongst younger people. The future of the planet is their number one concern. If you want to tell Greta Thunberg it’s not, be my guest. I’m not going to.

Increasingly people understand that resources are finite and waste has become public enemy number one. The impact all companies have on the environment is being measured discussed and counted and it will have an increasing effect on customer loyalty and brand value. Fewer and fewer people are ignoring this. The pressure is greater than ever. So how do we improve?

The answer to that falls into two halves. Half of it is about technology, and half is about people.

On the tech front things are moving fast. Forecasting has been something of a dark art, but now, with increasing computer power more sophisticated and more transparent forecasting is possible. Pragmatic AI (what I’d rather call machine learning) is identifying and drawing together vast amounts of data and delivering more accurate forecasts which in turn add to the sum of the knowledge and understanding of those making supply chain decisions. We can now forecast at SKU/store/weekday level, and take into account weather, external influencers like sporting events or local competition. But even this is not enough. It then takes an intelligent system to be able to use this forecast, evaluate the opportunities and balance the desire for sales, service levels and profitability with the reduction of waste. However, the right balance ultimately needs to reflect a company’s strategy and targets, and these have to inform those calculations.

Great forecasting can certainly deliver the retailer great results, particularly for fresh and short-shelf-life foods. But is that enough? Leaving aside from now the need for better, re-usable packaging – a big topic in itself – there’s the human dimension.

Automating most of the more mundane supply chain planning tasks creates time for managers to invest in relationships. Better links between retailers and suppliers can also lead to less waste, especially if a supplier has better advanced knowledge of the retailer’s needs they can steer production towards meeting demand while reducing unwanted stock. Conversely, as California food activist Ron Clark has argued, buyers could be better at offering consumers deals when there’s overproduction.

And, ultimately the consumer has a part to play too if we’re to make a real impact on issues like food waste. We’re in an age when consumers expect to have full availability of all fresh foods at all times and all seasons. If we’re to cut food miles and the impact on the environment those expectations have to change. If consumers accepted only what is in season and only from local suppliers, this would have a massive impact. Similarly if governments and consumers accept that not every item will be the perfect shape then significant amounts of waste could be reduced at source as everything edible would be shipped to retailers and sold.

We all have our part to play. Retailers and supply chain professionals are doing their bit. The question is, will those demanding these changes play their part too. We can wait and see, but frankly we can’t wait forever. The next move for supermarkets may be to decide whether they’re prepared to lead consumer change.

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