Circular Economy Circular Economy

Real-Time Visibility Key to Reducing Food Waste in the Supply Chain

How does food get on a plate? Unless you’re growing it yourself, that food may have had a long, complex journey before it arrived on your fork. That long trail all too often results in a lot of food wasted and lost along the way. The UN Food and Agriculture Organization estimates that around 40 percent of food production is lost before it even reaches the market.

By Vicki Warker | Published 6 years ago | About a 5 minute read

Food may be wasted at any point during its journey, usually earlier in developing countries, and later in more developed nations. There are a host of reasons for the waste, but it usually comes down to slack — the extra time shippers build into the timetable to account for variability that affects when shipments reach their destinations.

Slack in the supply chain

Slack comes in many forms. For farmers, it results from adding extra product to a shipment to ensure enough gets to the market, or adding unripe products that aren’t ripe yet so they won’t spoil before arriving. Warehouses concerned about spoilage also send extra product to grocers, who, in turn, ask for more than they can truly sell before the product spoils to make sure they are prepared for unexpected demand. With every extra leg of the journey, slack adds more time and more potential waste.

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SB'18 Vancouver!To get rid of extra slack, the people handling supply chain logistics need to be able to pinpoint when deliveries will occur, all while keeping their eyes on the food as it moves through the chain. Thanks to advanced technology, this real-time visibility is now possible.

Watching in real time

Real-time visibility has enormous intrinsic value for everyone involved in food logistics. It can drastically lower the amount of food wasted by spotting and preventing the circumstances that cause waste before it happens. Visibility reduces the uncertainty — which reduces the amount of slack suppliers and grocers require to ensure they meet demand.

This enhanced visibility is made possible by the Internet of Things (IoT). Internet-connected sensors can stream live data on location and condition of perishable items in transit. The status of shipments can be shared, and responses coordinated between suppliers and customers — guaranteeing that there are no surprises about food’s condition or arrival time. For instance, if there’s a major storm at sea during a shipment, grocers may be able to obtain their food from other sources not affected by the storm. Or they may choose to divert shipments that follow to another distribution center to avoid the storm or to refrigerate the food until the storm passes.

Collaboration among stakeholders further helps reduce slack simply by promoting a better understanding of what happens during transit and the variables in play. The buffer of extra food being shipped can be eliminated by everyone involved, instead of individually, which can help lower the potential waste of food overall. Once any problems are spotted, they can be solved or projected for future shipments in the same collaborative manner.

Blind spots

Why is real-time visibility not more common? Perhaps because organizations may not know what is possible or feasible.

First, what they picture as “real-time visibility” may actually be out of date or have limited detail. For instance, with Electronic Data Interchange (EDI) technology, a warehouse may not receive a message about a ship arriving in port until two days after it has arrived and been unloaded. Yet, this is sometimes called ‘real-time visibility’ because the message is sent as soon as the carrier creates it, regardless of the fact it’s two days late. But true “real time” means supply chain personnel are getting the messages as they happen and can take immediate action.

Even if organizations do understand the potential of real-time visibility, building a massively scalable architecture that can manage and process the enormous amount of real-time sensor data and other third-party data seems like a major and costly undertaking. They may see food waste as just a cost of doing business and not a problem to solve. Or the company might be structured so that the overall supply chain planning happens yearly or quarterly without the flexibility to pivot during daily operations. That company will miss out on the usefulness of dynamic information to save not just food, but all the resources that end up getting wasted with the food. With real-time visibility, however, they can respond quickly to problems and determine the trends and actions needed to improve efficiency.

The ROI for real-time visibility and supply chain analytics can be achieved quickly especially in companies where annual losses to slack are high. Organizations do not need to spend money on their own platform; it’s more cost effective to purchase existing third-party technology. Sensor costs are dropping every year, and neutral third-party brokers are already in possession of the IoT and analytics tools organizations need for both visibility and insight. Using a neutral intermediary can also dispel concerns over sharing commercially sensitive information directly with another logistics enterprise, allowing for more frequent collaboration.

Analyzing the future

It doesn’t take long for current and historical data to lead to actionable predictions. The right tools can be used to learn which shipping lanes perform best and when, the causes for delays, and more. They can provide the information that everyone in the supply chain needs to make the best possible strategic decisions to save time, money and food.

While most of the public may hold individuals, restaurants and grocery stores accountable for the amount of food wasted, solutions have to start far earlier in the supply chain. With the IoT and data analytics solutions available today, real-time, end-to-end supply chain visibility is achievable, no matter where the food is starting and ending its journey. All of the efforts to reduce slack can be coordinated, eliminating waste at every point in the chain — a win for everyone.