warehouse, 3pl, food waste

6 ways to Reduce Food Wastage in Supply Chain

Each year more than 80 million tons of food is discarded in Europe alone. The overall cost of this wastage is more than 140 billion Euros.  Globally it is estimated that a third of all the food produced, is wasted. Most of this wastage happens before the food item even reaches the market. These figures assume higher significance when more than 750 million people around the world face food insecurity. In countries with abundance of food, people tend to throw away what they do not require or consume. This wastage not only has the environmental impact but it impacts the environment (In terms of energy and resources consumed in producing and packing the food that is thrown away). The Food supply chain along with its three stages i.e. Production, wholesaling and retailing has a significant contribution in this wastage. The cost of disposal of unutilized food adds to the cost of food wasted due reasons such as wrong or bad storage, no demand, wrong transportation, expiry before sale etc . Let us look at some of the ways that the food wastage can be reduced in the supply chain.

  1. Intelligent Packaging. Lot of food is sensitive to environmental factors such as temperature. A smart packing such as Time temperature indicator that tells how long an item has remained at a particular (generally high) temperature can indicate how soon the item will go bad and thus prioritize its sale/consumptions. Many fresh foods (many fruits) respire even after harvest. When packed, they can change the environment inside the packaging due to respiration and thus can go stale. Gas indicators built into packaging can indicate the level of gas harmful to the product. Similarly biosensors can be used to indicate the level of pathogens in the food and transmit the data to control centre. All such indicators and information about the level of freshness of food can be used to prioritize its sale and consumption before it’s spoilt and thus reduce the wastage.
  2. Packaging Considerations. Packaging of the food product has very high impact on it’s shelf life. A vacuum packed meat product stayed fresh without any significant pathogens for long time. Similarly a cling film wrapped cucumber stays fresh for over two weeks, while an unwrapped one loses moisture and becomes dull in 3 to 4 days. Apart from freshness, Fruits and vegetables packed in trays and bags reduce their wastage due to handling anywhere between 5 to 20 percent depending on the food item. Well designed packaging also speeds up the movement of the product, due to easy handling. There is a lot of innovation in packaging that food supply chain companies should look into.
  3. Transportation. Cold transportation is not new. There are active cooling trucks (with actual refrigeration and passive cooling trucks that are basically thermally sealed. Wha’ts interesting however is the temperature gradient inside the trucks, once they are loaded. Most transporters simply ‘stuff’ the truck with products without much thought to placement of product to maximize its shelf life. Even in regular trucks the temperature of food right in the centre of the truck is different than the temperature at periphery. This can have large impact on the life of the product. Even in cold trucks if they are stuffed and the center is not cool enough, the food loaded in the centre has higher chance of being spoiled. Not only the temperature, but the way fruits and vegetables are loaded can have large impact on their life. Can you imagine berries at the bottom and potatoes at the top, going over a bumpy ride?
  4. Increasing decision points in Supply Chain. Most products don’t go from point of production direct to retail shelf. There are multiple hubs and distribution points between the point of production and point of final sale. However with technology, more and more decisions are being centrally. The decision points need to be decentralized and local intelligence specific to the distribution point needs to be utilized for maximum utilization of product. Products with shorter shelf life should be sent to high turnover outlets so that they can be sold before they expire. The principle of ‘First Expiry First out’ should be followed rigorously. Smarter decisions about product movement can be taken locally depending on local conditions such as weather. If the weather is nice and sunny, the demand for barbeque related products will increase. If its cold, the juicy fruits (e.g. watermelon) would be expected to move slowly and can be shipped to other warmer areas.
  5. Cost factors. Food industry often operates on low profit margins. Subsequently all the processes are designed for cost optimization. However lower cost may not always be the best solution. For example, organic food needs to be delivered quickly. The demand for organic food is increasing and it also has higher margin. So supply chain invests a little more in quick delivery of organic food, it can capture both, the volume and the higher margin, thus offsetting the cost and making more money.  A retailer in USA capitalized on this model by making quick deliveries of Organic, less processed oils. The retailed made express deliveries right from the production point and thus maximized the shelf life of oil available to the consumer (about 3-4 months). it’s competitor’s distribution processes itself took 3 to 4 months and thus could not compete.
  6. Production Location. Point of production is also a key factor in supply chain. The closer it is to the consumer, the smaller the chain and lesser the chance of waste. Many organization prefer to have production plants closer to the source of raw material. It reduces the transportation cost of raw material, but increases the waste in subsequent supply chain. With modern technology and transportation options, it is easier to transport bulk raw material to the more distant plant. It also provides for the maximum shelf and storage life once the product is leaves the production plant.

 

Some Food wastage is inevitable. Food will rot, get spoilt and will face some logistical issues. However the amount of food that is wasted currently is unsustainable. The higher environmental cost of this waste will be borne by the next generation; all while there still 700 million hungry people around the globe. If nothing else, the economic cost of the food wastage in itself makes a great business case to stop the wastage as soon as possible.

The Future of Supply Chain, Logistics & Manufacturing: How Technology Is Transforming Industries

Technology is changing fast. It is evolving at breakneck speed. There is no aspect of business that technology has not impacted. However, so far we have used technology for just a little more that some fancy automation. That is just scratching the surface when it comes to use of technology. With the pace at which the technology is progressing, we are going to see some major advances in the way whole business, right from production to delivery, is done. The new technologies will lead to faster, cheaper, more reliable business practices that will look very different from the practices of today. Let’s take a look at a few advances that have the potential to completely change the way we do the business.

  1. 3D Manufacturing: 3D manufacturing is not new. It’s been around for more than 2 decades. However it has really picked up in last few years. While it is still confined to mostly prototyping shops, 3D manufacturing offers a lot of agility to production process for many kinds of products. 3D manufacturing will shift the point of production to the very end of supply chain, just before the last mile delivery. If fact, with 3D manufacturing, the whole supply chain will become just a raw material supply chain. As 3D printing is customizable, the 3PL providers will offer it as a service, with product owners supplying the designs and preferred raw material sources. this will make them more lean and capital efficient.
  2. RFID use is set to proliferate in big way: It allows the manufacturer to track each and every unit of product and in many cases even the components of product, at any point in whole cycle, without intervention of any human with the system. RFIDs are being used in manufacturing and in Logistics as well, to track the movement of the product. So far the RFID use is still in early stages. They will be used for many other things such as validating the order, to ensure order has all the correct items and anomalies in the order are corrected as soon as they occur. They will help in improving the quality of products, and increase the effectiveness of whole supply chain and not just track and trace products.
  3. Delivery Drones: Few companies such as Amazon are experimenting with delivery drones right now. There are still some legal hurdles before drones are cleared to fly and make commercial deliveries. However once they take to the skies, the last mile delivery will change completely. The deliveries will be faster, more cost effective and less prone to error. The largest benefit will be seen in deliveries to remote, rural areas where the cost of single delivery by motor vehicle compared to the product being delivered, is quite high. Drones will also add to security and reduce the damage to the product as there is no human interaction involved in carrying the product.
  4. Self driving vehicles/Smart Vehicles: While self driving vehicles are yet to arrive, they are just around the corner. There is little doubt about the benefits they will offer. Benefits such as increased overall speed of delivery (with no mandatory breaks for drivers), increased reliability and efficiency of the vehicle will have positive changes to the supply chain and logistics. For example, the JIT manufacturing may get a whole new meaning. Smart vehicles are already here and are being used by logistics providers. Technologies such as tyre pressure sensors help the company in determining the fuel efficiency of the vehicle and make necessary adjustments not only to the load and vehicle but also to their cost calculations. GPS tracking provides exact location of the trucks and estimated time to reach the pickup location, providing the time remaining to have their shipment ready at the loading bay.
  5. Internet of Things (IoT): with IoT everything connects to everything. That’s what internet of things promises to be. In fact Industrial Internet of Things (IIoT) is where the excitement for businesses is high. Through simple IoT, the customer’s equipment places an order, which runs down the chain and enter manufacturer’s system. The system automatically checks for inventory , which is all tracked and verified by RFID and places the order for components that are not available in inventory. It gets the expected delivery date of these sub components for vendors, calculates the production times and delivery times and gives a rather accurate date of delivery to customer. The system schedules the production run and schedules the vehicles for delivery, which are tracked by GPS. If there is delay in arrival of components, the system triggers the alarm to the human user and to the vendor. All the while, the product is tracked and traced using RFID and order status updated to the customer, along with exact location of the product, if required. Once on board the truck, again exact location of the delivery is tracked. The traffic delays, if any, are adjust in delivery schedule and made available to the customer on his mobile phone. Get the picture?
  6. Big Data: With so much tracking, tracing and sensing, there will be a huge amount of data available for business scientist to play and come up with better solutions to business problems. Two key areas where this huge amount of data will be analyzed and used in business are maintenance and business analytics.
    1. Predictive maintenance. With so much of data available from the sensors, it will be possible to predict the time and point of failure of machine. The machine learning algorithms are already developed to use the sensor data and predict when the machine or component will fail. Add this with IoT, when the system will order the component just before its predicted failure, so that it is available just when the machine fails. This will reduce the machine downtime to bare minimum time required for replacement, while extracting maximum value from the failing component.
    2. When does the business expect large order volumes? What are the main causes of returns? Which warehouse gets most returns? Which shipper provides best value for every dollar of product delivered? These just few basic questions that big data can answer. Add to this all the information from social media, which is unstructured and advancements in machine learning and cognitive analytics. Pretty soon, you will be asking your computer “how much of my product will sell during this Christmas” and it will reply with a number with high level of confidence. It will speak to you just like Siri does today.

We have just touched upon a few technologies that will change the game when it comes to business of manufacturing and logistics. There are more technologies that will continue to deliver efficiencies and cost savings. The technology assisted future of business world looks very different and very exciting.