Food Waste and Traceability – Optimizing the Supply Chain

Laser-like attention on the COVID-19 vaccine – its safety record, production output, distribution strategy – is in part due to the shocking nature of a global pandemic. 

An avalanche of interest stems from a desire to protect one’s health and return society to some sense of normalcy. And that’s to be expected.

The vaccine is a precious commodity. Vials get measured to precision, and not a single dose is spared or wasted.

But why can’t the same be said for our food system? 

Unfortunately, an evolving, dynamic value chain makes food waste all too common. Dozens of trade partners, processing steps, and logistical exchanges create numerous opportunities for loss. Boston Consulting Group pinned an annual loss amount at 1.6 billion tons of food worth $1.2 trillion. 

The task ahead of the food supply chain is to utilize traceability technology to identify the gaps, build resilient partnerships between public groups and private industry, and accelerate the adoption of tools to plug food waste holes and capture value.

Waste Along the Value Chain

This simple fact of global food production speaks for itself: According to the World Economic Forum, one-third of all the food produced on Earth is wasted.

Additional data from the United Nations can further be broken down into where along the value chain the food is lost:

  • 14% of food is lost before it hits store shelves
  • 17% gets pitched by consumers due to questionable freshness or spoilage

Globally, it’s clear that food waste doesn’t discriminate against any single segment of the food chain. From farm to fork, there are clear gaps where improvements can be made.

An inverted bell curve does display the primary culprits to the waste challenge. The farm or production stage and the consumption period find themselves in the spotlight as the most considerable areas for improvement. 

The United Nations noted the biggest pitfalls for waste at each spectrum of the value chain:

  • Farmgate: poor harvesting timing, bad handling practices, challenges in marketing
  • Processing: inadequate storage, spoilage
  • Distribution: technical malfunctions, human error, inefficient logistics
  • Retail shelf: not meeting aesthetic standards, variability in demand
  • Consumer plate: inadequate purchase and meal preparation, label confusion, excess buying

In the United States, Food Policy noted that $165 billion in food is wasted, up to 20 pounds of food per person per month.

Source: Supply Chain Dive | Data from Economic Research Service, USDA

A Public-Private Path to A Less Wasteful Future

The challenges and opportunities around food production are so significant that the United Nations set global targets of reducing food waste by 50% by 2030. A part of its Global Opportunities for Sustainable Development Goals, the intergovernmental organization isn’t passively letting the private food sector dictate the pace of change needed.

The United Nations’ #ActNow campaign even drives food waste initiatives at the consumer level. 

Twitter – @GlobalGoalsUN

Similarly, the United States has mirrored the 50% target via the EPA’s 2030 Food Loss and Waste Reduction initiative. Plus, findings from the Intergovernmental Panel on Climate Change attribute 8-10% of global emissions on food waste.

All these efforts further prove that the trifecta of a humanitarian, economic, and global climate challenge is very real. 

In low-income countries, solutions should first and foremost take a producer’s perspective, e.g., by improving harvest techniques, farmer education, storage facilities, and cooling chains. In industrialized countries, on the other hand, solutions at the producer and industrial levels would only be marginal if consumer education and appropriate stock management at the retail level is not in place,

Maryam Rezaei and Bin Liu of the FAO

But the food industry isn’t resting on its laurels either.

Supply Chain Dive estimates that grocery retailers waste approximately $18 billion of food annually. The added procurement and distribution costs are astounding of moving this unsellable food. At the cost of twice the industry’s annual profits, there is an incentive to improve in this area. 

“The food businesses are the ones that hold a lot of the power-up and down the supply chain. They dictate what people buy at the store and the specs up and down the chain. They make the rules,”

Alexandria Coari, director of capital and innovation at Refed

And while food producers recognize the need, a mental shift at an industry-wide level is needed. It’s moving the focus of ‘continuous improvement’ away from increasing speed lines and updating equipment, which are easy to measure, to more robust traceability and tracking along supply chains where incremental wins take longer to measure and prove out a big financial payoff.

“Unfortunately, the economic incentives aren’t always to prevent food waste,”

Stephen Hamilton, Professor of Economics, California Polytechnic State University

study by the Boston Consulting Group found that food companies could reduce waste problems through supply chain infrastructure and efficiency. By 2050, a $1.5 trillion food waste problem could be reduced by $270 billion. 

One example of a crossover effort to build solutions is through the Environmental Protection Agency. The agency has created food retail and foodservice resources that include food waste calculators, packaging fixes, facility assessments, and more.

A cohesive private sector and public sector push will accelerate the fastest change. When systems and strategies begin to talk to one another, the technology output can rapidly create meaningful change.

Forecasting Food Waste’s Fate with Technology

The complexity of reducing food waste across a discombobulated food chain will require robust tools and industry alignment. 

Digital food traceability networks, like blockchain, are often touted as the solution to better track and mitigate foodborne illness outbreaks. And while true, they also could greatly benefit food waste reduction goals.

When supply chain partners universally adopt protocols, procedures, and policies, the visibility will accelerate the ‘plugging of holes’ where waste is commonly occurring. 

The World Economic Forum pieced together which particular technologies could have the most significant impact on reducing food loss: 

Source: Supply Chain Dive | Data from World Economic Forum

And while each technology brings advantages to improved traceability, their conjoined abilities facilitated with a supply chain management software could create synergistic results. 

With a 5-7% reduction in food loss opportunity, sensor technology leads the pack as real-time visibility along multiple supply chain points could make big waves of change.

One example with sensors could be at the food’s origin point. Farmers could utilize sensing tools to track how crops are growing to better monitor water supply or gauge optimal harvest dates. Hyperspectral imaging, an offshoot of sensors, could be used further down the value chain as produce is monitored during processing or distribution.

Additionally, supply chain management software, like Fusionware, that engages multiple stakeholders might give producers a chance to lock in prices that provide them with cash flow flexibility and align with processors’ goals, keeping demand in-check and avoiding waste.

Combining traceability software with material and food science is another option. Apeel, a firm focused on plant-based produce coatings, can extend shelf life without refrigeration. The edible covering would allow your apple or avocado to last twice as long and would enhance the ROI of any supply chain-related software.

Another helpful tool would be the Internet of Things [IoT]. When paired up with computer vision, spoilage could be avoided. IoT for All reveals the impact within the cold chain. Recorded temperatures and models can alert supply chain workers when food is at risk due to a swing in several degrees, hotter or colder.

Or take, for example, a pack of tomatoes or apples. If a single piece of produce is spoiling, it would likely increase the odds and rate of ruining the entire package. But the new technology could pinpoint that, allowing a retailer to remove the only spoiled piece and avoid additional waste.

And it’s worth noting that a platform like Fusionware that engages all these technologies could enable dynamic pricing, getting food through the supply chain at the right pace before it spoils while timing consumer demand. 

Today, Fusionware also tackles the food waste issue by implementing technology that converts surplus inventory into donations before spoilage. Groups such as the Arizona Food BankCollaborative For Fresh ProduceFeeding Washington, and Food Forward can capitalize on what would become waste at the farm or food retail level. The Natural Resources Defense Council highlighted even diverting 15% of U.S. food waste could feed 25 million Americans every year.

Another startup-heavy space with a similar mission plus economic advantages are secondary markets for imperfect produce. Rather than take a complete loss on grocery store-destined foods that don’t make the cut, farmers can divert ugly fruits and vegetables through wholesale and foodservice avenues. Technology could create further value-add by helping producers optimize that process and make production-level decisions more efficiently regarding inputs or other factors.

At the consumer level, labeling technologies could alter daily food waste decisions. The Consumer Goods Forum’s efforts highlight the $16 billion of food waste directly tied to label confusion and the value created by more standardization in the space.

Imagine scanning a shrink-wrapped tenderloin and the meal preparer having confidence it doesn’t need to be tossed. Labels with a series of dates and locations on a gallon of milk might stop a parent from pouring it down the sink. 

Eliminating questionable decisions about freshness or spoilage will fast-track reducing food waste at the consumer level. 

A global issue of this magnitude can be both motivating and daunting. But whether the end goal is social responsibility or nailing a financial metric, partnerships that focus on supply chain technology solutions by enabling data capture, traceability, and transparency will be the driving force to lessen global food waste. 

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