FMCG Food Waste: Supply chain speed and agility v inventory.

Hooray! Many supermarket chains now sell imperfect or misshapen fruit and vegetables at a discount. As you may know I am a big fan of buying this type of food as taste has nothing to do with shape based on my massive culinary knowledge. Whether my potatoes are knobbly, or my parsnips look like Donald Trump, I simply don’t care.

My other food gripe has always been about “best before” and “sell by” plus the simply ridiculous, “display until”. Food producers and legislators don’t make it easy for consumers, do they? Surely there can be 1 definitive statement for a food safe shelf life measure, for example “do not consume after….”. Slowly but surely progress is indeed being made to remove this confusion for consumers and waste for everyone in the supply chain including you.

This charity in Denmark collects close to expiry, expired and slightly defective product from producers and supermarkets and sells to the public with at least a 50% discount. This has helped to reduce unacceptable food waste in difficult economic times. Unfortunately, this charity has been so successful it has started the process of turning their operation into a branded supermarket and will have 3 shops open in 2018.

All good stuff then as long as the waste mountain is reduced. Well no, not at all. Why are some big name FMCG companies producing so much food stock that is either destroyed or as in Denmark, redirected to a charity. If you look at the video in the earlier link you will see some well-known names who will publicly claim to enjoy supply chain excellence. Getting their products to the consumers on time in full and at lowest cost is all very well but if the stock ends up as not required, it is surely a hollow boast?

I agree there will always be some inaccuracy in forecasting – there must be – but the volumes involved are not 1 or 2 cases, it is pallet loads. These companies will all be using various clever IT tools to forecast and supply the market demand but are they guilty of pushing too much into the retail end of the supply chain? Competition dictates that your products must always be available, and the consumer decides on the spot if she/he buys Coke or Pepsi.

I am still not convinced sales colleagues get forecasting in the way supply chain people must. The forecast must be based on what is being pulled along by consumers rather than what is pushed in to reach a monthly top line number. If sales forces in a number of foods companies do this then inevitably there will be waste at the far end of the extended supply chain.

Someone will get their forecast horribly wrong and when thinking about huge brands even a small inaccuracy can mean a hefty contribution to the waste mountain of food and expense.

You cannot ask your competitors what their volume plans are for the month to make sure there is no over-supply, but you can bring more agility to your supply chain. Demand fluctuates across the month irrespective of those companies still “enjoying” unrealistic month-end pushes. You might look at how much safety stock you have built into the plan and along the chain, reduce that cost and invest it in speed and flexibility instead.

Lose some fat from your inventory waist and you will be able to move much faster when the market or a competitive move demands.

Image courtesy of Stuart Miles at freedigitalphotos.net