Tackling Food Waste in Supply Chains: Innovative Approaches For a Sustainable Future

Learn about the causes of food waste, how food supply chains operate, how the economy and environment are affected, and how digital technologies are being used to mitigate impacts of food waste across the world

Have you ever wondered what happens to all the food that you throw away? Food waste is a global issue that affects everyone, from producers and consumers to our entire planet. According to the United Nations Food and Agriculture Organization (FAO), approximately one-third of all food produced globally is wasted or lost, amounting to nearly 1.3 billion tons per year. This waste contributes to hunger, economic loss, and environmental degradation. As a result, supply chain leaders and governments around the world are working to alter the current food supply chain model.

The challenge of reducing food waste is complex, however digital transformation has the potential to create a more sustainable supply chain. With innovative approaches and 3PL collaboration, businesses can implement effective supply chain management solutions to build a more efficient food system for the future.

In this blog post, we will discuss the causes of food waste in supply chains, the importance of addressing this issue, and some innovative solutions being implemented around the world to minimize waste and improve supply chain sustainability.

Datex Fast Fact

People living in European and North American countries throw away between 200 and 250 pounds of food per person per year.

People living in sub-Saharan Africa, South Asia, and South-East Asia throw away between 6 and 24 pounds of food per person per year.

Understanding the Causes of Food Waste in Supply Chains

Waste is a prevalent issue that affects the efficiency and effectiveness of warehousing and supply chain operations. To address and reduce waste, it is crucial to first understand its various forms and the factors that contribute to it.

Food waste has far-reaching economic, social, and environmental consequences. Understanding the causes of food waste within supply chains is crucial to devising effective strategies to reduce waste and promote a more sustainable food system. Addressing the causes of food waste in supply chains requires a comprehensive and collaborative approach involving stakeholders at every stage of the food system.

By understanding the causes of food waste, businesses can work together to minimize food waste, improve resource efficiency, and contribute to a more sustainable and resilient supply chain for future generations.

Overproduction

A significant cause of food waste in is overproduction. Farmers often grow more food than needed due to inaccurate demand forecasting, market fluctuations, or incentives to maximize yields. This excess supply can result in food not being harvested or sold, ultimately going to waste.

Harvesting and Post-Harvest Losses

Inefficient harvesting techniques, outdated equipment, and inadequate cold storage facilities can result in crop damage, food spoilage, and waste. Developing countries are particularly affected by these losses due to limited access to advanced technology and infrastructure. In fact, in developing countries food losses occur in the production chain and hit small farmers the hardest.

The United Nations estimates that 30% to 40% of total production can be lost before it reaches the market, due to problems ranging from improper use of inputs to lack of proper post-harvest storage, processing, or transportation facilities.

These losses can be as high as:

40% to 50% for root crops, fruits and vegetables

30% for cereals and fish

20% for oilseeds

Cosmetic Standards

Strict cosmetic standards imposed by retailers often lead to the rejection of edible but visually imperfect produce. This results in large quantities of nutritious but “ugly” fruits and vegetables being discarded.

The global ugly produce initiative promotes the sale of imperfect fruits and vegetables. By creating programs that sell and promote imperfect fruits and vegetables, businesses can help reduce waste due to strict cosmetic standards. Educating consumers about the nutritional value and benefits of ugly produce can also help increase customer demand and reduce waste.

Datex Fast Fact

10 million pounds of cosmetically imperfect food is thrown away per year

Processing and Manufacturing Waste

Food waste can occur during processing and manufacturing due to equipment malfunctions, human error, or inefficiencies in production lines. Additionally, edible by-products are often discarded instead of being utilized for other purposes.

Distribution and Transportation Losses

Perishable food products can spoil during transportation and storage if not maintained at appropriate temperature or humidity levels. Damage during transportation can also contribute to food waste. However, by utilizing advanced cold chain technologies to optimize business logistics management during transportation, companies can mitigate food losses.

Retail-Level Waste

Supermarkets and other food retailers may discard unsold products that have reached their expiration dates or overstock products, leading to excess inventory that cannot be sold before it spoils.

Consumer Waste

Food waste at the consumer level can occur due to factors such as over-purchasing, improper storage, lack of meal planning, or confusion about expiration dates. Consumers may also discard edible portions of food due to cultural preferences or lack of knowledge about their nutritional value.

Datex Fast Fact

In low-income countries, 40% of the losses take place after harvesting and during processing.

In high-income countries, 40% of losses are in the sales and consumer stages.

The Importance of Addressing Food Waste in Supply Chains

Addressing food waste in supply chains is vital for several reasons, including economic, social, and environmental factors:

Giving the customer more product than a customer ordered
Expediting an order that the customer does not need early

Economic Benefits

By optimizing the supply chain, businesses from farmers to retailers can reduce costs associated with excess inventory, spoilage, and waste disposal. In turn, consumers pay a lower cost for food.

Food Security

Globally, an estimated one-third of all food produced is wasted. Addressing food waste in supply chains can help improve food security by ensuring that more food reaches those in need. This is particularly important as the global population continues to grow and the demand for food resources increases.

Datex Fast Fact

Feeding America is the largest food recovery program in the United States. The organization partners with food manufacturers, grocery stores, restaurants, and farmers to rescue food and deliver it to food banks.

Resource Efficiency

Food production and distribution require significant resources, including water, energy, land, and labor. Subsequently, a substantial amount of money is wasted producing food that is never used. By reducing food waste, we can ensure that these resources are used more efficiently and sustainably.

Datex Fast Fact

The Food and Agriculture Organization of the United Nations (FAO) recently estimated annual losses of $1 trillion from resource costs.

Environmental Impact

Food waste contributes to environmental degradation in several ways. Decomposing food waste generates methane, a potent greenhouse gas that contributes to climate change. Additionally, the production of wasted food consumes resources and generates emissions, which could have been avoided if the food had not been wasted. The FAO estimates the environmental cost of food waste at $700 billion per year.

Datex Fast Fact

Discarded food is responsible for as much as 8 percent of global greenhouse gas emissions.

Waste Management

Reducing food waste in supply chains can help alleviate pressure on waste management systems, which often struggle to cope with the volume of waste generated. Improved waste management can lead to reduced landfill usage, lower greenhouse gas emissions, and a reduced need for waste treatment infrastructure.

Datex Fast Fact

Sustainability is important to nearly 8 out of 10 consumers. Of that number, over 70% said they would pay 35% more for brands that are sustainable and environmentally responsible.

Social Responsibility

Addressing food waste demonstrates a commitment to social responsibility and can enhance a company’s reputation among consumers, investors, and other stakeholders. Consumers are increasingly concerned about sustainability and are more likely to support businesses that demonstrate a commitment to reducing waste.

Regulatory Compliance

In some regions, governments have implemented policies and regulations aimed at reducing food waste. By addressing food waste in supply chains, businesses can ensure compliance with these regulations and avoid potential penalties or reputational damage.

The Digital Supply Chain Brings Solutions to Reduce Food Waste

A digitized supply chain holds the potential to revolutionize supply chain management of the food value chain by creating more supply chain resilience and mitigating supply chain risks.

By leveraging advanced technologies, such as the Internet of Things (IoT), artificial intelligence (AI), machine learning (ML), and blockchain, the digital supply chain can optimize various aspects of the food system, ensuring that resources are used more efficiently.

By digitizing food supply chains, businesses can decrease food waste by enabling:

More accurate customer demand forecasting

Enhanced visibility and traceability

Optimized inventory management

Better collaboration among stakeholders

Let us explore how the digital supply chain is combating food waste and positively impacting the entire food supply chain.

Real-Time Data and Advanced Analytics

One of the core components of a digital supply chain is the ability to collect, analyze, and act upon real-time data. By utilizing advanced supply chain analytics and AI, businesses can better forecast supply and demand, optimize production levels, and minimize waste.

A critical aspect of reducing food waste in supply chains is improving demand forecasting. With AI and ML, businesses can analyze vast amounts of data and generate more accurate demand predictions. In turn, this helps prevent overproduction and enables more informed decision-making about product distribution, ultimately reducing excess inventory and waste.

For example, grocers such as Ralphs, Kroger, and Target utilize Shelf Engine. This supply chain planning tool utilizes AI to help businesses optimize purchases to avoid waste. Shelf Engine estimates the technology has diverted nearly 600 tons of food waste from landfills to date.

Enhanced Traceability, Visibility, and Transparency

Digital supply chains enable greater traceability, visibility, and transparency across all stages of the food supply business process. Advanced technologies such as blockchain, IoT devices, and digital supply chain twins can help track products from farm to fork, giving businesses a clear and accurate understanding of their inventory and its origins.

Digital supply chain twins are especially useful in reducing food waste. By implementing supply chain twins, business can utilize live data to simulate different environmental conditions that can affect the lifespan of food. This can include changes in temperature, humidity, air quality and light intensity.

For example, digital twins can anticipate the shelf-life of potatoes for different applications – as chips, fries, or potato starch – by considering aspects such as fungal growth or change in sugar content over time. Suppliers and retailers can then use this information to adapt how they are handled at each stage of the ripening process.

IoT devices are also useful in monitoring and controlling various aspects of the food supply chain, such as temperature, humidity, and storage conditions. The increased visibility enables businesses to monitor the quality and freshness of products, identify potential issues, and respond more quickly to changes in demand, ensuring that perishable products are stored and transported in optimal conditions.

Blockchain technology can enhance traceability of products across the food supply chain. By creating a secure, decentralized digital ledger, blockchain enables all parties involved in the supply chain to share and verify information. This not only enables faster response times, but also fosters trust among consumers and stakeholders.

Improved Inventory Management

The digital supply chain offers more sophisticated and efficient inventory management systems. By implementing real-time monitoring and cloud-based inventory systems, businesses can monitor and control stock levels more effectively. This enables businesses to reduce the likelihood of spoilage or excess inventory. Integrating these systems with warehouse management software (WMS) can help streamline the entire food supply chain, ensuring that food reaches the market in a timely and efficient manner. Moreover, cloud technologies can facilitate collaboration and information sharing among supply chain partners, further enhancing efficiency and waste reduction.

Additionally, automated technologies such as mobile robots and cobots that assist in storing, picking, packing, and shipping, can help streamline various processes from harvesting and sorting to packaging and distribution. By automating these tasks, businesses can reduce labor costs, improve efficiency, and minimize waste due to human error or inefficiencies.

Smart Packaging Solutions

Active packaging such as modified atmosphere packaging and vacuum packaging, help increase the shelf life of food products by releasing or absorbing compounds from the food or the headspace of food packaging. This interaction with food stalls reactions such as lipid oxidation, microbial growth, and moisture loss which can degrade food.

Intelligent packaging monitors the food environment inside and outside the package and transmits this information to the purchaser and the seller. This enables the detection of unsafe food products and the identification of potential health hazards. IoT sensors and radiofrequency identification (RFID) systems are used in intelligent packaging systems. A key benefit of intelligent packaging is that they can be programmed to reduce order picking and customs inspection times. Data-enabled barcodes enable warehouse workers to quickly identify the products they need for order picking.

Connected packaging promotes brand-to-consumer contact via IoT and a smartphone to provide product information. Quick response (QR) codes and near field communication (NFC) chips are the most used technologies in connected packaging. They are beneficial because their applications can be modified according to industry, product type, and use case. Additionally, connected packaging assists companies in reimagining the entire supply chain through the perspective of customer experience.

Datex Fast Fact

According to the Sustainable Packaging Coalition, intelligent packaging products design can help divert 650,000 tons of food waste from landfills and save 120 billion gallons of water per year.

Smart and Dynamic Pricing

The implementation of AI-powered dynamic pricing strategies can help reduce food waste. By adjusting prices in real-time based on factors such as demand, supply, and expiration dates, businesses can encourage the purchase of products that would otherwise go to waste. This approach not only helps minimize waste but also maximizes profits, increases customer satisfaction, and helps businesses meet customer expectations.

Dynamic pricing strategies are beneficial because they can reduce the social cost of retail food waste. The lost consumer surplus resulting from wasted food pushes up the price of food. This loss has a greater impact on poorer individuals, as food costs account for a greater percentage of their income.

Datex Fast Fact

Supermarkets that have introduced dynamic pricing tool Wasteless, have experienced a 32.8% reduction in food waste and 6.3% increases in revenues from food that was sold instead of tossed.

Enhanced Collaboration and Information Sharing

Digital supply chains foster greater collaboration and information sharing among all stakeholders, including supply chain leaders, suppliers, manufacturers, distributors, retailers, and consumers. By leveraging digital platforms and communication tools, businesses can more effectively coordinate their efforts and share vital information, such as inventory levels, demand forecasts, and product specifications. This increased collaboration can lead to more efficient operations, optimized production, and reduced waste.

Food waste-reducing platforms (FWRPs) are driving redistribution initiatives by donating or commercializing food surpluses. Apps and websites like Flashgood and Too Good to Go connect businesses such as restaurants, supermarkets, and farms, with charities, food banks, or individual consumers. By facilitating the exchange of surplus food, these platforms help ensure that excess food reaches those in need, rather than being discarded.

In addition, several market channels for ugly produce have emerged. Developing alternative markets or distribution channels for imperfect produce can help ensure that these products are not discarded unnecessarily. Companies such as Misfits Market purchases ugly produce directly from farms. They then sell the food in the form of subscription boxes for 30% to 50% less than typical retail prices.

Datex Fast Fact

According to the Environmental Protection Agency, nearly $160 billion worth of fruits and vegetables are thrown away in the United States each year.

How Circular Supply Chain Principles Can Reduce Food Waste

Digital supply chains can facilitate the integration of circular supply chain principles into food production and distribution. In contrast to traditional supply chains, where resources are used and discarded, circular supply chains focus on minimizing waste and maximizing the value of resources throughout their lifecycle.

Here are examples of how a circular supply chain can help reduce food waste:

Recycling and Resource Recovery

Circular supply chains focus on transforming waste into valuable resources. Food waste can be repurposed into animal feed, compost, bioenergy, or other products, minimizing waste and creating new value streams.

Closed-Loop Systems

Circular supply chains aim to create closed-loop systems where waste is minimized, and resources are continually cycled back into the production process. By implementing circular practices such as regenerative agriculture, waste-to-energy systems, and innovative waste management solutions, businesses can reduce food waste and promote a more sustainable food system.

Consumer Engagement

Circular supply chains can help raise consumer awareness about food waste and promote sustainable consumption habits. By providing transparent information about the origins, production, and disposal of food products, businesses can empower consumers to make informed choices that support a more sustainable food system.

Conclusion

Reducing food waste in global supply chains is a crucial step towards building a more sustainable food supply chain network. By understanding the causes of food waste and implementing innovative solutions, supply chain organizations can make a significant impact on the environmental, social, and economic stability of future supply chains.

With the amount of food waste around the world, it is essential for businesses, governments, and consumers to collaborate and embrace these new approaches to create a brighter, more sustainable future. In doing so, businesses can improve their supply chain risk management, mitigate supply chain disruption, and gain a competitive advantage.

Technology plays a crucial role in reducing food waste. By leveraging IoT devices, blockchain technology, supply chain control tower technology, and smart packaging, businesses can not only improve supply chain planning but also resource and performance management throughout the food supply network. As businesses and consumers continue to adopt digital supply chain solutions, the world will see a substantial reduction in food waste as it moves toward a sustainable and circular food economy.