IMPROVED INVENTORY MANAGEMENT: REDUCING FOOD WASTE

If you find yourself having to throw food items every few weeks from your refrigerator, imagine what goes on at a grocery store.

Given the size of the industry, reducing retail food losses can mean significant savings for companies. Retail is one of the most dynamic sectors in the Canadian market due to the significant sales figures; by their levels of movement and operations; as well as the number of jobs it offers. The dimension of this industry has led the sector to always seek innovations, in its different processes and business stages.

That’s when a fundamental question arises for this sector: how to reduce retail food losses? Learn how to minimize waste in the following Slimstock Knowledge article.

Every year we know figures that show us millions of kilos of food becoming depleted without reaching the consumer. To reduce retail losses, some companies have implemented specific measures. For example, encourage the purchase of fruits and vegetables that are less appealing (without being bad). These, usually end up in the trash because they get spoilt without anyone buying them.

This could be a way to try to tackle the issue from the perspective of the final consumer. But is this the real problem in question to reduce losses in retail food?

HOW TO REDUCE WASTE IN RETAIL FOOD?

To reduce retail food losses, the way to manage fresh products should be reconsidered. After all, as Adam Leyland, publisher of ‘The Grocer,’ puts it: “Whether it is caused by a lower demand than expected, as if it is due to not complying with the regulations or due to having passed its date of expiration, shrinkage is not a small matter. It costs millions.” So, what can be done to reduce retail waste?

REPLENISHMENT MANAGEMENT

For retailers in the food sector, demand can fluctuate significantly in a single day. Also, many companies must base their replenishment decisions on weekly or monthly forecasts. This is not enough to keep inventory and demand balanced.

For example, let’s look at the typical demand patterns for the case of bread. In the first days of the week, demand is significantly lower as compared to the end of the week. This is because people tend to buy more for the next week. Therefore, if you use a weekly forecast and use it to make a daily average, you will have excesses during the first days. Also, at the end of the week (when there are more purchases) you will end up with less stock. Also, fresh bread only hangs on the shelf for a day. This means that whenever you have excess inventory, the risk of it becoming waste is very high.

To reduce losses in retail food, it’s essential to have a daily planning system that offers full visibility. Only by having access to this information can you optimize your replenishment processes. In this way, they can reduce waste and ensure that they have the necessary stock at the right time.

ORDER QUANTITY

How to maximize the shelf life of the product?

In terms of orders, retailers in the food sector face a significant challenge. That’s because they have to establish the exact amount of stock they must have and when they should request it. For this reason, unless the useful life of the product is taken into account, it is difficult to carry out this operation profitably.

Since fresh products have a limited life, storing them in the wrong place can result in lost sales.

For fresh items with high turnover, the tendency is usually to try to arrange them as close as possible to the final consumer. This is done to avoid stock breakage and ensure the highest number of sales before the expiration date is reached. To maintain high levels of availability, it may be advisable to have a particular stock of security both in the store and in the warehouse.

In the case of lower rotation of fresh products – in which the demand is more volatile – it makes more sense to maintain low levels of store stock. Having a centralized stock will allow us to be in a better position to respond to demand (at any point in the supply chain) without the risk of generating waste.

TIME FOR A NEW APPROACH

Reducing waste and managing it efficiently is a real challenge for retailers. On the one hand, customers expect high levels of availability. On the other, not hitting the forecasts and generate too much waste is a real problem for a retailer. That is why it is necessary for professionals in the sector to consider what their companies are doing to reduce waste.