Reducing waste through your supply chainPrint publication
It was announced on 29 January that the UK’s major supermarkets – Asda, Marks & Spencer, Morrisons, Sainsbury’s, Tesco, the Co-operative and Waitrose – have agreed to report on how much food they waste each year. The issue of food waste has become an increasingly hot topic, in particular following Tesco’s announcement last October that it had generated 28,500 tonnes of food waste at its stores from the first six months of 2013.
Apart from the loss to the bottom line through inefficiencies, there are governance considerations which will be driving the commitment to monitoring – and reducing food waste. Consumers increasingly demand sustainability from the retailers – and the retailers are responding.
The retailers will not be volunteering to report on their waste volumes if they think those volumes will be rising in the future. Pressure will be put on suppliers, who in turn will put pressure on their suppliers, to reduce costs, all the way to the farm gate. How might this happen?
- a focus on more effective packaging, such as an insistence on better distribution packing; the development of new packaging for different types of product, for example improving ventilation to a product; increased use of retail-ready packaging to reduce double handling
- greater scrutiny of storage and transportation facilities to reduce spoilage
- training on product handling and clearer handling instructions
- training on shelf replenishment
- reducing the numbers of pairs of hands involved in the transit process – possibly sharing warehousing and/or transport with competitors
- a reduction in contingency stock
- working with suppliers to improve forecast accuracy
- a review of minimum order quantity orders and supply periods
- education of consumers on best-before dates and use by dates
- review of product specifications
- analysis of rates of sale/minimum production run
- more end-to-end reviews with suppliers all the way through the chain.
Existing contracts may not reflect the sharpened focus on driving down waste and should be reviewed and amended if necessary. This applies not just to supply contracts but to logistics contracts, IT contracts and possibly contracts of employment.
Above all, collaboration with partners throughout the supply chain will be key and indeed the industry is already rife with examples of partnering arrangements between supplier and retailer with a view to pushing down waste volumes. We will see more and more partnering agreements designed to address the issue of waste.
The focus of this article has been on prevention rather than treatment, but treatment should also be at the forefront of waste management planning. The use of anaerobic digestion (AD) – the processing of food waste to generate heat and power – may help towards energy self-sufficiency or even to generate a revenue stream. The Renewable Heat Incentive (RHI), Renewable Obligation Certificates (ROCs) and Feed-in Tariffs offer incentives for businesses generating energy from waste. Walker Morris has advised on some of the country’s largest energy from waste projects and is currently advising on a number of food waste AD projects.
In summary, the focus on waste prevention – as well as wider sustainability – is here to stay, and failure to tackle the issue may lead to loss of reputation, profit and ultimately business. Take the time to think about the role of food waste in your strategy and whether you are in a position to turn food waste into an opportunity.
If you have any questions or would like more information please contact Richard Naish, Head of Food or Ben Sheppard, Commercial.