Reducing Food Waste Challenges the Global Supply Chain

Despite the challenges, the dollar value of annual food waste could be reduced by nearly $700 billion if businesses, governments, consumers, and action groups work together, BCG notes.

Small and midsize enterprises (SMEs) are among the most critical catalysts for widespread change. From food production to consumption, SMEs can be found across the global supply chain. The BCG report recommends a number of initiatives and best practices SMEs can adopt to cut down on how much food is wasted while actually improving their own bottom lines.

Improving Awareness Along the Global Supply Chain

Members of the supply chain have little visibility into just how much food is wasted, BCG found. The report notes the role SMEs can play to help educate farmers, producers, employees, and consumers to increase awareness. For example, they can teach farmers how to better protect crops during and after harvest, and they can train employees to effectively manage inventory and recycle and repurpose by-products and waste.

SMEs also can improve awareness among consumers by introducing promotions that highlight the importance of waste reduction. For example, one U.S. grocery chain recently unveiled a “Zero Hunger, Zero Waste” initiative to elicit consumer insight on food waste reduction.²

In addition, improved packaging can be used to better preserve goods. For example, one way to reduce spoilage—and increase profit margins—is to pack fresh fruit and vegetables with ethylene-absorbing strips. This can increase the shelf life of fresh strawberries by up to 50 percent.³

Updating the Food Industry’s Supply-Chain Infrastructure

Storage and transportation companies, which comprise a large part of the global food supply chain, could play a major role in reducing waste. With the right infrastructure and equipment—for example, advanced cold-chain containers—perishable food can be preserved for significantly longer periods of time. Yet less than 10 percent of all perishable foods are currently being refrigerated while transported through the supply chain.⁴

In addition, cold-chain containers can be managed remotely to ensure consistency in temperature, humidity, etc., further reducing food spoilage and waste. According to one shipping container company, remote container management and a controlled atmosphere can extend transit times for some fruits and vegetables by more than a month.⁵

Addressing Supply-Chain Efficiency

To date, many supply-chain efficiency efforts have focused on improving manufacturing speed and equipment, not reducing the amount of food wasted. Many companies have been slow to adopt digital supply-chain technologies that can closely track waste, cut costs, and increase efficiency. For example, some digital supply-chain tools can track supply and demand data to prevent overproduction. Other tools can create dynamic pricing schemes to quickly move products through the supply chain before they expire.⁶

Some major retailers are using automation capabilities to better manage inventory and fill their shelves at a faster pace.⁷ Another option to improve efficiency and reduce waste is to localize the supply chain, which reduces the amount of time food products spend in transit.⁸

Collaboration among all parties and stakeholders, from production to consumer, also is key, according to BCG. By working together, food producers, public agencies, and other companies can collect and share data regarding consumer demand. This can improve supply and demand forecasting to match consumer needs without overproduction.⁹

Business Benefits of Reducing Food Waste

Research shows companies that are effective at addressing societal challenges like food waste can see margins up to 3.3 percentage points higher than others.¹⁰ Businesses working to reduce food waste also could see their costs come down due to greater supply-chain efficiency.

In addition, new revenue streams can be found by transforming wasted food and by-products into new products. For example, one company is using biorefining technology to transform by-products from olive oil mills into cosmetic, agricultural, and construction products. Other companies are repurposing leftover food into animal feed and converting oil waste into biodiesel fuel.¹¹