Refine Product Management
Key Action Area
Refine Product Management
Refine Product Management
Ineffective or unsophisticated product management processes and procedures lead to wasted food across the supply chain – for example, more than 14% of unsold food at the retail level in 2021 was due to handling errors. The costs that result from it are generally borne by the businesses causing the waste – except when they are pushed downstream to other stakeholders, including consumers in the form of higher prices. And better management of product can also help extend its freshness and usability for those downstream recipients.
"Refining product management" means aligning purchases with sales as closely as possible, and when surplus arises, finding secondary outlets to accommodate it. It also means building out systems and processes for optimal on-site handling. Solutions in this action area employ tactics that simplify inventory management – such as dynamic pricing with artificial intelligence (to improve use of products in stock) and software that enhances future demand planning (to ensure that future product orders won’t lead to excess supply and waste). Product management solutions also include diversifying product outlets in case excess arises, establishing markets for last-minute products through alternative sales channels, and innovative new approaches such as markdown alert apps.
Refining product management should result in less over-purchasing, directly saving those businesses that implement solutions in this action area. As such, Corporate Finance and Spending can cover nearly two-thirds of the funding related to adopting solutions (paying solution providers) or developing internal capabilities. The next largest component comes from Venture Capital, which can fund continued innovation.
Key Indicators (Annual)
Interventions which are either not clearly definable as a specific solution, such as incremental improvement of existing common processes, or solutions that have already been implemented by a sufficiently large number of stakeholders such that there is little additional opportunity for them to address food waste that is still happening in the U.S. today.
Inventory evaluation to compare historic sales, costs of stocking and storing versus the benefit of selling in order to decrease variety of products to what is most profitable.
Inventory management technique, often using technology, to decrease prices for items that are falling behind average rate of sale in order to quickly move product.
Use of appropriate storage containers, packing materials, and facilities to meet the product-specific needs of items and maintain quality during storage.
Smaller and simpler in-store displays to minimize damages from excessive stacking, keep more fresh items in storage, and minimize handling numbers on items available.
Optimized Walk-In Layouts
Arrangement of products within walk-in freezers and coolers based on the optimal temperature, frequency of retrieval and use, and proximity to related items used in tandem.
- Operational Changes Require Corporate Capital - Operational changes, such as decreased transit time and First-Expired/First-Out models, will require corporations’ internal capital to purchase enabling equipment, pay service fees for solution providers, and change behaviors of employees through training and incentives
- Philanthropic Funding Decreases Risk for Food Businesses - Impact-First Investors, Government, and Non-Government Organizations have a significant role to play in supporting solution adoption in food organizations and nonprofits, particularly for subsidizing the upfront costs associated with implementing supplier- and purchaser-specific solutions. Depending on the size and capacity of some food businesses, implementing certain solutions can add operational risk and strain the organizational bandwidth. Philanthropic funding can act as a buffer for these organizations to limit the risk of non-starter solutions. De-risking funding is not a silver bullet by any means, but it can start the conversation for adopters.
- Private Investments Drive Effectiveness and Reduce Costs, Supporting Solution Adoption - Venture Capital and Corporate R&D drive greater effectiveness and decrease costs for product management technologies and solutions, which encourages adoption in large and small organizations.
Annual Investment Needed
Government Grants - $41.0M
Non-Government Grants - $129.3M
Impact-First Investments - $240.1M
Venture Capital - $388.8M
Private Equity - $172.8M
Corporate Finance & Spending- $1.6B
- Disincentivize, Limit, or Ban Food from Landfills– [State, Local; Legislative, Regulatory] Organic waste bans prohibit food waste from being sent to landfills, which in turn compels any business or other organization subject to the law (there are sometimes thresholds) to reduce their food waste. Organic waste bans are one of the most powerful ways to not only require recovery or recycling, but also incentivize preventative measures and food donations while also enabling measurement. Nine states currently have laws of this nature, as do several cities. Alternatively, while not as strong, increasing landfill tipping fees can achieve some of the same results by disincentivizing waste overall.
- Incentivize Innovations that Reduce Food Waste - [Federal, State, Local; Legislative/Regulatory] To spur adoption of existing technologies and encourage innovation of new ones, rebates, tax deductions, or other incentives could be granted to businesses that employ technologies that demonstrate an ability to reduce food waste by at least 10%.
- Employee Training and Incentives - Food businesses should encourage staff participation and engagement in interactive employee training and waste reduction incentive programs to increase consistency in execution of proper food safety, handling, and preparation protocols.
- Cross-System Information Sharing - Consumer facing food businesses should increase transparent data sharing with distributors and suppliers through existing data communication platforms to capture historical data and better forecast future demand.
- Pre-Competitive Practice Collaboration - Food businesses should share pre-competitive industry knowledge to leverage expertise on product management best practices, encourage technology adoption and infrastructure build-out, and streamline standardization across the industry, thus shifting to a higher standard of operational efficiency.
- Engaging More Players through Outreach - All product managers should identify opportunities to conduct outreach and education on adopting food waste reduction measures with new businesses, funders, consumers, and community organizations to share practical learnings, inspire new innovations, and identify potential partnerships.
- Cost-Efficient Tech - Research and development are needed to drive cost reductions of smart labeling, temperature monitoring, and early spoilage detection. These technologies exist but have not reached a price that allows for true scale.
- Automated Waste Tracking - Further automation in waste tracking and measurement, including that enabled by machine learning, image recognition, and "hands-free" tracking technologies, is needed to significantly increase measurement and the resulting management that comes.
- Advanced Ordering - Platforms that encourage advanced consumer orders are needed, as these provide businesses the ability to forecast with more precision.
Here's How You Can Reduce Food Waste
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