ReFED’s Roadmap to 2030: Reducing U.S. Food Waste by 50% was designed to provide food businesses, funders, policymakers, and more with a framework around which to align their food waste reduction efforts. It outlines seven key action areas with related solutions to prevent, rescue, and recycle food at risk of going to waste. Each month in our special “Following the Roadmap” series, we’ll dig deep into one of the key action areas to explore why waste occurs – and what can be done about it.
Refine Product Management
Ineffective or unsophisticated product management processes and procedures lead to wasted food across the supply chain – for example, 20% of unsold food at the retail level is 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. While surplus food is generally lower in this action area compared to the others, there are still opportunities for improvement.
Action Area Overview
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.
Impact of Solutions Adoption
ReFED’s analysis shows that solutions that improve product management can reduce food waste by 4.6 million tons each year, along with cutting greenhouse gas emissions by 14.2 million metric tons and saving more than 850 billion gallons of water. While the cost to implement solutions is $3.9 billion per year, this can result in an annual net financial benefit of $15.8 billion.
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.
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.
Which solutions can help food businesses to refine product management? Visit the Solutions Database in ReFED’s Insights Engine to learn more.