1.3 trillion kgs. That’s the amount of food we as a society waste every year.
Of the 263 billion kgs of meat produced globally, over 20% is lost or wasted. Many significant causes of food waste, such as weather changes, the natural variability of food products and seasonal effects on supply and demand, are beyond the control of the supply network. Although these factors are essential for understanding food waste, the main focus of this article is on those causes that management practices can influence.
In India, like other developing economies, most of the loss and waste occurs during production and storage.
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Food waste reduction is an opportunity to improve efficiency and optimisation within businesses significantly. Rational management of the food products is necessary during the entire chain – Primary Production, Processing and Distribution. Let’s dig a little deeper.
1. Inventory Management
1.1 Inadequate handling and Storage Conditions
A common problem in fruit & vegetable and meat supply networks is poor adherence to temperature controls. This could be during storage, transportation or at the retail store.
Meat shelf life is directly dependent on the storage temperature. Shelf life at -18C (deep freezing) is months longer than at 4C (standard refrigeration). Hence, robust temperature controls are critical to shelf life and food safety.
Since the shelf life of meat and meat products is relatively short, the cycle time for meat products needs to be quite short.
1.2 Shelf-life and Stock Management
The absence of inventory management initiatives could lead to inventory risk, i.e. the cost associated with unsold inventory and waste. All meat products must have labels indicating their shelf-life (i.e. sell by or use by dates). Shelf life can vary significantly depending on the species, the product type, the packaging used and the quality of refrigeration.
Retailers often demand products with more than 70% of their shelf-life left, indicating their unwillingness to carry inventory risk. This leads to local optimisation at the retailer but creates inefficient stock rotation and additional waste for suppliers.
A lack of adherence to FIFO operations exacerbates this issue.
Suppliers are assessed on their delivery performance, typically by the “On Time In Full” (OTIF) metric. Besides, suppliers are keen to avoid short-supplying their customers. These twin pressures to maintain high OTIF figures and promote high safety stock levels often lead to wastage because of the limited shelf-life of products. Unfortunately, for most suppliers, the fear of a lost sale is greater than the fear of waste.
2. Supply & Demand Management
Meat products require between 42 days and 36 months, depending on the species, before they are ready for consumption. This large variation in production times necessitates planning and forecasting to balance supply and demand through these natural cycles.
These practices vary across producers and retailers. Since perishable products have a short shelf-life, inaccurate forecasting will inevitably cause waste. Some producers cope with inaccuracies by freezing surplus products, but this generally involves a substantial loss in the product’s value or a hefty investment in infrastructure.
Many companies are investing heavily in ML models to predict demand and plan their supply. This provides real-time inputs and suggests corrective actions to decision-makers without having to wait for end-of-month reports.
One of the most common ways of wastage is labelling your packages wrong. Many grocery companies have reached the stage of innovation where they print the exact weight of their product on the label. For example, instead of printing an average weight of 500 grams on the label, they print a precise weight of 512 grams. This allows you to track how much you’re packing in each order and work at reducing the variation.
However, while companies print the exact weight, they don’t print the exact cost. Going one step further would be printing a weight-specific price.
Right now, the price printed on the labels is for 500 grams, not 512 grams. So the company is basically wasting those 12 grams. While 12 grams might not seem like a lot, an average grocery company sends out about 2 lakh packages daily across India. So, the company is losing 24,00,000 grams or 2,400 kgs each day. 1kg of a meat product usually costs about 400-500 rupees. So the company is making a loss of approximately 12,00,000 or 12 lakh rupees.
An easy fix for this is printing the label after weighing it. This is called on-demand printing, as you print the label after packaging. This label will have the exact weight and price of the product you’re sending out.
4. Packaging and Labelling
All packaging is eventually wasted or recycled, but it protects the product from damage and can sometimes extend the shelf life. Hence the decision of how much and what kind of packaging to use is not clear-cut.
4.1 Wastage of Food Products:
The design and the material of the packaging and the atmosphere in which the product is kept influence the mechanical damage and microbial contaminations suffered by the product.
Retailers reported that the packaging of some fruits and vegetables could lead to increased waste because products cannot be repacked in store if one item in the pack becomes diseased or out of specification. In these cases, the whole pack is thrown away.
4.2 Wastage of Packaging:
The leading causes of packaging waste appear to be poorly packaged packs requiring repackaging, machine breakdowns, and labelling changes.
Packaging and labelling designs frequently change, usually at the request of retailers, which can create waste through “write-offs”. A large amount of human labour is wasted during these processes as well.
Proper protocols and inspections must be established to avoid errors and minimise recalls. Simple errors such as spelling mistakes, two similar labels placed on the wrong product, or incorrect labels on the wrong side of the product can cause interruptions in the packaging process and, in severe cases, a total recall of that product.
A few years back, Nestle’s KitKat Peanut Butter Bites were mispackaged as KitKat Original Milk Chocolate. The entire batch had to be recalled because the product had nuts, an allergen, and was not stated on the label or packaging.
60% of recalls are due to labelling errors, and approximately 25% to 50% are due to human error.
Improper packaging significantly impacts the amount of damage occurring during transport, as well as the exposure of the cargo to the adverse effects of weather conditions during loading/unloading and transportation of products.
5. Utilisation of By-Products
Non-utilization or under-utilisation of by-products leads to loss of potential revenues and the added and increasing cost of disposal of these products.
A ball-park figure for the contribution of by-products to the value of livestock would be 10% (depending on the species).
In the past, by-products were a favourite food in Asia, but health concerns have increased the focus on non-food uses, such as pet foods, pharmaceuticals, cosmetics and animal feed.
The by-products collected during the slaughtering process include livers, brains, hearts, kidneys, stomach, and tongue. Bones and rendered meat are widely used in pet foods, animal feed and fertilisers.
Gelatin, obtained from high-collagen products such as pork snouts, skin, and dried rendered bone, is used in confections, jellies, and pharmaceuticals.
Edible fats are used as shortenings and cooking oils, while inedible fats are used in soap and various industrial grease formulations. Lanolin from sheep wool is used in cosmetics. Finally, hides and pelts are used in the manufacture of leather.
6. Primary Production
Inadequate quality of the obtained meat and products, especially if they do not meet safety requirements or hygienic conditions during processing, can lead to food waste.
India has had the highest foot and mouth disease outbreaks over the past 5 years. In fact, India suffers a 20,000 crore loss annually due to this very disease.
Animal sickness can spread quickly through livestock and lead to unnecessary animal deaths. When a disease outbreaks, the animals need to be quarantined and tested. All affected animals are treated, and if that’s not possible, they are euthanised. The meat from unhealthy animals due to diseases is removed from the supply chain immediately to protect the consumers. The need to protect healthy livestock and the consumer supply chain is leading to new regulations and increased investment in traceability solutions such as livestock RFID.