When it comes to supply chain challenges, few are as massive as handling food waste. To get a sense of the magnitude of the problem, consider that the Food and Agricultural Organization (FAO) of the United Nations says that every year one-third of the food produced in the world for human consumption gets lost or wasted.
The problem has recently prompted targeted efforts by both government and private industry. For example, the state of New Jersey recently introduced several pieces of legislation aimed at reducing food waste by 50 percent by 2030. In the United Kingdom, Tesco has implemented a food-waste hotline, which suppliers can use to report a potential food-waste issue, and then have the grocery chain work with them to resolve it.
Now academia is getting into the act. Researchers from Arizona State University's (ASU) W.P. Carey School of Business have received close to US$1 million dollars in funding from the U.S. Department of Agriculture (USDA) to pursue two research projects that will explore solutions to food waste.
The first project will test online marketplaces and mobile apps that could help farmers, restaurants, retailers, and households manage problems with day-to-day food waste. For example, a farm could post that it has a surplus of food on an app or website. Then consumers could select the items they want, and the app would coordinate delivery and payment. This research is being done in conjunction with Imperfect Foods, a San Francisco startup that seeks to sell imperfect or misshapen produce to consumers. (Such produce is often rejected by consumers and often goes to waste.)
"In Arizona and around the country 18 percent of landfills is food waste, according to the EPA—and that may be a conservative number," said lead investigator Tim Richards in a statement. "If we can figure out a way to better utilize food that would otherwise be wasted, we can minimize what goes into our landfills, and more importantly, make better use of the water that's used to irrigate plants, saving 25 percent of our freshwater supply each year."
The second ASU research project will investigate how to reduce the problem of "shrink," or the loss of product between delivery and checkout, in grocery stores that use scan-based trading (SBT). In scan-based trading, the supplier retains ownership of the inventory in stores until the product has been scanned at the checkout register. While the SBT model is popular, shrink is major problem, according to lead investigator Elliot Rabinovich.
"We hope to explore the causes of shrink and how to address it. Can suppliers do a better job at managing it? Or do retailers need to have greater sensitivity—regardless of whether they own the inventory or not?" Rabinovich said. "It's not finding out who's at fault; it's how do we work together."
At the conclusion of the two-year research period, investigators hope to be able to answer the following:
- How can SBT contracts support the objectives of retailers, suppliers, and the farmers who sell to them?
- Is there potential to minimize food waste through the supply system by using SBT?
- How does shrink at SBT stores and non-SBT stores impact wholesale and retail costs?
The two projects will be funded by Agriculture Economics and Rural Communities (AERC) grants from the USDA's Agriculture and Food Research Initiative.
