Food Chain Centre identifies a huge 20% wasted opportunity
Britain’s food producers can reduce by one-fifth the waste they incur along the supply chain, according to research to be published later this week.
The work represents the largest investigation of its type ever carried out. The Food Chain Centre (FCC) was set up by government after the findings of Sir Don Curry’s Policy Commission on Farming and Food. On Wednesday, the FCC will report back on work over the past five years designed to improve the industry’s efficiency and ensure its future sustainability.
The FCC, co-ordinated by grocery think tank IGD, will present results of 33 sector categories, from red meat and fresh produce through to dairy and bakery, that have been investigated. The research involved 1,581 businesses, from farmers through to processors, retailers and those in the foodservice sector.
“The findings are compelling,” said the IGD’s head of supply chain Tarun Patel, giving a snapshot of some of the main FCC findings at a recent IGD supply chain conference. He described how 20% of the food industry’s costs are “non-value adding”
He claimed the costs resulted from problems such as product variability, inconsistent product quality and sub-optimal use of staff. Other problems included inefficient plant layout, badly utilised equipment and inputs, repetitive handling and moving and inefficient administration. It was, said Patel, “a significant issue facing our industry”
Highlighting the need to reduce the huge complexity that exists, he cited the example of the cheese supply chain and said: “What chance do you have for lean and smooth product flow when you have such a disjointed supply chain.”
Likewise, the fresh produce sector offered the possibility to “drive out complexity”. However, he added that “getting the trust of farmers was absolutely key to the initiative”. Applying lean principles is all about stripping out waste from the supply chains and focusing on those activities that add value, said Patel.
“There is an upward trend in retailer supply chain costs so they are looking for any opportunities to drive down transport costs,” he said. He also noted that two of the primary drivers of changing sales demand for retailers were in-store promotions and location in store. However, he said for suppliers retail distribution was the second most important issue after in-store promotions.
By using tools such as process mapping, it was possible to increase staff productivity, reduce unnecessary stock and plan production more efficiently, he added. “Taking a practical approach is important in developing a lean operation.” And while it all might have seemed like common sense, he said: “The trouble is people are focused on collecting the wrong type of data.”
There were also trade-offs to be addressed, he said. They included frequency of delivery versus level of truck fill, on-shelf availability versus wastage and mass production versus custom flexibility. “We need to work harder and the answer is around consolidation centres,” said Patel.
