Wasting food is never a good thing. Given resource scarcity, efficient operations and logistics are important processes that help ensure a company best achieves its potential. Likewise, accurate inventory management and demand forecasting invite optimal revenues and profits. And increasingly, numerous industries are turning to technology solutions to improve these specific aspects of the operation. Based on recent developments, it now appears that the food industry might be doing the same.
(Read our bold story on Disruptive Technology Initiatives That Decrease Food Waste.)
For some time now, experts have recognized that there has been a need for food waste solutions. Overall estimates suggest that food waste reaches over 1.6 billion tons annually. The cost of this waste exceeds $1.2 trillion globally. With advances in cloud computing, data analytics, and artificial intelligence, however, new opportunities are emerging. Food waste solutions that employ these technologies for better demand forecasting are proving to be effective. And with several new companies offering new platforms, everyone throughout the food supply chain stands to benefit.
Wanted: Food Waste Solutions…Fast!
The figures cited above highlight the magnitude of the problem when it comes to the food industry. But for individual companies, the need for food waste solutions strike closer to home. Because many food items are perishable items, over-supply and over-production can result in tremendous costs related to waste. Not only does the lost product result in direct costs, but it similarly drives up expenses indirectly. Fuel and transit costs are routinely experienced related to the transport and delivery of wasted food. And packaging costs are also noteworthy when food goes bad. Without effective ways to measure consumer demand (demand forecasting), these companies suffer greatly from waste from food products.
Over-production and over-supply of food items are not the only problems that require food waste solutions. At the same time, under-supply issues related to poor demand forecasting also pose problems for those in the food industry. Statistically, when consumers are unable to locate a product, 62% will choose a substitute while 23% go to a competitor. Unfortunately, this happens all too often with “stock-outs” occurring about 7% of the time. The estimate of these costs alone pointed to $6 billion a year in lost sales revenues. Thus, there is a need for food waste solutions and more accurate food supply strategies. And this is where better demand forecasting and related technologies come into play. Learn how Tech Transforms Food Industry.
Bold Businesses Offering New Demand Forecasting Solutions
Several companies are introducing food waste solutions today that have the potential to revolutionize the food industry. For example, NexTec Group offers a variety of demand forecasting technologies through ERP, CRM, and Cloud-based products. With over 25 years in the food industry, they offer right-fit solutions to clients. LeanPath is another innovative company focusing on food waste solutions. Since 2004, LeanPath has helped kitchens globally through data-collection tools, cloud-based analytics, and expert coaching through waste-tracking methods. And a number of companies serve the agricultural sector in facilitating accurate demand forecasting and crop production.
These companies have certainly offered innovations in terms of food waste solutions. However, newer startups are looking to do more. Specifically, Crisp recently launched a comprehensive platform that can all food supply chain players can use. Its ERP software provides a more comprehensive demand forecasting strategy for food waste solutions. Crisp’s platform uses historical data as well as demand drivers to better predict food production and supply needs. These demand drivers include things like seasonality, price sensitivity, holidays, competition, marketing campaigns, and even weather. And its platform is self-learning, which means better demand forecasting the longer its clients utilize the technology. For retailers, suppliers, and distributions in the food industry, Crisp’s platform looks to be quite promising.
Streamlining the Entire Food Supply Chain
In terms of food waste solutions and demand forecasting, today’s innovations offer a more comprehensive approach. Notably, unlike other industries, the food sector enjoys a higher level of interdependence among various players. This means there are fewer competitive hurdles to cross in data-sharing among various stakeholders throughout the supply chain. As companies like Crisp has noted, this is allowing richer insights to be gained in demand forecasting. And ultimately, this will accelerate the opportunities to better align food production and supply with consumer needs.
Based on cost estimates, every 1% increase in improved demand forecasting results in a 2% reduction in cost. This naturally provides strong financial incentives for companies in the food supply chain to adopt disruptive technologies.
In addition, these same technologies also have the ability to enhance scheduling and customer service areas. This offers additional benefits that can certainly help the bottom line. But most importantly, food waste solutions such as these address major societal problems related to food scarcity and effective resource utilization. If companies can adopt better demand forecasting techniques, then opportunities to help global food shortages can be realized. And this is certainly a mission any bold business should embrace, especially when doing so is a clear win-win scenario.