Knowledge Insights Issue

February 2015

Knowledge Insights:
Supply Chain Innovations
to Address Wastage

By Alexander Chan

www.oxfordstrategygroup.com
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http://www.linkedin.com/company/the-oxford-strategy-group
info@oxfordstrategygroup.com

Knowledge Insights:
Supply Chain Innovations to
address wastage
33-50% food produced in UK is wasted with almost equal
contribution by both consumers & suppliers.
This piece focuses on innovations & insights across supply chain
(from consumers to retailer to suppliers) that may help in
managing food wastage.

Alexander Chan is a Managing Director at OSG.

For more information, please visit www.oxfordstrategygroup.com
or contact us at info@oxfordstrategygroup.com

Supply Chain Innovations

Background
33-50% food produced in UK is wasted with almost equal contribu=on by both
consumers & suppliers.

The key ques=on thus arises as to how supply chain innova=ons can help in reducing
wastage along the supply chain.

Case Framework & Structure

Reducing wastage along
supply chain

Customers:
Public
Percep/on

Retailers:
Sales
Forecas/ng

Suppliers: Collabora/on
Networks

Public Percep/on
Social Media Analysis

Data Sources

Supply Chain Innova/ons

Align public percep&ons

to actual supply chain
informa&on

Real-&me POS Data,

Assortment Analysis,
Social Listening

Sta/s/cal &
Computer Analysis

Gene&c Algorithms,
Ar&cial Neural
Networks, Gaussian
Processes, and Support
Vector Machines

Vendor Managed
Inventory

Dealing with Food Wastage

Dona&ons and Disposals

Supply Chain Innovations

Key Case Insights

1 Emerging importance of understanding public percep4on

Customers:
Public
Percep/on

Recent years have seen an increase in awareness towards wastage across supply chains, where a
2012 WRAP survey has shown that over 70% of individuals are aware of the harm that food
wastage brings to the environment.

The increasing public concern (par=cularly on social media) suggests its vital for companies to
ac=vely engage and work towards improving public percep=on through emphasizing and beQer
highligh=ng the companys sustainability commitments- which more oRen than already exists
but are not well communicated to consumers.

2 U4lize product a8ribute analysis & social listening tools

Retailers:
Sales
Forecas/ng

When it comes to improving data sources used for sales forecas=ng, assortment
analysis (Marshall Fisher and Ramnath Vaidyanathan) focuses on isola=ng demand of a
combina=on of product aQributes to allow for beQer assortment op=miza=on & clustering of
stores for assortments. Other than that, social listening can be used to extract data from
social media. Specically, companies can develop a path to purchase for special occasions
and u=lize social listening tools to extract the dierent data along the path to purchase.

3 Develop Computer Analysis Tools

4 typical computer analysis forecas=ng tools include: Gene&c Algorithms, Ar&cial Neural
Networks, Gaussian Processes, and Support Vector Machines. Specically, the laQer 2 analysis
techniques has shown good promise, with Support Vector Machines having large amount of
suppor=ng research evidence.

4 Vendor Managed Inventory Systems

Suppliers:
Collabora/on
Networks

Supply chain systems that allows the suppliers place the orders for the retailers and are
responsible for determining quan=ty and =ming of those orders. Such systems allow for
beQer inventory management, reduced variability in stocks and beQer synchroniza=on and
collabora=on. However, the main setbacks to this are that there are risk of loss from out-of-
stocks and more autonomy needs to be handed over to suppliers.

5 Further consider emerging disposal methods

Two op=ons exist for unloading unsalvageable food: dona=on and disposals. Specically for
disposals, there are various methods, of which anaerobic diges=on, rendering, and
compos=ng are more likely to be posi=vely received by the public, but greater scien=c
consensus is yet to be realized.

References

Public Percep=on study:

- WRAP: Consumer A`tudes to Food Waste and Packaging (2012)
Sales forecast study:
- Oracle Supply Chain Data Planning White Paper
- HBR Which products should you stock? (Nov 2012)
Suppliers study:
- Vendor managed inventory: a survey of the Taiwanese grocery
industry [Tyan and Wee, 2003]
Waste Management Reduc=on
- IGD Supply Chain Analysis: Food and Packaging Waste (2011)
- Ipsos Mori: Public A`tudes Towards Recycling and Waste
Management (2002)

INTERESTING FACTS
About 1/3-1/2 of all food produced in the UK
is wasted and this trend is largely steady over
&me. Specically, there is approximately
equal contribu&on to food wastage between
retailers and consumers (though its more
dicult to change consumers behaviour).
Supply Chain Innovations

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the Oxford Strategy Group that focuses on research &
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