Orchestrating the Future of Food Supply Chains

A System Dynamics Approach to Analyzing Food Waste in

Wholesale Markets

Food and Retail Operations Lab

Furqan Khalil Syed
Advisors: Dr. Christopher Mejia
Prof. Dr. Sara Grobbelaar
Motivation and Background

1.3 Billion tonnes of food

wasted every year

750 million people at risk of

severe food insecurity

How can we match the dynamic consumption patterns to food sources to ensure accessibility,
affordability and availability for all?

© 2022 MIT Center for Transportation & Logistics | Page 2

Research Objectives

Food is lost along every stage in the food value chain:

On-farm post
Transport,
Pre harvest / Harvest / harvest/ Wholesale
storage, Retail Consumption
Pre Slaughter Slaughter slaughter Markets
distribution
operations
Stages of food systems

1. What significant Supply Chain factors may help address overarching challenges around food
waste in wholesale markets?

2. What are the strategic and operational levers and some recommendations that can help fight
food loss and waste?

We aim not to solve specific challenges of specific wholesale markets but devise a framework
that can support the process of analyzing issues and developing mitigation schemes.

© 2022 MIT Center for Transportation & Logistics | Page 3

Methodology and Results

Process and Quantitative

Primary Data SD Simulation
Stakeholder Data
Collection Framework Model
Mapping Collection

Identifying and Semi-structured Publicly available Causal Loop Simulate SD model with
developing key interviews data Diagram supporting data
partners
Behavioral WS Market sourced Develop Stock and Devise Intervention
Surveys Flow Model Schemes

© 2022 MIT Center for Transportation & Logistics | Page 4

Methodology and Results

Process and Quantitative

Primary Data SD Simulation
Stakeholder Data
Collection Framework Model
Mapping Collection

Identifying and Semi-structured Publicly available Causal Loop Simulate SD model with
developing key interviews data Diagram supporting data
partners
Behavioral WS Market sourced Develop Stock and Devise Intervention
Surveys Flow Model Schemes

© 2022 MIT Center for Transportation & Logistics | Page 5

Process Mapping and Primary Data Collection

Primary Partner Hamburg, Germany

World Union of Wholesale Markets (WUWM) Paris, France
Barcelona, Spain Piraeus, Greece
A broad network of WS markets that aims to create a
more inclusive, sustainable and high quality Mexico City
international food system
Melbourne,
Australia

3 dimensions:
Strategy and
Market Operations Key Challenges
Objectives

© 2022 MIT Center for Transportation & Logistics | Page 6

Methodology and Results

Process and Quantitative

Primary Data SD Simulation
Stakeholder Data
Collection Framework Model
Mapping Collection

Identifying and Semi-structured Publicly available Causal Loop Simulate SD model with
developing key interviews data Diagram supporting data
partners
Behavioral WS Market sourced Develop Stock and Devise Intervention
Surveys Flow Model Schemes

System Dynamics framework capturing 70 + interrelated factors (or variables)

© 2022 MIT Center for Transportation & Logistics | Page 7

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 8

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 9

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 10

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 11

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 12

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest

Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 13

Simplified SD Model for Wholesale Market Operations
Physical Flow Endogenous Variables
Partnerships with
Tax Incentives Causal impact Stock Variables
foodbanks
Terminal Flow Variables
Decision Variables
Food Recovery Taxes Exogenous (Driving)
variables

Supply from Wholesale Wholesale Operational

Sales Income
farms Market Inventory Market Cash Expenditure

Food Waste Infrastructure

Willingness to Investment
invest
Hi Lo
Invest in
Inventory Total Inventory
Product Price Cold
Capacity Need Capacity
Storage

Refrigeration Invest in Cold Storage

Product Shelf-life Product Quality
Capacity Need Capacity Capacity

© 2022 MIT Center for Transportation & Logistics | Page 14

Methodology and Results

Process and Quantitative

Primary Data SD Simulation
Stakeholder Data
Collection Framework Model
Mapping Collection

Identifying and Semi-structured Publicly available Causal Loop Simulate SD model with
developing key interviews data Diagram supporting data
partners
Behavioral WS Market sourced Develop Stock and Devise Intervention
Surveys Flow Model Schemes

© 2022 MIT Center for Transportation & Logistics | Page 15

Simulating the model

7 Scenarios developed to explore model dynamics

 Baseline  Panic buying

 Growing yield without infrastructure investment  Perishability
 Growing yield with infrastructure investment  Intermittent Supply shock
 Partnerships with foodbanks

© 2022 MIT Center for Transportation & Logistics | Page 16

 Seasonal supply with/out Infrastructure Investment
Partnerships with Willingness to invest LOW Supply from
Product Shelf-life
foodbanks NO 2-10 d Willingness to invest HIGH farms

Simulation run over 1000 days No infrastructure investment High infrastructure investment

Key Insights:
• A growing yield triggers investment in merchandise capacity and cold storage
• Food loss is significantly reduced as cold chain and additional capacity are developed

© 2022 MIT Center for Transportation & Logistics | Page 17

 Intermittent Supply (with active partnerships)
Supply from
Partnerships with Willingness to farms
Product Shelf-life HIGH
foodbanks YES 2-10 d Invest
Supply from
farms

Simulation run over 1000 days Intermittent Supply Seasonal Supply

Key Insights:
• Sudden changes in supply can cause the system to “overreact”
• Delay in market response causes the demand – and therefore stock to trail behind supply peaks
• With established partnerships with foodbanks, potential loss shifts to recovery

© 2022 MIT Center for Transportation & Logistics | Page 18

Key Contributions

 A framework capturing dynamics of wholesale market supply chains

 Key insights for wholesale markets:

 Partnerships with foodbanks
 Proactive infrastructure investment
 Strategic management of supply & demand

 Use of systems thinking in wholesale market supply chains

 Foundational work for future research

© 2022 MIT Center for Transportation & Logistics | Page 19

Thank you!
System Dynamics Models

Cash flow

Inventory

Demand
Infrastructure
© 2022 MIT Center for Transportation & Logistics | Page 21