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<\/a><\/strong><\/p>\nWalmart: Addressing Produce Waste<\/strong><\/p>\n In the past, Walmart used manual inspections to assess the quality of produce shipments based on in-person review and photos. After these inspections, produce would be accepted\/rejected, per USDA guidelines.<\/p>\n <\/p>\n Recognizing this inefficiency, Walmart held an internal hackathon event in 2017 \u2013 the result was \u2018Eden\u2019, a machine learning algorithm that scans produce to assess quality and freshness. With Eden, Walmart digitized the USDA quality standards and trained its algorithms on the 1 million old produce photos they had stored. The availability of this data allowed Walmart to launch Eden 6 months after conception.[4]<\/p>\n <\/p>\n Eden saved Walmart $86M, through reduced food waste, in the 6 months after launch. It projects additional savings of $2B over the next 5 years.[5]<\/p>\n <\/p>\n How Does it Work?<\/em><\/p>\n Eden has a suite of apps that allow workers and suppliers to take photos of shipments \u2013 which are assessed using Eden\u2019s algorithms, providing real-time analytics on the defect rate, freshness level etc. (see Figure #2). This reduces screening time, resources wasted transporting defect produce and allows for in-store prioritization.[6] Walmart has also begun to add sensor data to Eden \u2013 generated by monitoring temperature\/light conditions for each shipment.<\/p>\n <\/p>\n Figure #2-Eden Interface<\/u><\/p>\n Take an example: per Figure #3, suppliers use Eden to detect defects before shipment. While en-route, sensors indicate conditions have altered the produce\u2019s useful life \u2013 so the shipment is rerouted to a nearer distribution center. The produce then reaches the shelf faster \u2013 where workers can prioritize it as required (e.g., with price markdowns).[7]<\/p>\n <\/p>\n Figure #3-Eden Use Case<\/u><\/p>\n Value Creation\/Capture<\/em><\/p>\n Eden undoubtedly creates value by enhancing the experience of customers. It allows Walmart to closely monitor shipment quality and the freshness of produce – ensuring quality is maintained on-shelf for customers. It\u2019s interesting to consider if customers\u2019 advocacy increases because of the environmental benefits from reduced food waste. I believe this is the case for younger generations \u2013 in a recent survey, 45% of those below 44 said they consider food waste when grocery shopping vs. 27% for 45-64 year olds [8].<\/p>\n <\/p>\n It\u2019s clear that Eden provides significant economic benefit to Walmart \u2013 which is value that didn\u2019t exist before. Walmart is jointly growing the \u2018pie\u2019 with its suppliers \u2013 i.e., creating value by helping them screen shipments. This assumes that the supplier cost saving from not shipping defective produce offsets the increased cost of disposal.\u00a0 However, it\u2019s likely that Walmart will use its bargaining power to pressure suppliers to give up this created value (i.e., value capture).<\/p>\n <\/p>\n Challenges <\/strong><\/p>\n Walmart has not released any data on Eden\u2019s screening effectiveness vs. humans \u2013 so we have to assume it\u2019s superior. Walmart\u2019s challenge will be to continuously improve Eden over time. However, it\u2019s in a fortunate data position \u2013 it should leverage data from its international operations, making Eden more difficult to replicate.<\/p>\n <\/p>\n Walmart may also face near-term controversy with Eden. Startup Zest Labs sued Walmart for $2B in 2018, alleging that it worked with Walmart on a similar product for many years before Eden. They claim their proprietary information was stolen to create Eden.[9] Walmart will likely settle and continue to operate Eden.<\/p>\n <\/p>\n Conclusion\/Opportunities<\/strong><\/p>\n It\u2019s clear that waste reduction analytics is highly valuable to Walmart. It has allowed them to utilize an under tapped resource: their produce data. It increases customer advocacy and allows Walmart to \u2018grow the pie\u2019 with suppliers.<\/p>\n <\/p>\n What\u2019s next? I would encourage Walmart to use Eden to refine grocery delivery \u2013 given inconsistent produce freshness is a major current barrier to adoption. They could pass-on Eden information to customers in advance\u2013 i.e., the expected life of their produce.<\/p>\n <\/p>\n Finally, Eden undoubtedly results in an environmental benefit. Given this, should Walmart open-source the technology, making it widely available to other grocers? It would be in the best interests of the environment, but I doubt Walmart will.<\/p>\n <\/p>\n (749 Words) <\/strong><\/p>\n <\/p>\n References<\/em><\/p>\n [1] Yale Climate Connections. May 2019. \u201cFood waste starts long before food gets to your plate\u201d. Retrieved from: https:\/\/www.yaleclimateconnections.org\/2019\/05\/food-waste-has-crucial-climate-impacts\/<\/a><\/p>\n [2] ReFed. Jan 2018. \u201cReFed analysis reveals food waste represents $18.2B profit opportunity for grocery retailers\u201d. Retrieved from: \u00a0https:\/\/www.refed.com\/content-hub\/refed-analysis-reveals-food-waste-represents-18-2-billion-profit-opportunity-for-grocery-retailers<\/a><\/p>\n [3] Statista. 2018. \u201cShare of Tesco store food waste in the United Kingdom (UK) in 2017\/18, by category breakdown\u201d. Retrieved from: https:\/\/www.statista.com\/statistics\/490863\/tesco-group-united-kingdom-uk-food-waste-by-category\/<\/a><\/p>\n [4] Phil Lempert. Forbes. Mar 2018. \u201cWalmart Wants To Sell The Freshest Produce, And It’s Using iPhones To Do It\u201d. Retrieved from: https:\/\/www.forbes.com\/sites\/phillempert\/2018\/03\/01\/walmart-wants-to-sell-the-freshest-produce-and-are-using-iphones-to-do-it\/#beb563593e4d<\/a><\/p>\n [5] Dan Alaimo. March 2018. \u201cWalmart develops produce inspection technology to track freshness\u201d. Retrieved from: https:\/\/www.grocerydive.com\/news\/grocery–walmart-develops-produce-inspection-technology-to-track-freshness\/534221\/<\/a><\/p>\n [6] Walmart. Mar 2018. \u201cEden: The Tech That\u2019s Bringing Fresher Groceries to You\u201d. Retrieved from: https:\/\/corporate.walmart.com\/newsroom\/innovation\/20180301\/eden-the-tech-thats-bringing-fresher-groceries-to-you<\/a><\/p>\n [7] ibid.<\/p>\n [8] New Hope Network. Sep 2019. \u201cSurvey finds younger consumers most concerned about wasting food\u201d. Retrieved from: https:\/\/www.newhope.com\/news\/survey-finds-younger-consumers-most-concerned-about-wasting-food<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n