{"id":24719,"date":"2017-11-15T18:30:21","date_gmt":"2017-11-15T23:30:21","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/apps-on-apps-tesco-uses-digitalization-to-tackle-food-waste\/"},"modified":"2017-11-15T18:30:21","modified_gmt":"2017-11-15T23:30:21","slug":"apps-on-apps-tesco-uses-digitalization-to-tackle-food-waste","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/apps-on-apps-tesco-uses-digitalization-to-tackle-food-waste\/","title":{"rendered":"Apps on Apps: Tesco uses digitalization to tackle food waste"},"content":{"rendered":"

Is a wasteful supply chain leaving 8 million people hungry?<\/strong><\/p>\n

In 2013, Britain\u2019s largest supermarket, Tesco, confessed to throwing away almost 30,000 tonnes (30 million kg) of food in 6 months, half of which was still safe to eat [1]. This represents a loss of 60 million meals [2], while 8 million Britons struggle to put enough food on the table each day [3]. Moral and ethical reasons aside, businesses also have an economic incentive to reduce waste. A UN Sustainable Growth report found that every $1 companies invested in programs to reduce food waste yielded a $14 return [4].<\/p>\n

Waste is the enemy of any efficient supply chain, so why is Tesco only now tackling its food waste problem? Put simply, meeting customer demand trumps the expense of carrying extra safety stock. Supermarkets commonly over-order to ensure they always have necessary items in stock [5]. Yet today, this excess inventory often ends up in landfills.<\/p>\n

Fresh fruits and vegetables most often fall victim to waste because they must be sold and consumed by an expiration date. Speed of redistribution is essential in any effort to donate food to people in need. Sadly, many charities resort to stocking dry goods because they do not have the logistics infrastructure in place to retrieve the produce quickly enough [6].<\/p>\n

To reduce food waste, Tesco must cut down on excess safety stock with improved order accuracy, integrate new players – such as food charities – seamlessly into the supply chain, and increase supply chain transparency to save food before it is lost. The recipe calls for a faster, more accurate, more connected supply chain solutions — in other words, a digital supply chain.<\/p>\n

Current solutions: donations and accurate ordering <\/strong><\/p>\n

Short-term, Tesco has publicly announced its goals of achieving less than 1% food waste by the end of 2017 [7], and publishes data on its progress, as in the featured print ad [8]. They have prioritized donating food nearing its sell-by date to thousands of charities, and at a minimum converting it to bio-diesel. This endeavor demands a fast and reliable information transfer \u2013 the perfect challenge for a digital system. Tesco implemented the FareShare FoodCloud app [9], which allows them to promptly inform local charities of the amount of food ready for pick up that day. So far, they have given 10 million meals to 5400 charities [10].<\/p>\n

\"\"<\/a><\/p>\n

Longer-term, Tesco aims to halve food waste in their own operations, their supply chain, and in the markets in which they operate retail stores by 2030 [11].<\/p>\n

So, Tesco is investing in big data and analytics to improve their ordering by more accurately reading current customer behavior and forecasting consumer demand. Currently, Tesco uses analytics and clustering to group products by how people shop for the products, not by how people shop in-store or by how Tesco used to buy them [12].<\/p>\n

Finally, Tesco is also working with suppliers to broaden their specifications to sell the less than visually perfect fruits and vegetables that are edible, but currently tossed out. The \u201cPerfectly Imperfect\u201d line of produce is priced lower and allows Tesco to take more crop from suppliers [13].<\/p>\n

What\u2019s next: Tesco will know what I\u2019ll buy before I do <\/strong><\/p>\n

Tesco\u2019s inventory management improvements are only the beginning. Tesco could more accurately predict demand by integrating more and different types of external data into their analytics engines. The pipedream would be knowing what people will buy before they do.<\/p>\n

Tesco has embarked on this journey already, but seemingly in a manual and one-off fashion. Tesco noticed that warmer weather led to a bumper crop in strawberries. Thus they were able to sell larger strawberry boxes at discounted prices, benefiting both the customer, who received a discount, and the grower, because Tesco bought more from them [14]. By systematically analyzing more data, Tesco could automate and systematize this adaptive ordering practice to waste less and sell more \u2013 a win-win.<\/p>\n

Additionally, Tesco should attempt vertically integrating the supply chain and deploying Internet of Things systems. The benefits of vertical integration are self-evident: the tighter and faster the information and product flow between farmers, wholesalers, retailers, and consumers, the less food will go to waste. Indeed, Tesco seems to be moving in this direction. In March, they announced the acquisition of the wholesaler, Booker [15]. To strengthen the impact, Tesco can deploy Internet of Things technology to improve real-time visibility into inventory availability, utilization, and shipment tracking throughout the system [16]. Increased transparency will spotlight waste in the system and enable quicker course corrections.<\/p>\n

Will Tesco\u2019s efforts be enough?<\/strong><\/p>\n

How much of Tesco\u2019s ability to achieve its 2030 goals of halving supply chain food waste is dependent on its suppliers and their adoption of digital technologies? Will \u201czero-waste\u201d catch on if the whole industry doesn\u2019t move with Tesco?<\/p>\n

[799 words]<\/p>\n

[1] \u201cTesco says almost 30,000 tonnes of food ‘wasted’,\u201d BBC News<\/em>, October 21, 2013, \u00a0http:\/\/www.bbc.com\/news\/uk-24603008<\/a>, accessed November 2017.<\/p>\n

[2] At .5kg per meal. \u201cTesco food waste rose to equivalent of 119m meals last year,\u201d The Guardian<\/em>, June 15, 2016, https:\/\/www.theguardian.com\/business\/2016\/jun\/15\/tesco-food-waste-past-year-equivalent-119-million-meals<\/a>, accessed November 2017.<\/p>\n

[3] Anna Taylor & Rachel Loopstra. \u201cToo Poor to Eat: Food Insecurity in the UK,\u201d The Food Foundation<\/em>, May 2016, http:\/\/foodfoundation.org.uk\/wp-content\/uploads\/2016\/07\/FoodInsecurityBriefing-May-2016-FINAL.pdf<\/a>, accessed November 2017.<\/p>\n

[4] Craig Hanson & Peter Mitchell. \u201cThe Business Case for Reducing Food Waste,\u201d Champions 12.3<\/em>, March 2017, p. 2.<\/p>\n

[5] Ministry of Economy, Trade, and Industry, \u201c6.42 million tons per year! – food loss and waste in Japan,\u201d January 2016, http:\/\/www.meti.go.jp\/english\/mobile\/2015\/20151021001.html<\/a>, accessed November 2017.<\/p>\n

[6] Ben Schiller, \u201cFood Charities Can Now Be More Like Food Companies With Just-In-Time Food Waste Logistics,\u201d Fast Company<\/em>, August 2014, https:\/\/www.fastcompany.com\/3034376\/food-charities-can-now-be-more-like-food-companies-with-just-in-time-food-waste-logistics<\/a>, accessed November 2017.<\/p>\n

[7] Tesco PLC, \u201cProducts \u2013 Food Waste, Actions and Targets,\u201d https:\/\/www.tescoplc.com\/little-helps-plan\/products-food-waste\/actions-and-targets\/<\/a>, accessed November 2017.<\/p>\n

[8] Tesco PLC, \u201cAt Tesco, We Have No Time for Waste,\u201d print ad, 2017.<\/p>\n

[9] Megan Gibson, \u201cThe Food-Sharing App That Helps Hundreds of Irish Charities Just Went International,\u201d Time<\/em>, June 2015, http:\/\/time.com\/collection-post\/3908855\/next-generation-leader-foodcloud-expansion\/<\/a>, accessed November 2017.<\/p>\n

[10] Tesco PLC, \u201cUK Food Waste Data,\u201d https:\/\/www.tescoplc.com\/little-helps-plan\/products-food-waste\/uk-food-waste-data\/<\/a>, accessed November 2017.<\/p>\n

[11] Tesco PLC, \u201cProducts \u2013 Food Waste, Actions and Targets,\u201d https:\/\/www.tescoplc.com\/little-helps-plan\/products-food-waste\/actions-and-targets\/<\/a>, accessed November 2017.<\/p>\n

[12] Brenden Marr, \u201cBig Data At Tesco: Real Time Analytics At The UK Grocery Retail Giant,\u201d Forbes<\/em>, November 2016, https:\/\/www.forbes.com\/sites\/bernardmarr\/2016\/11\/17\/big-data-at-tesco-real-time-analytics-at-the-uk-grocery-retail-giant\/2\/#f3564d7504f3<\/a>, accessed November 2017.<\/p>\n

[13] Sarah Butler, \u201cTesco to launch ‘wonky veg’ range,\u201d The Guardian, <\/em>March 2016,\u00a0\u00a0 https:\/\/www.theguardian.com\/business\/2016\/mar\/11\/tesco-launch-wonky-veg-range-food-waste-fruit-vegetables<\/a>, accessed November 2017.<\/p>\n

[14] Tesco PLC, \u201cWorking with Suppliers to Tackle Food Waste,\u201d https:\/\/www.tescoplc.com\/little-helps-plan\/products-food-waste\/suppliers\/<\/a>, accessed November 2017.<\/p>\n

[15] \u201cBenefits of reduced food waste a factor in Booker deal, says Tesco boss,\u201d Reuters<\/em>, March 2017, http:\/\/www.reuters.com\/article\/booker-group-ma-tesco-waste\/benefits-of-reduced-food-waste-a-factor-in-booker-deal-says-tesco-boss-idUSL5N1GG369<\/a>, accessed November 2017.<\/p>\n

[16] \u201cThe Value of Real-Time Visibility and Predictive Intelligence in Supply Chains,\u201d International Data Corporation<\/em>, October 2016.<\/p>\n

Key Image Source: \u201cTesco food waste rose to equivalent of 119m meals last year,\u201d <\/span>The Guardian<\/em>, June 15, 2016, <\/span>https:\/\/www.theguardian.com\/business\/2016\/jun\/15\/tesco-food-waste-past-year-equivalent-119-million-meals<\/a>, accessed November 2017.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Tesco admitted wasting 30,000 tonnes of food in 2013. 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