Abstract
In this article, we examine how an Operational Research (OR) modeling approach can help in identifying how structural components in the supply process of a food product subject to a small probability of almost immediate failure affects the amount of waste arising at the retailer. This process can be viewed as the cumulative effect of various possible causes, including (apparent) product flaws and breakage. This category of waste, in contrast to products that are removed based on reaching their best before or use-by date, are also having little potential for redistribtion, and may thus be most targeted in future waste reduction legislative initiatives. We develop some relatively easy to calculate measures to help a retailer with identifying the financial implications of waste production in relation to some supply source characteristics, the financial motivation of its supplier to tackle item deterioration at the retailer level, and how this is affected by the level of logistics collaboration. We also discuss how the model can help in deriving the relative benefit of technological, logistical, supplier selection, and marketing strategies available to the retailer to meet future legislative waste reduction targets, and derive conclusions with respect to the design of legislative instruments.
Highlights
One particular area where product deterioration is highly relevant is food waste
Empirical research to date indicates that the two main types of reasons for food waste arising at the retail level are product “deterioration” on the one hand, leading to products being rejected by consumers or store personnel, and “erratic” demand, leading to products not being sold in time relative to their best before/useby/sell-by date
It seems fair to conclude that a significant fraction of food waste at retailers occurs due to products having or developing one or more of a list of possible defects, and that make consumers avoiding them, and store personnel to remove them from the aisles
Summary
One particular area where product deterioration is highly relevant is food waste. The United Nations estimates that roughly 33% of food produced for human consumption is wasted or lost along the supply chain. The EU’s Sustainable Development Goal 12.3 in particular calls for halving per capita food waste at the retail and consumer level by 2030, and reduce food losses along the food supply chain. We believe that there is scope for an analysis of a relatively simple supply model that can provide such fairly general insights with respect to some of the root causes of food waste arising at retailers, and how to address them. This may help decision makers (retailers, legislators) identify how best to make changes in this structure to help meeting the expected waste reduction targets, while preserving the financial sustainability of this sector. It can help to direct some of the research on OR models with item deterioration towards exploring alternative avenues with a focus on waste prevention and reduction strategies
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