Reducing excess waste in supermarket supply chains

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Short shelf life is one of the most obvious differences between food products and non-perishable goods. Whereas items such as manufacturing supplies and stationary are fairly straightforward to transport, food products pose numerous challenges. Buyers must pay close attention to a multitude of details, specific to the sector, if they are to optimise operations and drive growth.

Fresh Products and Fresh Savings

José Alvarez, former CEO of Stop and Shop, one of the largest food retailers in the USA, was surprised to findcustomers were dissatisfied with the shop’s stock. Despite an extremely efficient supply chain, shoppers complained that products were not as fresh as they should be.

Alvarez found that due to a surplus of deliveries, many shops stocked produce that was several days old, while fresh stock was kept in storage. Stop and Shop decided to reduce the amount of perishable goods on display within each shop.

Additional labour was required to restack aisles more frequently, however, customer satisfaction and profits increased. Alvarez described getting growers onside as one of the most difficult aspects of the project; “Growers were saying, ‘You guys want 8-packs, but the other guy wants 24-packs, so now I have to pack twice.’ There wasn’t a lot of industry cooperation on the issue.” Despite these difficulties most suppliers profited due to reduced wastage. Stop and Shop made savings of $100m per year.

Savings vs. Waste

The perishable nature of most food products combined with an inability to produce huge quantities at will, makes purchasing food an area which requires extensive strategic planning. Despite this, an experienced team will often be able to identify numerous cost saving opportunities and strategic processes which can dramatically improve business performance.

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