According to rts, a company that works with waste haulers to streamline collection routes, Americans alone discard 40 million tons of food every year—more than any other country in the world. That number works out to about 219 pounds of waste per person in the U.S. But, of course, waste comes from many sources: individuals, farms/producers, processors, food service and logistics failures in the supply chain—late deliveries, temperature excursions outside safe limits, shortage of labor, etc.
RizePoint’s thought leader and account manager, CJ Pakeltis, provided me with a punch list for food and beverage processors and the rest of us to help minimize food waste and save money in the process. RizePoint is a provider of food safety management solutions, supplier management, audit solutions and quality software. The company works with food processors, audit companies and food service operations.
Pakeltis' list provides over half a dozen options to reduce waste—from upgrading inventory and ordering systems to optimizing supply chains and elevating food packaging—to name a few. For details, see the sidebar, “Ways businesses can reduce waste and save money.”
As practical as the list is, for me, it raised as many questions as it provided solutions. So, I thought I’d follow up and have him explain how processors might actually work at solutions.
Coping with supply chain issues
I’ve heard rumors that the supply chain delays we’re facing today could last from anywhere to the end of this year (as 3PL suggests)—all the way out to the beginning of 2024, as some retailers say, assuming no more pandemics, fuel shortages or other world crises arise.
So, with all the supply chain issues right now, how does a food processor actually balance orders with incoming ingredients, especially when some of those ingredients are delayed in arriving—or may not be available at all?
“Although the supply chain is unpredictable, there are ways to help alleviate some of the uncertainty in delivery times,” says Pakeltis. “One of those ways is to order based on historic and seasonal trends. For example, when there is an upcoming holiday, be sure to order the trending ingredients (early and in abundance) so that you have the items in time and have plenty of them. Additionally, you can also track your inventory year over year and figure out trends so that you can appropriately order ingredients ahead of time. But perhaps most importantly in times of uncertainty, your reputation and relationship with your suppliers matters most of all.”
I wondered if there is some kind of AI-based software that can help manage these situations. Pakeltis suggested that the key to finding the right AI solution is looking for solutions that can be tailored and modeled—and tuned—to the unique aspects of a supply chain participant’s business. Important predictors for optimizing a business can include geography, weather, time of year, and more.
One aspect of an AI-based system might include predictive ordering. “The two main tracking components in predictive ordering are recurrence and frequency of purchase,” says Pakeltis. Based on those two trends, items are ordered when and, in the quantities, necessary based on the predictive ordering model. Those are table stakes. A predictive ordering system going forward needs to learn from a larger set of variables that can indicate shifts and changes in supply and demand.
Planning production with those variables are tricky enough, and shelf life is important so products don’t come back due to expired shelf life. “Organization is key,” says Pakeltis. “Having a system/software in place to keep track of ordering and shelf-life expiration dates will help alleviate some of variables when it comes to ordering appropriate quantities of food/ingredients.”
Balancing forecasting and shelf life
Some time ago, I worked for electronics companies that could actually build devices for stock. Food companies don’t have that luxury. So how can a food company visualize what its market demands will be in light of rising inflation and costs?
“It is important for organizations to have a solid forecasting system in place for budgeting already, but even more so now with rising costs and inflation,” says Pakeltis. More emphasis on global forecasting is a definite priority. Also look at the historical Consumer and Producer Price Indexes as well as the current cost trends and make sure to incorporate those figures into forecasting. Inflation is tracking consistent increases since early 2021 and continues to trend upwards. So, using solid forecasting tools and making sure that those tools are incorporating good current data is going to be key here, says Pakeltis.
But, can packaging be improved to increase shelf life while still being perceived to be friendly to the environment and safe?
“I think the answer to this question is yes, but if we continue to do what we have always done then we will continue to get what we have always gotten,” says Pakeltis. This takes a good research and development arm or at least some time devoted to searching out new methods for packaging that are preserving shelf life—and are still environmentally friendly.
“That means getting outside our usual methods and looking for the ingenious and the disruptors in their respective industry,” adds Pakeltis. Tech is exploding in so many areas and constantly causing evolution to our environmental footprint, so it’s just about getting out there and finding the groups that are disruptive to the “standard ways of doing things,” says Pakeltis.
Energy and storage
With energy prices going up, food/beverage companies face the challenge of producing the right amount of product while keeping energy costs low. Processors need to get an energy cost per pound of product—or some other KPIs to gage efficiency.
“Having a good data analyst onboard is going to be vital to calculating through these rough waters,” says Pakeltis. “Being able to adapt and remain agile is crucial as well. We can’t tell exactly what to expect next, but we have enough data at this point to see some patterns and behaviors. We are still experiencing (and I believe this won’t be done until close to 2024) pent-up demand hitting a bottlenecked supply chain, but the right amount of product should begin to be much more certain. So, while we don’t have a clear answer for the expectations of our supply chains, I believe we can expect the demand to continue to stabilize and become much more manageable. I am certain that through utilizing the correct tech tools and a solid data analyst, an energy cost per pound is not too difficult to calculate.”
My own research for FE’s Annual Plant Construction Survey has shown the number of cold storage facilities to be increasing—both at food processor sites and large distributor sites. In fact, I had just recently read an article suggesting this trend may continue into the near future to provide an increased buffer capacity between processors and consumers.
“I believe additional cold storage should be a strong consideration for many,” says Pakeltis, “but I wouldn’t urge producers to jump into this investment without serious considerations of the long-term implications to their business model and their eco footprint. This may bring a short-term solution for many at the cost of long-term headaches and costs.”