How ERP transforms food waste into profit
With the global population growing, efficiency in the fresh food business is critical. A recent Wrap report revealed the extent of current food wastage; that 3.6m tonnes of food is thrown away or fed to animals each year in the UK.
The issue is particularly pressing in fresh produce. Fresh produce needs to be properly handled, managed and maintained at each stage in the food production cycle to avoid its potential disposal.
With the use of technology, fresh produce businesses are able to implement leaner, more efficient practices; with the end goal of reducing waste as far as possible. A dedicated ERP system makes it possible to reduce waste while increasing profits.
Why reducing food waste is so important for businesses
It is vital that fresh produce businesses tackle food-waste head on. Tackling food waste not only reduces costs and increases profits, it helps businesses to achieve a ‘corporate social responsibility’.
Many of the world's largest supermarkets; including Tesco, Marks and Spencer and Waitrose; have pledged to halve food waste by 2030 by working with farmers and suppliers to ensure that the amount of produce they provide is in line with quantities the supermarket’s customers will buy.
How can ERP help reduce food waste
Technology is helping reduce food waste significantly. A dedicated ERP system, specifically for the fresh produce industry, digities every corner of a fresh produce business. From grower accounting; to traceability, consignments, farming and quality console; an ERP solution embeds technology at the core of a fresh produce business. In doing this an ERP systems affords businesses’ with the operational oversight they need to implement effective waste reduction practices.
Pressure from supermarkets to have a constant supply means that fresh produce businesses often fall into a cycle of overproduction; partly due to the unpredictability of weather, and pests.
ERP, however, gives businesses access to accurate demand forecasting features. With more insight into demand, businesses can minimise overproduction; thereby reducing any excess waste produce.
The demand forecasting functionality ensures supply and demand is aligned as effectively as possible. This keeps inventory costs low, while helping business to maintain optimal sales.
Make the most out of seconds
With supermarkets looking for cosmetically perfect fruit and veg’ (rejecting 10-16% of all food produced on farms) a very large amount of fruit and veg’ is literally thrown away. This is because fresh produce businesses consider out of grade goods to be unprofitable.
ERP systems can be seamlessly integrated with produce graders, to enable businesses to understand the results of grade-out. Any out-of-grade produce can be sold to secondary buyers; such as veg for microwave meals or low-grade potatoes for soup or chips.
ERP systems capture data straight from grading machines and collate the information into an accessible format; such as on a computer, phone or tablet. Businesses, therefore, can have the insight they require to determine and realise any and all potential revenue streams - increasing revenue, profits, and reducing waste.
Improve lead times
Fruit and veg is often damaged or spoiled during the production, handling, storage and distribution process.
An ERP solution digitises all aspects of a fresh produce businesses’ distribution chain; including information relating to consignments, transport, handling and storage infrastructure.
With additional data, it is possible for businesses to utilise ERP to implement more efficient processes; including in areas such as inventory management, pack-ahead planning, third-party inventory services, transport requests, load management, and haulage matching.
As a result, fresh produce gets to retailers faster, therefore reducing the need to keep fresh produce stored for longer than necessary. With shorter lead times, produce spoilage is less likely to occur and buyer relationships are greatly improved. This reduces costs incurred through waste and maximises any potential sales.
Improve harvesting techniques
Poor harvesting techniques are also a source of waste for fresh produce businesses. Fruit and veg is discarded due to being bruised as a result of poor picking practices, and lots of good produce is lost due to crops not being adequately harvested or even left behind.
With an ERP solution, specifically for the industry, fresh produce business have access to farming features. By utilising data taken straight from the farm itself, ERP systems provide businesses with the insight they require to improve harvesting practices.
Features; such as crop/harvest planning, harvest shrinkage and harvest resource allocation; reduce waste incurred through improper or inadequate harvesting. This ensures businesses derive maximum profit from crop production, and don’t fall short on demand due to losses incurred through ill-managed production practices.
The time to reduce food waste is now
With food wastage increasingly on the green agenda, fresh produce businesses are now under the microscope. Overproducing, disposing of products, inefficient lead times, and inadequate harvesting techniques are all sources of waste production - leading to higher costs, reduced profits, less efficient operations, and reputational damage.
A dedicated LINKFRESH system, embeds technology into every facet of a fresh produce business; reducing waste by improving demand forecasting, more efficient inventory management, reducing lead times, and improving farm practices. This helps ensure businesses maximise their profits, maintain relationships with buyers and reduce waste.
To find out more download our free guide “What can ERP can offer to Agribusiness”.