Final Report Reducing Food Waste through Retail Supply Chain Collaboration Companies reducing retail supply chain food and packaging waste by working together through an IGD Performance Improvement Programme Project code: RSC010-001 ISBN: Research date: April 2010 –February 2011 Date: March 2011
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Final Report
Reducing Food Waste
through Retail Supply Chain
Collaboration
Companies reducing retail supply chain food and packaging waste by working together through an IGD Performance Improvement Programme
Project code: RSC010-001 ISBN:
Research date: April 2010 –February 2011 Date: March 2011
WRAP helps individuals, businesses and
local authorities to reduce waste and
recycle more, making better use of
resources and helping to tackle climate
change.
Document reference: WRAP, 2010, Cross Sectoral Work Programme to Reduce Food Waste
Arising in the Retail Supply Chain (WRAP Project RSC010-001.
Report prepared by James Tupper, ECR Learning & Change Manager,
and Peter Whitehead, Agribusiness Project Leader, IGD)
Written by: James Tupper, ECR (Efficient Consumer Response) Learning & Change Manager (IGD),
and Peter Whitehead, Agribusiness Programme Leader (IGD)
Legacy research commissioned by the previous government.
Front cover photography: Cross-functional trading partner teams at the On-Boarding Meeting preparing plans of action for the Measure & Understand phase.
WRAP and IGD believe the content of this report to be correct as at the date of writing. However, factors such as prices, levels of recycled content and regulatory
requirements are subject to change and users of the report should check with their suppliers to confirm the current situation. In addition, care should be taken in using
any of the cost information provided as it is based upon numerous project-specific assumptions (such as scale, location, tender context, etc.).
The report does not claim to be exhaustive, nor does it claim to cover all relevant products and specifications available on the market. While steps have been taken to
ensure accuracy, WRAP cannot accept responsibility or be held liable to any person for any loss or damage arising out of or in connection with this information being
inaccurate, incomplete or misleading. It is the responsibility of the potential user of a material or product to consult with the supplier or manufacturer and ascertain
whether a particular product will satisfy their specific requirements. The listing or featuring of a particular product or company does not constitute an endorsement by
WRAP and WRAP cannot guarantee the performance of individual products or materials. This material is copyrighted. It may be reproduced free of charge subject to the
material being accurate and not used in a misleading context. The source of the material must be identified and the copyright status acknowledged. This material must
not be used to endorse or used to suggest WRAP’s endorsement of a commercial product or service. For more detail, please refer to WRAP’s Terms & Conditions on its
web site: www.wrap.org.uk
Reducing Food Waste through Retail Supply Chain Collaboration 3
Executive summary
Aims
In December 2009 WRAP commissioned IGD to conduct a performance improvement programme with leading
grocery retailers and their trading partners aimed at reducing food and drink waste in the supply chain. The
programme was designed to support signatories to the second phase of the Courtauld Commitment and provide a
demonstration to the wider industry, highlighting how collaborative working can prevent waste arising while
providing commercial benefits.
The programme started in December 2009 and ran through 2010, completing in February 2011 following an ex-
post-evaluation meeting.
Specifically, the programme aimed to:
deliver reductions in food and packaging waste previously being disposed of to landfill;
initiate new ways of working and business practices across the supply chain that prevent waste; and
deliver case studies that showcase the benefits of the project and encourage wider and faster uptake of such
collaborative working practices across the grocery industry.
Method
IGD approached a senior Director in several retailer signatories of the Courtauld Commitment at the outset of the
programme with an invitation to participate. Five retailers opted to join the programme nominating a key lead
individual who would be responsible for the work. The retailers then self-selected non-competing product
categories with high levels of waste and invited their respective suppliers to participate. This led to five retailer-
supplier teams each comprising between two and six individuals who carried out the programme with facilitation
from IGD.
Category Companies
Biscuits / Snacks / Cakes
Floral
Ready Meals
Citrus
Salads
Sandwiches
Reducing Food Waste through Retail Supply Chain Collaboration 4
The retailer-supplier teams focused on:
delivering commercial benefits for their participating businesses so that behavioural changes could be
embedded and sustained;
reducing food and packaging waste including landfill and non-value adding activities for their chosen product
categories; and
developing case studies to be shared encouraging wider uptake.
The facilitation provided by IGD comprised three phases.
First, teams were requested to ‘measure and understand’ their respective category specific supply chains in
order to identify current processes from end-to-end and quantify the amount of waste arising. All teams used
systematic methods such as value stream mapping in both the retailers and suppliers premises. This phase ended
with teams presenting their findings to each other at a progress meeting designed to cross-fertilise ideas and
develop plans for improvement.
In the second phase, ‘re-design and pilot’ the teams targeted one or more root causes of waste (identified in
phase one) and developed new ways of working that would reduce waste. Typically, these involved activities such
as joint business planning between retailer and supplier and agreeing forecasts where previously these were
separate exercises. Better alignment between order management/timing and production schedules was also
achieved. These changes were piloted by the teams and their impact assessed. A progress meeting marked the
completion of this phase in which teams were able to have their findings assessed and peer reviewed.
The third and final phase, ‘roll-out and sustain’ involved teams applying the improvements to other parts of
their businesses, for example other products within the category or other categories. Solutions were embedded
with work instructions in some cases following Board approval. A final progress meeting captured the benefits
and agreed a framework for developing the case studies. Each team agreed to attend an ex-post evaluation
meeting to finalise benefits and assess the overall cost/benefit of the programme.
Results
Overall the programme has prevented approximately 1,400 tonnes of waste arising as of March 2011, with a
further 1,193 tonnes expected to be prevented in the financial year 2011-12. The waste reductions were achieved
using simple methods throughout the programme, thereby not incurring capital or other costs. New ways of
working were developed that are transferable to other supply chains and the reduction was delivered in a
sustainable and profitable way. As a result, as a percent of sales waste has fallen by up to 1% point allowing for
products whose sales have increased over the life of the programme.
The programme has also given rise to what generically might be termed ‘better supplier relations’. Specifically,
all teams have made changes to their working practices as a result of the programme. These changes include:
instigating regular meetings between the retailer and supplier teams;
increasing/introducing daily communications with suppliers;
more detailed forecasting methods linked to an improved order planning process;
improved tools to assess underperforming lines and for decision making;
improved tools to make order amendment more accurate; and
regular touch-points to review progress on a regular basis.
Teams noted that the methods piloted in the programme can be deployed in other categories and certain teams
have plans in this regard. In a similar way teams noted that methods piloted by other teams may have
applicability to their own trading partners.
Reducing Food Waste through Retail Supply Chain Collaboration 5
The new ways of working, identified by the teams which have wider applicability to food retailers and
manufacturers not involved in the programme are listed below.
improved communications between retailers and suppliers over production planning and order timings;
closer cross-functional team-working within each organisation as well as between them;
joint forecasting, both between and within companies using all the expertise available;
range management including removal of slow moving lines (SKU’s);
fixing order quantities based on a significant proportion of current volumes;
reduced packaging and better designs for shelves; and,
changes to the ‘mark down’ windows for products reduced to clear.
There is a great deal of work being undertaken by WRAP under the second phase of the Courtauld Commitment
and by IGD as part of the ECR (UK) programme to help companies identify and reduce their waste. The following
practices were identified by the participants as being particularly beneficial and they form the recommendations
from this project to the wider industry.
Retailers and suppliers should measure waste using tonnes as the common metric, in preference to value or
the number of cases;
retailers and suppliers should develop ‘joint business plans’ to drive their supply chain operations with open
and honest sharing of information;
retailers and suppliers should develop an ‘end-to-end’ understanding of each other’s business using tried and
tested approaches such as value stream mapping; and
retailers and suppliers should focus on waste prevention with suppliers through the use of in-store availability
measures in preference to service levels.
This report has emphasised the value of collaborative working between trading partners through an externally
facilitated performance improvement programme as an effective vehicle for improving waste prevention. Other
sectors of the grocery industry, for example the independent or convenience sector could benefit from a similar
approach.
Given the benefits that have been identified in this report, WRAP is undertaking similar collaborative programmes
across the home improvement, grocery and food service sectors and encourage industry and business to engage
in the same.
The report includes eight case studies that have been developed from this project.
Reducing Food Waste through Retail Supply Chain Collaboration 6
4.0 Conclusions and Recommendations ......................................................................................... 19 4.1 Recommendations ............................................................................................................. 19
Appendix 1: People ............................................................................................................................... 21 Appendix 2: Case Studies ..................................................................................................................... 22
Figures
Figure 1: Hierarchy of objectives for programme developed with participating retailers. ................................... 10 Figure 2: IGD Performance Improvement Programme structure and dates. ..................................................... 12 Figure 3: The purpose and activities of each of the three phases of the programme. ....................................... 12 Figure 4: The key activities of each the four meetings of the programme. ....................................................... 12 Figure 5: Participant commitment levels during the On-Boarding Meeting ....................................................... 13
Tables
Table 1: Product categories and suppliers identified by participating retailers. ................................................. 11 Table 2: Job functions companies were asked to consider engaging in the first phase. ..................................... 11 Table 3: Participants’ scoring at Progress Meetings of their team’s partnership. ............................................... 14 Table 4: Participants’ estimates of their teams’ supply chain waste prevention due to the programme. .............. 15 Table 5: People involved; their roles and their attendance at the four main meetings. ...................................... 21
Reducing Food Waste through Retail Supply Chain Collaboration 7
Abbreviations Defra Department for Environment, Food and Rural Affairs
FOTM Food on the Move
JS Sainsbury’s
KPI Key Performance Indicators
LEAN A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination
M&S Marks & Spencer
MAPE Mean Absolute Percent Error
MOQ Minimum Order Quantity
NPD New Product Development
RAG or RYG Traffic lights: Red Amber Green or Red Yellow Green
SKU Stock Keeping Unit
SNAF Short Notice Amended Forecast
UB United Biscuits
WRAP Waste & Resources Action Programme
Acknowledgements
IGD and WRAP would also like to thank the companies participating in this programme.
Musgrave
United Biscuits
Sainsbury's
World Flowers
Morrisons
Kerry-Noon
Tesco Stores Ltd
MM (UK)
Natures Way Foods
G's Marketing
Marks & Spencer
Uniq Prepared Foods
Particular thanks go to their cross-functional trading-partner team members who did the work, identified the
opportunities, designed and tested solutions, embedded new working methods and prevented hundreds of tonnes
of retail supply chain waste in a commercially sustainable way.
Special thanks go to Kerry-Noon, Natures Way Foods, Morrisons, Marks & Spencer and Sainsbury's for hosting
key meetings during the programme.
Reducing Food Waste through Retail Supply Chain Collaboration 8
1.0 Introduction
1.1 Background
Around 6.5 million tonnes of waste arise in the manufacture, distribution and retailing of food and drink (WRAP,
2010)1. The majority (77%) of this waste rests in food manufacturing. The economic cost of this, ‘supply chain’
waste is estimated at around £5 billion. Previous research into the role of supplier – retailer trading relations by
Cranfield University and IGD for Defra identified management factors as a significant root cause of food and drink
waste2. Much has been done to drive down waste by individual manufacturers and retailers but the potential of
collaborative working in a supply chain context as a means of preventing waste is relatively unexplored.
A framework for waste prevention across the supply chain has been introduced under the 2nd phase of the
Courtauld Commitment through which 49 signatories (as of March 2011) are working to improve resource
efficiency and reduce the carbon and wider environmental impact of the grocery industry. Signatories are working
with WRAP to achieve individual and collective ‘sector’ strategy plans to deliver the following three targets:
to reduce the weight, increase recycling rates and increase the recycled content of all grocery packaging, as
appropriate to reduce the carbon impact of this grocery packaging by 10%;
to reduce household food and drink waste by 4%; and
to reduce traditional grocery product and packaging waste (both solid and liquid) in the grocery supply chain
by 5%.
In support of the supply chain reduction target, WRAP is conducting research projects to identify waste hotspots
where supply chain efficiencies can be made, mapping out the reasons for waste and identifying good practice
guidance. These projects include a series of ‘resource maps’ covering the following sectors: fresh fruit and
vegetables, meat, fish, pre-prepared foods and drinks (alcoholic and non-alcoholic). As part of its support to
signatories to meet Courtauld targets WRAP is also carrying out waste prevention reviews and providing bespoke
advice on how to reduce the waste identified.
In recognition that the new supply chain target is challenging and that previously many retailers and
manufacturers have focused on the diversion of waste from landfill (to, for example, energy recovery) and less on
waste prevention, WRAP invited IGD to facilitate a performance improvement programme to demonstrate the
waste reduction benefits of collaborative working. The programme is the first of its kind designed specifically to
involve trading partners working together to identify and prevent waste in their supply chains.
IGD has a long history of encouraging supply chain collaboration through, for example, management of the
Efficient Consumer Response (ECR -UK) programme. This work includes the development and delivery of IGD
performance improvement programmes utilising a bespoke design that has been run 15 times across UK,
elsewhere in Europe and in North America by IGD or under licence to IGD. The programme enables supply chain
partners and different job functions to work together for a common purpose, build their understanding, challenge
the status quo and change their working methods. The programme enables companies to identify, implement and
sustain step-changes in performance levels along the supply chain that would have been difficult or impossible to
undertake in isolation. In doing so, it also encourages companies to embed the process changes within their
businesses and supply chains.
1.2 Aims and Objectives
The aims of this new performance improvement programme set by WRAP and IGD were as follows:
1 Waste arising in the supply of food and drink to households in the UK (WRAP, 2010) 2 Evidence on the role of supplier-retailer trading relationships and practices in waste generation in the food chain (Defra, 2008)
Reducing Food Waste through Retail Supply Chain Collaboration 9
to deliver reductions in food and packaging waste previously being disposed to landfill;
to initiate new ways of working and business practices across the supply chain that prevent waste; and
to deliver case studies that showcase the benefits of the project and encourage wider and faster uptake more
widely across the grocery industry.
The emphasis in the programme was to find collaborative ways of working that prevent waste arising. The extent
to which waste could be prevented was uncertain at the outset, but WRAP specified that the programme should
deliver significant reductions and set a target over the programme and following embedding within the
businesses of 10,000 tonnes. However, it was recognised that this programme, although based on a tried and
tested approach, was a pilot initiative to explore whether retailer-supplier collaborative working could be an
effective way of helping signatories meet their commitments to Courtauld. Due to the nature of the programme
both WRAP and IGD identified behaviour change that could be sustained to be as important as the waste
reduction target.
Both WRAP and IGD also wished to use the programme to demonstrate to the wider industry (Courtauld
signatories and companies more generally) that collaborative working can prevent waste and reduce costs. A
target of six case studies drawn from the programme was set to showcase the benefits.
It was anticipated that this project would also help improve resource efficiency more generally because other
types of ‘waste’ such as markdowns, inventory and transport would be reduced at the same time. Some of these
impacts are difficult to measure directly but arise through process improvements identified and adopted by
retailer-supplier project teams engaged on the project.
Both WRAP and IGD recognised that if waste prevention was to be sustainable and the new ways of working
embedded across the supply chain, the programme needed to be shown to be of commercial benefit to
participating companies and so this was critical to both the design and execution of projects. Generally
businesses at any one point in time will be running a mix of short term and longer term projects, the latter more
strategic in nature. A short term project of this type would normally be expected to deliver immediate gains while
in effect it is preparing companies for the longer term strategic goal of shifting waste from landfill by preventative
activity.
For many companies waste reduction is ‘business as usual’ and an explicit key performance measure. This
programme was designed to help companies challenge existing approaches while recognising that if companies
are going to take forward change they will only do so if those changes help achieve company wide goals
profitably.
The programme commenced in December 2009 with the recruitment of trading partners and was completed in
February 2011 with an ex-post evaluation meeting.
2.0 Methods
IGD performance improvement programmes engage a mix of businesses and individuals from within the
businesses and facilitate these teams through a programme of phased activities in a simple structure:
companies and their supply chain trading partner(s) are engaged in the programme to tackle real
commercially relevant issues;
cross functional trading partners are recruited to break through the barriers between functions and
businesses;
teams from several supply chains work in parallel to agreed deadlines, competing but also cross fertilising
ideas;
a Measure & Understand phase ensures actions are based on evidence; not myth, legend or gut-feel alone;
Reducing Food Waste through Retail Supply Chain Collaboration 10
a Redesign & Pilot phase wins benefits in the short-term to motivate others from the businesses to join the
change process; and,
a Roll-out & Sustain phase ensures results are delivered and learnings applied; not sidelined by new
initiatives.
The following sections detail the engagement, structure and facilitation of the programme.
2.1 Engagement
IGD approached a senior Director in several retailer signatories of the Courtauld Commitment offering them the
opportunity to participate in the programme and succeeded in attracting five retailers to the programme, as
follows:
Marks & Spencer Tesco Sainsbury’s Morrisons Musgrave
Their participation was secured at a meeting of the retailers at IGD on 5th March 2010 against the following
hierarchy of objectives that stressed the importance of delivering commercial benefit from waste reduction.
Figure 1: Hierarchy of objectives for programme developed with participating retailers.
From the outset and during the programme, focus on
Towards the end and immediately following the programme, focus on
Commercial benefit from waste
performance improvement for
businesses participating directly in the
programme so that behavioural change
can be embeded and sustained.
Reduction in food and packaging waste
arising in the retail supply chain (as
defined for target 3 of the Courtauld
Commitment Phase 2).
Reduction in household waste
(e.g. from pack size reduction).
Reduction in other types of waste /
non-value-adding activities.
Commercial benefit from waste
performance improvement for
businesses not participating in the
programme through both:
hard hitting case studies of successful
food and packaging waste reduction
(with any commercially sensitive
information removed); and
clearer customer requirements that are
more aligned across supply chains to
reduce waste / improve resource
efficiency.
Previous research (for example, Defra, 2008) had identified categories that have both a short shelf life and high
demand volatility as those likely to have the highest percentage levels of waste in relation to sales. While this
information was available to participants, we were not prescriptive about which products were chosen for this
project - each of the retailers were free to identify different product categories. Once these were identified the
process involved the retailers selecting non-competing own label or branded product suppliers. The products
selected ranged from sandwiches and biscuits to flowers and ready meals.
Reducing Food Waste through Retail Supply Chain Collaboration 11
Table 1: Product categories and suppliers identified by participating retailers.
Category Companies
Biscuits / Snacks / Cakes
Floral
Ready Meals
Citrus
Salads
Sandwiches
The above retailers have national coverage and their participation secured effort across England, Scotland and
Wales. Suppliers based overseas were excluded.
A key feature of the programme is ‘learn by doing’ and IGD worked with retailer and supplier companies to help
them assign the right people to cross-functional trading partner teams who collaborated on the programme.
Companies were asked to consider engaging the following job functions in the first meeting and first phase of the
programme with subsequent engagement dependent on findings.
Table 2: Job functions companies were asked to consider engaging in the first phase.
Retailer Supplier Growers
Store operations Depot operations
Ordering
Buyers
Technologist
Manufacturing S&O Planning
Demand Planning
Account Manager
Technologist
Procurement
Manager / Owner
2.2 Programme
The full programme structure is shown in the chart below (with engagement as part of the set-up period). The
meeting dates were chosen to reflect the time required to complete each phase of the programme.
Reducing Food Waste through Retail Supply Chain Collaboration 12
Figure 2: IGD Performance Improvement Programme structure and dates.