June 13, 2017
Turn Food Waste into Profit
Every year, approximately one third of all food created for human consumption globally goes to waste—that’s around 1.3 billion tonnes of food. Research from the Waste and Resources Action Programme (WRAP) notes that the U.K. produces 1.9 million tonnes of food waste
every year and the Natural Resources Defense Council (NRDC) reports that 40% of the food in the United States is never eaten
. Yet, one in eight people in each of these geographies struggles to put enough food on the table—putting the scale of wastage into perspective.
In recent years, much attention has been focused on how consumers and outlets can stop wasting so much, whether by educating consumers on finishing food before expiry dates or getting supermarkets and grocers to change their policies on what happens to unsold products on store shelves that go beyond their sell-by date. While these efforts are helping with food waste diversion through donations, reuse, or recycling, they make up only a small piece of the puzzle.
According to WRAP, the British organisation dedicated to resource sustainability, manufacturing accounts for a significant amount of easily preventable food wastage
—around £1.2 billion ($1.55 billion) worth every year, which equates to nearly 1 million tonnes of food in the U.K. alone. The Environmental Protection Agency (EPA) places source reduction—reducing the volume of surplus food generated—as the top priority in its Hierarchy of Food Recovery
How are manufacturers wasting so much food? A common cause of food waste is errors in the manufacturing process, making ingredients or food products unfit for consumption. As food standards and specifications become increasingly stringent, even more product gets diverted to the rubbish bin due to contamination from external ingredients or objects, out-of-specification products, or overfilling.
When framed in these terms, food waste from manufacturers becomes a concern for manufacturing CFOs, since profits are essentially being thrown away with the food waste.
So, what can manufacturers do about it? Research from Champions 12.3, an international coalition dedicated to moving the world towards halving the amount of global food waste by 2030, released research in March demonstrating that organisations realize a positive return on their investment (ROI) to reduce food waste
—for every 80p (approximately $1) that companies invested, £12 (approximately $14) was saved in operating costs.
These cost savings come from making sure that manufacturers have the right measures in place to guarantee the quality of the product at each stage of the production process, including quantifying and monitoring food loss and waste, training staff on practices to reduce waste, changing food storage and handling processes, changing packaging to extend shelf-life, changing date labels, and integrating other staff and technology investments.
In order to identify the proper measures for each organisation, a manufacturer needs centralised oversight of the entire quality management process across the enterprise. This visibility
, produced with a quality intelligence solution, not only helps operators to identify what is happening at any stage of the process, but also enables them to drill down into the details of trends and issues for a more thorough understanding of the specific manufacturing process.
This level of quality control is vital for preventing food waste throughout operations. For instance, if a manufacturer monitors variances and out-of-spec issues across plants, operators can make adjustments in real time to minimize giveaway. For one consumer packaged food and beverage leader, this strategy reduced waste by £1.63 million ($2.1 million) in one year
If every manufacturer applied these and other best practices in waste reduction, food waste levels around the world would plummet. The 14:1 ROI in waste reduction and actual cost savings from minimising giveaway will increase profits for organisations whilst preventing needless waste.