One of the biggest challenges grocery retailers have to tackle is waste. If grocers have more inventory than demand requires, they face markdowns (which narrow already tight margins) or spoilage (which hits their bottom line and negatively impacts sustainability efforts).
By RELEX Solutions co-founder and CMO Johanna Smaros.
The cost of food waste to the Australian economy is estimated to be around $20 billion each year. Australian consumers throw away around 3.1 million tonnes of food—that’s close to 17,000 grounded 747 jumbo jets. Another 2.2 million tonnes is disposed of by the commercial and industrial sector. The impact of food waste also includes the energy, fuel and water used to grow food that may not be used. When food waste is sent to landfill, it contributes to greenhouse gas emissions.
Reducing food waste is a complex challenge, it also presents a number of opportunities to use technology to rethink how food waste can be prevented. Through the foundation of highly precise forecasts created through the use of AI and machine learning retailers can improve order accuracy while maximising sales and minimising waste. More importantly, this foundation future-proofs retailers technology strategy as the industry moves further toward an AI-driven future.
In 2021, RELEX announced that they had partnered with Coles to provide unified retail planning solutions, to optimise their end-to-end supply chain planning for fresh produce categories as well as their long-term inventory planning capabilities. Through centralising the control of the replenishment model, it will allow Coles to provide increased efficiency in one of our most complex supply chains and improve the customer experience through more targeted ranges, improved availability, fresher products, and simpler processes for Coles team members and suppliers.
Although some grocers like Coles have made great strides with their initiatives to decrease the amount of food sent to landfills, the industry as a whole can do far more to prevent waste from happening in the first place. Grocery retailers need to get serious about reducing food waste not only in each local store but also across the entire supply chain. By investing in modern supply chain planning and optimisation technology, grocery retailers can improve their profitability and their sustainability at the same time. In our experience, retailers have been able to reduce food waste by 10-40% while maintaining, or even improving, on-shelf availability and perishable freshness.
When grocery retailers reduce waste and spoilage, everyone wins: customers find the items they need, when they need them, at the highest quality possible; sustainability efforts are improved across the board; and margins—and profits—can be protected. By relying on AI and machine learning to create highly accurate forecasts, retailers can find success in their efforts at levels they had only dreamed of just a few short years ago.
About Johanna Smaros
Johanna Småros, PhD is RELEX’s Chief Marketing Officer and, along with Mikko Kärkkäinen and Michael Falck, one of its three co-founders. She also serves on the company’s board.
As a researcher, Johanna conducted ground-breaking work in collaborative planning and forecasting between retailers and suppliers, sharing and utilisation of point of sale (POS) data in supply chains and automatic store ordering. An advocate for technology innovation that pragmatically solves retail challenges, Johanna remains actively involved in RELEX’s research and development. She was awarded the Young Scientist Entrepreneur Award in 2014 and the Veuve Clicquot Business Woman Award in 2017.
For more information, visit linkedin.com/in/johannasmaros.
About RELEX Solutions
RELEX Solutions is dedicated to helping retail businesses improve their competitiveness through localised assortments, profitable use of retail space, accurate forecasting and replenishment, and optimised workforce planning. RELEX Solutions is trusted by leading brands including Coles, Baby Bunting, and Delivery Hero, and has offices in Melbourne as well as in Asia, Europe and the US.
For more info visit, relexsolutions.com.