Powered by Google

Good practice

© Marguerite De Valois, #197658333, 2019, source: stock.adobe.com

Finnish hypermarket uses digital application to minimise food wastage

Resources:
Waste
Sector:
Wholesale and retail
Cost:
Low cost
Annual saving:
50000 - 100000€
Read more
Recurring costs:
500€
Resource savings: Waste:
By using the digital application to fix systemic daily problems, a 20-30 % reduction of waste is possible within a year, which means about € 50 000 in savings for a regular supermarket. In larger hypermarkets, this can rise up to € 100 000.
Associated cost savings: Waste:
20 - 30%
The cost of software and training is about 400-500 €/month, which means it will be profitable after the 1st month.
One off investment:
400 - 500€

Hyper-solutions to food wastage show the way

  • A major hypermarket which sells a large range of food products looked for ways to improve on its already good food waste credentials
  • It realised that even small amounts of waste quickly add up to a bigger problem 
  • Using digital technology it identified a host of 'root causes' and started tackling them

These days retail chains have tools to help them replenish their stores just in time. Despite that, the amount of food wasted is still considered too high. One hypermarket store in Finland recognised this problem. Its waste percentage of food in 2017 was 1.59 %, which is not bad but they wanted to reduce it even more.

The problem with food waste is not about wasting large amounts of few products, but wasting very small amounts of many products, but regularly. This is called a systematic error. Because most waste is generated this way, it is hard to notice and even more difficult to fix. So far, it has been found 18 root causes for the waste of food in retail stores.

To measure and find systematic errors the store used Kauppavalmennus Ltd. method and application, which are both based on lean management. Whenever a worker notices irregular waste, shortages or excess inventory, he or she can scan the product with a regular cell phone to determine the cause. All necessary information is provided, so the worker can try to prevent the problem from occurring again. Usually, this takes about 30 seconds.

At first, workers struggled with the approach, but week by week with one-to-one support they developed a solid routine. Reducing waste is easier at first because there are many products that have a clear root causes, but many cases still fall into 'Don’t know' category. The more experience a worker has in identifying 'root causes', the better the system works in solving the problems. For that reason, the amount of waste usually keeps declining for a very long time, even years. The less waste, the less time it takes to examine the problems and the more efficient the store eventually becomes.

Key results
In this case, after  just 42 weeks the improvement was tangible. Waste was reduced by 18.2 % compared to 2017 figures. The waste percentage was reduced to 1.38 % and is expected to keep going down. The variety of items on sale remained the same, but shortages (out of stock situations) reduced by 12 %. By reducing waste, the store also managed to reduce the work needed to shelve products, collect them and register waste.

A 20-30 % reduction of waste is possible within a year, which means about € 50 000 in savings for a regular supermarket. In larger hypermarkets, this can reach € 100 000.​

Source

Kauppavalmennus Ltd's general website: http://www.kauppavalmennus.com/briefly-in-english

Want to know if relevant support is offered in your country?