Researchers from Arizona State University (ASU) in the U.S. will explore solutions to food waste through two unique research projects funded by the U.S. Department of Agriculture.
In scan-based trading, the supplier retains ownership of inventory until it’s sold to the consumer.
One ASU research project will put scan-based trading (SBT) under the microscope. In this new type of contract used by food suppliers and retailers like Walmart and Target, the supplier retains ownership of the inventory in stores until the product is scanned for checkout. Suppliers, such as dairy producers or bakery vendors, keep products in stock, while the retailer provides and manages the shelf space. Any loss of product between delivery and checkout is typically the responsibility of the supplier.
One major problem in SBT is shrink, which can occur from expired inventory, broken cartons, and even theft. This could mean a loss for the supplier under an SBT contract, who may decide to increase wholesale prices to cover its losses. The retailer could then pass that increase along to customers, by raising prices, according to lead investigator Elliot Rabinovich.
“We hope to explore the causes of shrink and how to address it. Can suppliers do a better job at managing it? Or do retailers need to have greater sensitivity, regardless of whether they own the inventory,” says Rabinovich, a supply chain expert and ASU business professor. “It’s not finding out who’s at fault; it’s how do we work together.”
SBT contracts give suppliers access to real-time sales information from retail checkouts and the flexibility of replenishing stock in-store, without having to go through a distribution center.
Apps and online marketplaces
Apps let consumers know of food that won’t sell at retail.
The other project will test online marketplaces and mobile apps to help farmers, restaurants, retailers, and households manage problems with day-to-day food waste. For example, if a farmer has a box of ugly fruits that won’t sell in the supermarket, he can use an online platform to let others know of the surplus. Consumers then visit the app or website, select the items they want, and the app coordinates delivery logistics and payment for the farmer.
Lead investigator Tim Richards says the idea is making markets out of what would otherwise be waste. “Eighteen percent of landfills is food waste, according to the EPA—and that may be a conservative number,” says Richards, the agribusiness chair at ASU. “If we can figure out a way to better utilize food that would otherwise be wasted, we can minimize what goes into our landfills and make better use of the water that’s used to irrigate plants.”
ASU researchers are teaming with Imperfect Foods, a startup delivery company based in San Francisco to test market theories and demand conditions. In addition, the experiment will use 400 business school students at ASU and California Polytechnic State University to measure their use of food waste.