Supply Chain Frontiers #61 :: Using Logistics to Cut Food Waste in Colombia

This is the first time that the Colombian government has published official figures for the amount of food wasted by the country’s farmers, manufacturers, retailers, and consumers, says Ana Catalina Suárez Peña, Executive Director at ABACO. The estimates underline the scale of the problem – and the urgent need for more effective solutions. Companies receive tax credits for donating excess food to charitable organizations, yet much of the product they send to landfills is perfectly edible.

 

Proposed legislation that would impose fines on enterprises that throw away food needlessly, could provide a stronger incentive for change. If the legislation is enacted, it will be one of the first laws of its kind in the world, says Suárez. Developing more efficient reverse supply chains for food also will deliver environmental benefits by reducing the amount of landfilled product.

 

The partnership between ABACO and CLI is tackling the country’s mountain of food waste on two fronts: increasing the efficiency of ABACO’s collection and distribution operations, and helping retailers to develop less wasteful approaches to discarding product they no longer want to sell. There are plans to work with farmers at a later stage. Many farmers are poor, yet they waste some 40% of their harvests because the produce does not meet retailers’ and consumers’ quality standards.

 

ABACO has 19 food banks in 18 cities across Colombia. Every year its fleet of 48 trucks rescues about 20,000 tons of rejected food. Around 15% to 30% of the food is unfit for human consumption. The edible product is stored in ABACO facilities, which function as distribution centers for about 2,500 charities that make the final delivery to needy citizens.

 

It’s a complicated supply chain. The amount of product that retailers donate varies from day to day, making it extremely difficult to forecast supply volumes. Often, retailers will alert ABACO that they have food to donate only 24 hours before the products’ expiration dates. Demand is fragmented too. Take, for example, the operation in Colombia’s premier city, Bogotá, where about 200 stores donate excess food. Of the capital city’s some 7 million inhabitants, about 700,000 live in poverty. They are scattered across this traffic-choked megacity, which is served by a single ABACO food bank and a fleet of four, five-ton trucks and a single 10-ton truck. It’s almost impossible for the food bank to cover every store, so ABACO must find better ways to utilize the organization’s transportation resources. “One problem is that about 58% of our trucks are running empty at any given time because it is extremely difficult to find backhaul loads,” Suárez says.

 

CLI is helping ABACO to streamline its supply chain by improving vehicle routing processes. The center is building models of ABACO’s distribution networks to optimize transportation. “We are developing a simple software tool that ABACO can use to prioritize collections from donors by, for example, product expiration dates, and make better use of their trucks,” explains Vivian Rangel, sustainability research track leader at CLI.

 

The second arm of the project is focused on the retailers that donate food. Here, the overarching goal is to develop sound business cases for sending excess product to food banks. “We are trying to show industry that donating food makes good business sense in terms of social impact, a sustainable environment, and economic development, and is not just an act of charity” says Suárez.

 

As Rangel explains, “We have worked with major retailers over the last two to three years on their food dumping practices, and found that most of the product that is wasted can actually be saved.” Flawed handling, breaks in the cold chain, and incorrect use of expiration dates, are examples of practices that can be changed to reduce the amount of food that stores discard, she says. Reforming these practices can deliver cost savings for retailers by improving inventory management and extending product shelf life.

 

CLI is collaborating with retail outlets to improve logistics processes inside the store. A measure as simple as ensuring soiled product is separated from saleable product can make a huge difference. “We are working on a guide to help retailers improve the way they handle food, and to create best practices in this area” says Rangel.

 

It is hoped that the partnership’s work will also change public policy, and trigger a rethink of how Colombia – and possibly other countries – produces and distributes food. “Food waste is directly related to the efficiency of logistics operations, and we have an opportunity to make a real difference in the country’s poor communities,” says Suárez.