Food e-retail model profits while reducing food losses

Signal of change / Food e-retail model profits while reducing food losses

By Gwyneth Marcelo / 27 Sep 2016

OpenTaste.sg is a grocery delivery service that allows customers in Singapore to order fresh produce, meat and dairy directly from farms as far away as California and Australia, as well as tropical produce from closer markets such as Thailand, Philippines, Vietnam and Malaysia. OpenTaste’s online order management system allows them to cut several actors out of the supply chain, including the exporter, importer and broker, as well as a separate distributor. In traditional food supply chains, each of these actors means more product loading/unloading, increasing wastage related to time, temperature fluctuation and poor handling practices, as well as higher costs. According to their website, OpenTaste’s prices are up to 50% lower than supermarket prices, and take a big bite out of supply chain food wastage.

So what?

This and other food e-retail models address entrenched inefficiency in food supply chains by working against a distribution channel phenomenon called the bullwhip effect, through which each additional actor along the chain decreases the accuracies of demand forecasts for subsequent actors, and reduces producers’ visibility over end demand for their products. For manufactured products, this increases inventory costs. For perishable food items, this effect increases loss levels.  OpenTaste.sg offers producers accurate demand and more accurate forecasting, reducing food losses and improving profit margins.

This model speaks to our need to reconnect with our food. It could be expanded to connect consumers directly with individual farms, building trust relationships across geographical borders. If it were to converge with the trend in crowdfunding, new loyal consumer bases could become funding sources for on-farm efficiency and sustainability improvements, and potentially help out during times of drought or flood.

There are some sustainability risks. Newly empowered food e-retailers could exacerbate inequality in food supply chains, rather than help producers achieve greater sustainability. Consumers may order more often, increasing the number of half-empty vehicles making trips through crowded urban areas, worsening road congestion. Lastly, this innovation does not address high emissions from present-day refrigeration technology.

This signal of change was spotted as part of Disrupting Food Logistics, a multi-stakeholder collaborative endeavour to build the sustainable zero-waste food supply chains of the future, drawing on innovations from across the globe.

For more information, please read the Call to Action and reach out to Gwyneth Fries, Senior Sustainability Advisor at Forum for the Future.

Sources

www.opentaste.sg

What might the implications of this be? What related signals of change have you seen?

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