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Final Report

Reducing Food Waste

through Retail Supply Chain

Collaboration

Companies reducing retail supply chain food and packaging waste by working together through an IGD Performance Improvement Programme

Project code: RSC010-001 ISBN:

Research date: April 2010 –February 2011 Date: March 2011

WRAP helps individuals, businesses and

local authorities to reduce waste and

recycle more, making better use of

resources and helping to tackle climate

change.

Document reference: WRAP, 2010, Cross Sectoral Work Programme to Reduce Food Waste

Arising in the Retail Supply Chain (WRAP Project RSC010-001.

Report prepared by James Tupper, ECR Learning & Change Manager,

and Peter Whitehead, Agribusiness Project Leader, IGD)

Written by: James Tupper, ECR (Efficient Consumer Response) Learning & Change Manager (IGD),

and Peter Whitehead, Agribusiness Programme Leader (IGD)

Legacy research commissioned by the previous government.

Front cover photography: Cross-functional trading partner teams at the On-Boarding Meeting preparing plans of action for the Measure & Understand phase.

WRAP and IGD believe the content of this report to be correct as at the date of writing. However, factors such as prices, levels of recycled content and regulatory

requirements are subject to change and users of the report should check with their suppliers to confirm the current situation. In addition, care should be taken in using

any of the cost information provided as it is based upon numerous project-specific assumptions (such as scale, location, tender context, etc.).

The report does not claim to be exhaustive, nor does it claim to cover all relevant products and specifications available on the market. While steps have been taken to

ensure accuracy, WRAP cannot accept responsibility or be held liable to any person for any loss or damage arising out of or in connection with this information being

inaccurate, incomplete or misleading. It is the responsibility of the potential user of a material or product to consult with the supplier or manufacturer and ascertain

whether a particular product will satisfy their specific requirements. The listing or featuring of a particular product or company does not constitute an endorsement by

WRAP and WRAP cannot guarantee the performance of individual products or materials. This material is copyrighted. It may be reproduced free of charge subject to the

material being accurate and not used in a misleading context. The source of the material must be identified and the copyright status acknowledged. This material must

not be used to endorse or used to suggest WRAP’s endorsement of a commercial product or service. For more detail, please refer to WRAP’s Terms & Conditions on its

web site: www.wrap.org.uk

Reducing Food Waste through Retail Supply Chain Collaboration 3

Executive summary

Aims

In December 2009 WRAP commissioned IGD to conduct a performance improvement programme with leading

grocery retailers and their trading partners aimed at reducing food and drink waste in the supply chain. The

programme was designed to support signatories to the second phase of the Courtauld Commitment and provide a

demonstration to the wider industry, highlighting how collaborative working can prevent waste arising while

providing commercial benefits.

The programme started in December 2009 and ran through 2010, completing in February 2011 following an ex-

post-evaluation meeting.

Specifically, the programme aimed to:

deliver reductions in food and packaging waste previously being disposed of to landfill;

initiate new ways of working and business practices across the supply chain that prevent waste; and

deliver case studies that showcase the benefits of the project and encourage wider and faster uptake of such

collaborative working practices across the grocery industry.

Method

IGD approached a senior Director in several retailer signatories of the Courtauld Commitment at the outset of the

programme with an invitation to participate. Five retailers opted to join the programme nominating a key lead

individual who would be responsible for the work. The retailers then self-selected non-competing product

categories with high levels of waste and invited their respective suppliers to participate. This led to five retailer-

supplier teams each comprising between two and six individuals who carried out the programme with facilitation

from IGD.

Category Companies

Biscuits / Snacks / Cakes

Floral

Ready Meals

Citrus

Salads

Sandwiches


The retailer-supplier teams focused on:

delivering commercial benefits for their participating businesses so that behavioural changes could be

embedded and sustained;

reducing food and packaging waste including landfill and non-value adding activities for their chosen product

categories; and

developing case studies to be shared encouraging wider uptake.

The facilitation provided by IGD comprised three phases.

First, teams were requested to ‘measure and understand’ their respective category specific supply chains in

order to identify current processes from end-to-end and quantify the amount of waste arising. All teams used

systematic methods such as value stream mapping in both the retailers and suppliers premises. This phase ended

with teams presenting their findings to each other at a progress meeting designed to cross-fertilise ideas and

develop plans for improvement.

In the second phase, ‘re-design and pilot’ the teams targeted one or more root causes of waste (identified in

phase one) and developed new ways of working that would reduce waste. Typically, these involved activities such

as joint business planning between retailer and supplier and agreeing forecasts where previously these were

separate exercises. Better alignment between order management/timing and production schedules was also

achieved. These changes were piloted by the teams and their impact assessed. A progress meeting marked the

completion of this phase in which teams were able to have their findings assessed and peer reviewed.

The third and final phase, ‘roll-out and sustain’ involved teams applying the improvements to other parts of

their businesses, for example other products within the category or other categories. Solutions were embedded

with work instructions in some cases following Board approval. A final progress meeting captured the benefits

and agreed a framework for developing the case studies. Each team agreed to attend an ex-post evaluation

meeting to finalise benefits and assess the overall cost/benefit of the programme.

Results

Overall the programme has prevented approximately 1,400 tonnes of waste arising as of March 2011, with a

further 1,193 tonnes expected to be prevented in the financial year 2011-12. The waste reductions were achieved

using simple methods throughout the programme, thereby not incurring capital or other costs. New ways of

working were developed that are transferable to other supply chains and the reduction was delivered in a

sustainable and profitable way. As a result, as a percent of sales waste has fallen by up to 1% point allowing for

products whose sales have increased over the life of the programme.

The programme has also given rise to what generically might be termed ‘better supplier relations’. Specifically,

all teams have made changes to their working practices as a result of the programme. These changes include:

instigating regular meetings between the retailer and supplier teams;

increasing/introducing daily communications with suppliers;

more detailed forecasting methods linked to an improved order planning process;

improved tools to assess underperforming lines and for decision making;

improved tools to make order amendment more accurate; and

regular touch-points to review progress on a regular basis.

Teams noted that the methods piloted in the programme can be deployed in other categories and certain teams

have plans in this regard. In a similar way teams noted that methods piloted by other teams may have

applicability to their own trading partners.


The new ways of working, identified by the teams which have wider applicability to food retailers and

manufacturers not involved in the programme are listed below.

improved communications between retailers and suppliers over production planning and order timings;

closer cross-functional team-working within each organisation as well as between them;

joint forecasting, both between and within companies using all the expertise available;

range management including removal of slow moving lines (SKU’s);

fixing order quantities based on a significant proportion of current volumes;

reduced packaging and better designs for shelves; and,

changes to the ‘mark down’ windows for products reduced to clear.

There is a great deal of work being undertaken by WRAP under the second phase of the Courtauld Commitment

and by IGD as part of the ECR (UK) programme to help companies identify and reduce their waste. The following

practices were identified by the participants as being particularly beneficial and they form the recommendations

from this project to the wider industry.

Retailers and suppliers should measure waste using tonnes as the common metric, in preference to value or

the number of cases;

retailers and suppliers should develop ‘joint business plans’ to drive their supply chain operations with open

and honest sharing of information;

retailers and suppliers should develop an ‘end-to-end’ understanding of each other’s business using tried and

tested approaches such as value stream mapping; and

retailers and suppliers should focus on waste prevention with suppliers through the use of in-store availability

measures in preference to service levels.

This report has emphasised the value of collaborative working between trading partners through an externally

facilitated performance improvement programme as an effective vehicle for improving waste prevention. Other

sectors of the grocery industry, for example the independent or convenience sector could benefit from a similar

approach.

Given the benefits that have been identified in this report, WRAP is undertaking similar collaborative programmes

across the home improvement, grocery and food service sectors and encourage industry and business to engage

in the same.

The report includes eight case studies that have been developed from this project.


Contents

1.0 Introduction ................................................................................................................................ 8 1.1 Background ........................................................................................................................ 8 1.2 Aims and Objectives ............................................................................................................ 8

2.0 Methods ...................................................................................................................................... 9 2.1 Engagement ..................................................................................................................... 10 2.2 Programme ....................................................................................................................... 11 2.3 Facilitation ........................................................................................................................ 13

2.3.1 Paying Attention to Participants’ Commitment Level ................................................. 13 2.3.2 Paying Attention to Partnership Success Factors ...................................................... 14

3.0 RESULTS .................................................................................................................................... 15 3.1 Tonnes Saved ................................................................................................................... 15 3.2 Commercial Impacts .......................................................................................................... 16 3.3 New Business Practices ...................................................................................................... 17 3.4 Cost Benefit ...................................................................................................................... 18

4.0 Conclusions and Recommendations ......................................................................................... 19 4.1 Recommendations ............................................................................................................. 19

Appendix 1: People ............................................................................................................................... 21 Appendix 2: Case Studies ..................................................................................................................... 22

Figures

Figure 1: Hierarchy of objectives for programme developed with participating retailers. ................................... 10 Figure 2: IGD Performance Improvement Programme structure and dates. ..................................................... 12 Figure 3: The purpose and activities of each of the three phases of the programme. ....................................... 12 Figure 4: The key activities of each the four meetings of the programme. ....................................................... 12 Figure 5: Participant commitment levels during the On-Boarding Meeting ....................................................... 13

Tables

Table 1: Product categories and suppliers identified by participating retailers. ................................................. 11 Table 2: Job functions companies were asked to consider engaging in the first phase. ..................................... 11 Table 3: Participants’ scoring at Progress Meetings of their team’s partnership. ............................................... 14 Table 4: Participants’ estimates of their teams’ supply chain waste prevention due to the programme. .............. 15 Table 5: People involved; their roles and their attendance at the four main meetings. ...................................... 21


Abbreviations Defra Department for Environment, Food and Rural Affairs

FOTM Food on the Move

JS Sainsbury’s

KPI Key Performance Indicators

LEAN A production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination

M&S Marks & Spencer

MAPE Mean Absolute Percent Error

MOQ Minimum Order Quantity

NPD New Product Development

RAG or RYG Traffic lights: Red Amber Green or Red Yellow Green

SKU Stock Keeping Unit

SNAF Short Notice Amended Forecast

UB United Biscuits

WRAP Waste & Resources Action Programme

Acknowledgements

IGD and WRAP would also like to thank the companies participating in this programme.

Musgrave

United Biscuits

Sainsbury's

World Flowers

Morrisons

Kerry-Noon

Tesco Stores Ltd

MM (UK)

Natures Way Foods

G's Marketing

Marks & Spencer

Uniq Prepared Foods

Particular thanks go to their cross-functional trading-partner team members who did the work, identified the

opportunities, designed and tested solutions, embedded new working methods and prevented hundreds of tonnes

of retail supply chain waste in a commercially sustainable way.

Special thanks go to Kerry-Noon, Natures Way Foods, Morrisons, Marks & Spencer and Sainsbury's for hosting

key meetings during the programme.


1.0 Introduction

1.1 Background

Around 6.5 million tonnes of waste arise in the manufacture, distribution and retailing of food and drink (WRAP,

2010)1. The majority (77%) of this waste rests in food manufacturing. The economic cost of this, ‘supply chain’

waste is estimated at around £5 billion. Previous research into the role of supplier – retailer trading relations by

Cranfield University and IGD for Defra identified management factors as a significant root cause of food and drink

waste2. Much has been done to drive down waste by individual manufacturers and retailers but the potential of

collaborative working in a supply chain context as a means of preventing waste is relatively unexplored.

A framework for waste prevention across the supply chain has been introduced under the 2nd phase of the

Courtauld Commitment through which 49 signatories (as of March 2011) are working to improve resource

efficiency and reduce the carbon and wider environmental impact of the grocery industry. Signatories are working

with WRAP to achieve individual and collective ‘sector’ strategy plans to deliver the following three targets:

to reduce the weight, increase recycling rates and increase the recycled content of all grocery packaging, as

appropriate to reduce the carbon impact of this grocery packaging by 10%;

to reduce household food and drink waste by 4%; and

to reduce traditional grocery product and packaging waste (both solid and liquid) in the grocery supply chain

by 5%.

In support of the supply chain reduction target, WRAP is conducting research projects to identify waste hotspots

where supply chain efficiencies can be made, mapping out the reasons for waste and identifying good practice

guidance. These projects include a series of ‘resource maps’ covering the following sectors: fresh fruit and

vegetables, meat, fish, pre-prepared foods and drinks (alcoholic and non-alcoholic). As part of its support to

signatories to meet Courtauld targets WRAP is also carrying out waste prevention reviews and providing bespoke

advice on how to reduce the waste identified.

In recognition that the new supply chain target is challenging and that previously many retailers and

manufacturers have focused on the diversion of waste from landfill (to, for example, energy recovery) and less on

waste prevention, WRAP invited IGD to facilitate a performance improvement programme to demonstrate the

waste reduction benefits of collaborative working. The programme is the first of its kind designed specifically to

involve trading partners working together to identify and prevent waste in their supply chains.

IGD has a long history of encouraging supply chain collaboration through, for example, management of the

Efficient Consumer Response (ECR -UK) programme. This work includes the development and delivery of IGD

performance improvement programmes utilising a bespoke design that has been run 15 times across UK,

elsewhere in Europe and in North America by IGD or under licence to IGD. The programme enables supply chain

partners and different job functions to work together for a common purpose, build their understanding, challenge

the status quo and change their working methods. The programme enables companies to identify, implement and

sustain step-changes in performance levels along the supply chain that would have been difficult or impossible to

undertake in isolation. In doing so, it also encourages companies to embed the process changes within their

businesses and supply chains.

1.2 Aims and Objectives

The aims of this new performance improvement programme set by WRAP and IGD were as follows:

1 Waste arising in the supply of food and drink to households in the UK (WRAP, 2010) 2 Evidence on the role of supplier-retailer trading relationships and practices in waste generation in the food chain (Defra, 2008)


to deliver reductions in food and packaging waste previously being disposed to landfill;

to initiate new ways of working and business practices across the supply chain that prevent waste; and

to deliver case studies that showcase the benefits of the project and encourage wider and faster uptake more

widely across the grocery industry.

The emphasis in the programme was to find collaborative ways of working that prevent waste arising. The extent

to which waste could be prevented was uncertain at the outset, but WRAP specified that the programme should

deliver significant reductions and set a target over the programme and following embedding within the

businesses of 10,000 tonnes. However, it was recognised that this programme, although based on a tried and

tested approach, was a pilot initiative to explore whether retailer-supplier collaborative working could be an

effective way of helping signatories meet their commitments to Courtauld. Due to the nature of the programme

both WRAP and IGD identified behaviour change that could be sustained to be as important as the waste

reduction target.

Both WRAP and IGD also wished to use the programme to demonstrate to the wider industry (Courtauld

signatories and companies more generally) that collaborative working can prevent waste and reduce costs. A

target of six case studies drawn from the programme was set to showcase the benefits.

It was anticipated that this project would also help improve resource efficiency more generally because other

types of ‘waste’ such as markdowns, inventory and transport would be reduced at the same time. Some of these

impacts are difficult to measure directly but arise through process improvements identified and adopted by

retailer-supplier project teams engaged on the project.

Both WRAP and IGD recognised that if waste prevention was to be sustainable and the new ways of working

embedded across the supply chain, the programme needed to be shown to be of commercial benefit to

participating companies and so this was critical to both the design and execution of projects. Generally

businesses at any one point in time will be running a mix of short term and longer term projects, the latter more

strategic in nature. A short term project of this type would normally be expected to deliver immediate gains while

in effect it is preparing companies for the longer term strategic goal of shifting waste from landfill by preventative

activity.

For many companies waste reduction is ‘business as usual’ and an explicit key performance measure. This

programme was designed to help companies challenge existing approaches while recognising that if companies

are going to take forward change they will only do so if those changes help achieve company wide goals

profitably.

The programme commenced in December 2009 with the recruitment of trading partners and was completed in

February 2011 with an ex-post evaluation meeting.

2.0 Methods

IGD performance improvement programmes engage a mix of businesses and individuals from within the

businesses and facilitate these teams through a programme of phased activities in a simple structure:

companies and their supply chain trading partner(s) are engaged in the programme to tackle real

commercially relevant issues;

cross functional trading partners are recruited to break through the barriers between functions and

businesses;

teams from several supply chains work in parallel to agreed deadlines, competing but also cross fertilising

ideas;

a Measure & Understand phase ensures actions are based on evidence; not myth, legend or gut-feel alone;


a Redesign & Pilot phase wins benefits in the short-term to motivate others from the businesses to join the

change process; and,

a Roll-out & Sustain phase ensures results are delivered and learnings applied; not sidelined by new

initiatives.

The following sections detail the engagement, structure and facilitation of the programme.

2.1 Engagement

IGD approached a senior Director in several retailer signatories of the Courtauld Commitment offering them the

opportunity to participate in the programme and succeeded in attracting five retailers to the programme, as

follows:

Marks & Spencer Tesco Sainsbury’s Morrisons Musgrave

Their participation was secured at a meeting of the retailers at IGD on 5th March 2010 against the following

hierarchy of objectives that stressed the importance of delivering commercial benefit from waste reduction.

Figure 1: Hierarchy of objectives for programme developed with participating retailers.

From the outset and during the programme, focus on

Towards the end and immediately following the programme, focus on

Commercial benefit from waste

performance improvement for

businesses participating directly in the

programme so that behavioural change

can be embeded and sustained.

Reduction in food and packaging waste

arising in the retail supply chain (as

defined for target 3 of the Courtauld

Commitment Phase 2).

Reduction in household waste

(e.g. from pack size reduction).

Reduction in other types of waste /

non-value-adding activities.

Commercial benefit from waste

performance improvement for

businesses not participating in the

programme through both:

hard hitting case studies of successful

food and packaging waste reduction

(with any commercially sensitive

information removed); and

clearer customer requirements that are

more aligned across supply chains to

reduce waste / improve resource

efficiency.

Previous research (for example, Defra, 2008) had identified categories that have both a short shelf life and high

demand volatility as those likely to have the highest percentage levels of waste in relation to sales. While this

information was available to participants, we were not prescriptive about which products were chosen for this

project - each of the retailers were free to identify different product categories. Once these were identified the

process involved the retailers selecting non-competing own label or branded product suppliers. The products

selected ranged from sandwiches and biscuits to flowers and ready meals.


Table 1: Product categories and suppliers identified by participating retailers.

Category Companies

Biscuits / Snacks / Cakes

Floral

Ready Meals

Citrus

Salads

Sandwiches

The above retailers have national coverage and their participation secured effort across England, Scotland and

Wales. Suppliers based overseas were excluded.

A key feature of the programme is ‘learn by doing’ and IGD worked with retailer and supplier companies to help

them assign the right people to cross-functional trading partner teams who collaborated on the programme.

Companies were asked to consider engaging the following job functions in the first meeting and first phase of the

programme with subsequent engagement dependent on findings.

Table 2: Job functions companies were asked to consider engaging in the first phase.

Retailer Supplier Growers

Store operations Depot operations

Ordering

Buyers

Technologist

Manufacturing S&O Planning

Demand Planning

Account Manager

Technologist

Procurement

Manager / Owner

2.2 Programme

The full programme structure is shown in the chart below (with engagement as part of the set-up period). The

meeting dates were chosen to reflect the time required to complete each phase of the programme.


Figure 2: IGD Performance Improvement Programme structure and dates.

© IGD 2010

For WRAP reporting and ex-post monitoring purposes an additional meeting was held with company

representatives on 17th February 2011.

IGD performance improvement programmes have a simple structure, which increases the chances that essential

phases of activity are not skipped because of time pressure or forgotten because, for example, they have been

obscured by unnecessary complexity. The name, purpose and team activity of each phase are outlined below.

Figure 3: The purpose and activities of each of the three phases of the programme.

Phase Purpose of Phase Team Activity During Phase

1. Measure &

Understand

To ensure actions are based

on evidence; not myth and

legend or gut-feel alone.

Performance is measured, root

causes of variance analysed and

alternate solutions are identified.

2. Redesign

& Pilot

To win short-term gains

and to motivate others to

join the change process.

Chosen solutions are developed

and tested locally to contain risk.

Peer scrutiny drives valid trials.

3. Roll-out

& Sustain

To ensure results are delivered

and learnings applied; rather than

sidelined by new initiatives.

Solutions are applied consistently,

improved further, and applied in

other areas.

© IGD 2010

Within the above structure teams have considerable freedom to employ methods that may be already available to

them from within one or other of the partner companies or made available to them by IGD at one of the

meetings or via the reference material provided.

The key activities of each the four meetings are outlined below.

Figure 4: The key activities of each the four meetings of the programme.

Meeting Participants

On-Boarding Develop vision, scope and key performance indicators

Get up-skilled in simple mapping and analysis techniques

Plan cross-functional trading partner team actions

1st Progress Present findings, alternate solutions and draft plans

Elicit improvement suggestions from other teams

Improve team action plans to redesign and pilot

2nd Progress Present the pilot results, learnings and draft plans

Elicit improvement suggestions from other teams

Improve team action plans to roll-out and sustain

Evaluation Present roll-out results, investment made and abilities developed

Estimate waste reductions (tonnes) and commercial benefits (£s)

Detail action plans to further spread and embed improvements

© IGD 2010


2.3 Facilitation

Throughout the programme IGD acted as a facilitator to encourage team working by:

providing retailer and supplier teams with an additional sense of confidence to innovate;

ensuring detailed actions, responsibilities and deadlines were agreed, documented and distributed;

surfacing individuals’ concerns and identifying next steps to overcome them;

utilising individuals’ positive feelings, building high and sustainable energy levels and commitment to the

programme;

committing retailer and supplier teams to work to a series of reporting deadlines that don’t slip;

ensuring coordination and cross fertilisation amongst teams working in parallel;

facilitating scrutiny and constructive criticism of the progress and plans presented by other teams;

ensuring all business results and learning’s are captured; and

identifying success stories/tools that can be shared with other categories to accelerate improvement.

2.3.1 Paying Attention to Participants’ Commitment Level

At the first meeting IGD provided an instrument that was used by participants to record their commitment levels

throughout this On-Boarding meeting. The following diagram shows how commitment levels tracked during the

meeting. Nearly all participants reached the level of “support” or higher.

Figure 5: Participant commitment levels during the On-Boarding Meeting

10:00 11:00 12:00 13:00 14:00 15:00 16:00

Time during On-Boarding Meeting, 27th April 2010

Participant On-Boarding - Where am I on this scale, right now?

Unawareness

Awareness

Understanding

Contribution

Engagement

Support

Obligation

DedictationTEAM Key

Cakes

Floral

Ready Meals

Citrus

Salads

Sand-wiches

© IGD 2010

Participants are listed and meeting attendance shown in Appendix 1.


2.3.2 Paying Attention to Partnership Success Factors

During the Progress Meetings IGD provided an instrument that was used by participants to score their team’s

partnership against 12 success criteria. Participants rated on a five point scale the extent to which they agreed

with each of the statements listed in the table below. The colours on the right of the table indicate the relative

rating of each team; based on the average of team members’ ratings.

Table 3: Participants’ scoring at Progress Meetings of their team’s partnership.

Key TEAM

G Agree A Not sure R Disagree

Cak

es

Flo

ral

Re

ady

M

eal

s

Cit

rus

Sala

ds

San

d-

wic

he

s

Partnership Success Criteria

Symbiosis The partnership achieves more

together than working separately

Value The benefits outweigh

the costs for all parties

Win / Win There is a genuine

spirit of co-operation

Commitment All parties have bought-in

Equality All parties have valid input

Participation There is shared effort and action

Clarity Everyone is clear about the vision,

process, outcomes and their roles

Sponsorship There is ongoing support

from key decision makers

Empowerment There is the appropriate

authority to make decisions

Communications All parties are informing and

being kept informed of news

Transparency Information is being shared

Bubble Hidden agendas, manipulation,

power play are not getting in the way

OVERALL

© IGD 2010

Both the Citrus and Salads teams showed higher levels of uncertainty and dis-agreement than did the other

teams. In the Salads team it reflected the lower “support” from the retail commercial function combined with the

departure of a leading player from one of the suppliers. In the Citrus team the scoring reflected the lower

“support” from a supplier person combined with the departure from the retailer of their leading player. These

departures ultimately caused a halt in progress of the Citrus and Salads teams and they took no further part in

the programme despite having done all the ‘measure and understand’ phase, which identified considerable waste

reduction potential.

The above table reflects the aforementioned adverse circumstances affecting the Citrus and Salad teams. All

other teams were able to address, work around or otherwise overcome the partnership issues highlighted.


3.0 RESULTS

The results of the programme against each of the three objectives identified at the start of the project are set out

below. First, tonnes saved with estimates of the commercial impact this has achieved are presented. Second, we

examine whether the programme led to changes in working practices and third, eight case studies are presented

identifying best practice from the programme (see Annex 2). In a final section the results are brought together

into an overall cost-benefit assessment.

3.1 Tonnes Saved

Estimates by the teams of waste prevented during the programme and what they should achieve during 2011 are

summarised in the table below.

Table 4: Participants’ estimates of their teams’ supply chain waste prevention due to the programme.

Supply Chain Waste Saved (tonnes / annum)

TEAM

Cakes Floral Ready Meals

Sand-wiches

Total

Redesign & Pilot, 2010 18 998 223

15 33

Roll-out & Sustain, 2010 36 114 1,371

Further Scale, 2011 102 500 421 170 1,193

The four teams estimated that 33 tonnes per annum of supply chain waste was prevented during the Redesign &

Pilot phase. An example of this type of change includes re-scheduling phone calls to achieve better production

planning. Such changes, often called ‘just-do-its’ can be implemented without cost and result from detailed

investigation of actual work practices for the particular products involved.

An estimated equivalent of 1,371 tonnes per annum of supply chain waste was prevented during the Roll-out &

Sustain phase. In these cases some system changes may be required but without exception none of the teams

incurred capital costs to make these changes. Further insights into the types of working practice that were

changed are given below and in the case studies.

An estimated equivalent of 1,193 tonnes per annum of supply chain waste should be prevented during 2011 from

further scale-up and embedding of the changes made as a result of the programme. Each team worked over

different time periods and the scale up represents both putting data onto an annual basis as well as applying the

new working practices to other products in the same category (and in certain cases to products in different

categories). Although this figure is more speculative it does represent real plans identified by the teams at the

Evaluation meeting.

Overall the programme has prevented approximately 1,400 tonnes of waste arising as of March 2011, with a

further 1,193 tonnes expected to be prevented in financial year 2011-12. Although this is below the target we

had originally set, it represents a considerable success for the programme. All participants who completed the

project have indicated that the new ways of working are being sustained and rolled out in their supply chains. In

addition, the reports and case studies provided through this programme should aid in ensuring that these new

ways of working are adopted more widely across the food industry.

We asked companies to estimate whether waste as a percent of sales had reduced because of the programme.

Three of the four teams reported that sales of the products in question have increased over the period of the

programme; even allowing for these increases waste as a percent of sales had fallen by around a single

percentage point.

The steps taken within the programme to prevent food waste will also address some aspects of preventing

packaging waste. The teams calculated the weight and type of packaging associated with the main products

recognising that primary packaging will vary even between individual products, for example, different types of

biscuit.

Table 5: Participants’ estimates of the packaging weight and type for each product


Product/Packaging

% packaging

weight to total

Packaging type(s)

Cakes

<1%

Paper (film and

some plastic)

Floral

4%

Card (bucket and

water not included)

Ready Meals

5%

CPET/RPET/PP (and

films)

Sandwiches

6%

90% card (rest

film)

Participants noted that all their packaging was re-cycled. Some teams also noted that they had taken steps

outside of this programme to ‘lightweight’ their packaging.

We had an aspirational target to deliver a reduction in waste of 10,000 tonnes, this was set in the spirit of helping

companies achieve their 5% supply chain waste reduction target specified in the second phase of the Courtauld

Commitment. It should be noted that four retailer teams participated out of the potential signatories and that the

project focused on single products within categories. If the (mainly low and no-cost) opportunities identified in

this project were replicated across the organisations that participated, the actual tonnages saved could be

significantly higher than those achieved within the timeframe of this project

3.2 Commercial Impacts

For the participating businesses to embed and sustain behavioural change the waste prevented by the teams

needs to be commercially beneficial. There are many ways in which waste prevention can reduce costs and

increase sales including, for example, through a reduction in land-fill charges and an increase in product shelf life.

These are presented below for each of the buyer/ supplier partnerships:

Cakes

Musgrave

United

Biscuits

Musgrave (who trade as Budgens and Londis in the UK) have a different business model to

that of the other retailers participating in the programme in that they operate by franchise

agreements. As a result their stores have a good deal of autonomy for example, in deciding

their product ranges. The team estimated an equivalent of 13,800 cases or 36.4 tonnes per

annum of supply chain waste was prevented during the Roll-out & Sustain phase. One

hundred and two tonnes of savings and other benefits are anticipated for 2011 from improved

forecast accuracy, range review, stock reduction and increased product life. Given their

business model implementing a range review is more challenging for Musgrave but the saving

in waste from this alone over the longer term will far outweigh the costs of the programme.

Floral

Sainsbury’s

World

Flowers

Floral is typically a low volume, high value category subject to fluctuating and unpredictable

demand that results in high levels of waste. One of the key changes made by Sainsbury’s and

World Flowers was to introduce fixed order quantities resulting in greater predictability across

the supply chain. The team estimated that a 15% improvement in waste performance at the

retailer is worth approximately £12,000 per week. Further reductions in waste of 15% are

also anticipated in the upstream supply chain. These benefits comprise savings in air-freight,

reduced stock holding and improved factory efficiency. In 2011 a top level reduction in waste

of 222 tonnes per week will be achieved as a result of the programme. Both parties believe

that the programme that focused on two different types of rose is scalable to other flowers

and other categories (for example in fresh produce where trials are planned) and have made

estimates of waste saved in 2011 on this basis.

Ready Meals

Morrisons

Kerry Noon

Morrisons sell 280,000 Indian meals per week (August 2010), the subject of the programme.

Greater collaboration was the key to unlocking improved ways of working focusing on the

better alignment of orders and production. Simple changes, for example to the timing of

orders, led to saving 3% of waste or 223 tonnes in 2010 (which has continued to fall in 2011

despite increased sales) and will save 7% of waste or 421 tonnes in 2011. On this basis, meal

waste prevented will be worth £100,000 per annum and savings in markdowns will be worth

£17,000. The results are potentially applicable to other ready meal suppliers. Ready meal

packaging was also re-designed and its weight reduced.

Sandwiches The short shelf life of sandwiches coupled with unpredictable demand from consumers due,


M&S

UNIQ

for example, to the weather and other factors can lead to high levels of waste. Marks &

Spencer provides a wide range of sandwiches (including ingredients) for their customers with

different types varying in their popularity. By obtaining a fuller understanding of the

contribution made by all sandwich lines and taking action with Uniq to review the range, both

have seen a substantial reduction in their costs. For Marks & Spencer this has been achieved

through reduced stock and lower right–offs, for Uniq there are fewer change-overs and

improved revenues as they are able to push sales without driving up waste.

All of the retailers who participated have published CSR reports that include waste reduction policies (and other

areas of their respective businesses). All four retailers have policies to eliminate the amount of food waste going

to landfill. M&S, Sainsbury’s and Morrisons have set specific dates (2012 for M&S, 2011 for Sainsbury’s and 2013

for Morrisons) to achieve this target.

3.3 New Business Practices

The second objective of the programme was to initiate new ways of working to prevent waste. This is less easy

to quantify but a critical element of the programme if it is to be sustained. To do this we have tracked behaviours

at different stages of the programme.

We asked participants to identify those working practices that changed as a result of the programme and have

become routine. These include:

regular meetings between the retailer and suppliers teams;

daily communications with suppliers – a genuine collaborative approach;

more detailed forecasting methods linked to an improved order planning process;

improved tools to assess underperforming lines and for decision making;

improved tools to make order amendment more accurate; and

regular touch-points to review progress on a regular basis.

The teams noted that while their initial work to measure waste in their specific categories involved some relatively

sophisticated analysis, for example value stream mapping, the changes in working practices are all simple steps

that can be taken without cost (some, for example, involving simple spreadsheets) and can be summarised as

‘better supplier relations’. In practice this means better alignment of order and production management.

The working practices are capable of being used more widely for example in other categories and there are plans

in place to undertake these trials. At least one team remarked that practices piloted by other teams in the

programme had potential applicability to their own trading partners.

The results for each individual project undertaken across the four teams are provided below in the form of eight

case studies. Each case study highlights in more detail the work undertaken by each team, drawing out the

business and environmental benefits both in terms of business results and job behaviours. The table below shows

the focus of the case study and the team responsible.

Table 6: Eight case studies from the programme.

Case Study Trade Partners

1. Snacks and Cakes Promotions Management

Musgrave United Biscuits 2. Biscuits and Snacks Range Management

3. Flowing Cakes Through the Supply Chain – Stockless

4. Floral Supply Chain Waste Prevention Sainsbury’s World Flowers

5. Ready Meal Supply Chain Waste Prevention Morrisons Kerry Noon

6. Collaborative Forecasting of Sandwich Demand

M&S UNIQ 7. Cutting Unprofitable Sandwich Lines to Reduce Waste

8. Reducing to Clear and Prevent Sandwich Waste

The case studies appear in Appendix 2.


3.4 Cost Benefit

In addition to the financial costs incurred by WRAP, the main additional costs on the project were those incurred

by the participating companies through the time of the individuals who worked on the programme. At the

Evaluation Meeting we asked the teams to estimate the time they had invested in the programme. These

estimates from the teams are summarised in the table below.

Table 7: Participants’ estimates of their teams’ time investment in the programme.

Time Invested (person days) during phases of programme

TEAM

Ca

ke

s

Flo

ral

Re

ad

y

Me

als

Cit

rus

Sa

lad

s

Sa

nd

-

wic

he

s

Measure & Understand 37 10 18 - - 25 Redesign & Pilot 16 7 12 - - 9 Roll-out & Sustain 19 7 6 - - 9

TOTAL PROGRAMME 72 23 36 - - 43

The table shows that the teams worked some 174 days on the programme representing a considerable

commitment from the retailers and their suppliers over the 10 month period. If the costs of this resource are

calculated using a standard ‘day rate’ then it represents the most significant cost element across the programme.

It can be seen for all teams that the majority of their time was taken at the ‘measure and understand’ phase.

This reflects both the in depth analysis that was undertaken by teams and the need to convert case quantity (and

value) measures of waste to convert a value measure of waste derived from the quantities of products wasted

and their different pack sizes and weights into tonnes, for the programme. The need to establish a common

measure for waste using tonnes as the metric is a wider generic issue that is being addressed by both WRAP and

IGD outside this programme. For example IGD has been running ‘training days’ as part of the ECR (UK) work

programme on food and packaging waste reduction, whilst WRAP, through the second phase of the Courtauld

Commitment, collects supply chain waste data for each year.

In the table below we estimated the costs and benefits of the programme. The costs side is predominantly

comprised of the investment made by WRAP in the programme and the time invested by each of the trading

partners (valued at £500 per day). On the benefits side are costs saved by not having to pay landfill tax (taken

to be £48 per tonne of waste, ignoring collection costs and any regional variations), savings from mark down

policies and reductions in other costs, for example changeovers and efficiencies from collaboration (one example

being less fire fire-fighting on order management and on forecasting).

We have provided two estimates; the first is simply the savings in landfill tax as a result of the waste reduction.

This understates the full extent of savings in 2011 by ignoring collection charges and not including £8 per tonne

increase in landfill charges that will come into effect on 1 April this year (and subsequent years). The second

estimate is based on the figures provided by the companies at the Evaluation meeting.

Table 8: Summary of costs and benefits of the programme.

Costs £ Benefits £

WRAP 54,000 (1) Landfill tax savings 120,000

Trading partner teams 87,000 (2) Company estimates 669,000

For WRAP the return on investment calculated as the costs of the programme set against the savings in landfill

tax is approximately two fold. For the companies the return on investment calculated as the costs of their input

set against their own estimates of the benefits is in excess of seven fold (or 1.4 fold if only the savings in landfill

tax are included).

This analysis demonstrates that both retailers and manufactures can obtain commercial benefits by working

together to reduce waste. These benefits can be significant over time demonstrating a strong business case for

waste prevention.


4.0 Conclusions and Recommendations

Considerable effort is being made to reduce waste by individual retailers and food manufactures. This project has

demonstrated that trading partners who work together can reduce the waste that arises at the interface of their

trading relations. As such, it is the first project of its kind that has tackled waste reduction through collaborative

action along the supply chain.

This waste focused performance improvement programme represents a milestone in the delivery of targets under

the Courtauld Commitment and more widely because:

it demonstrates that retailers and suppliers can collaborate to identify and reduce supply chain waste and that

this can be initiated and accelerated with third party facilitation;

waste prevention – the pinnacle of the waste hierarchy – can be delivered thus reducing the amount of

material that has to be either redistributed, recovered or disposed of; and,

participants secured a positive rate of return for their investment of time and resources thereby

demonstrating and securing a commercial benefit from preventing waste.

The case studies document the many changes that have been introduced as a result of this project to improve

collaborative working. In this programme joint working has taken several different forms (documented

throughout this report), but the teams wished to highlight the importance of involving the retailers’ technical

teams with the supply base and the beneficial role of staff exchanges (‘implants’) on performance.

Overall the project will have led to a reduction in waste amounting to around 2,500 tonnes. Given the pilot nature

of the project and the small number of products that were involved the results, if they can be scaled, suggest

that Courtauld signatories should be able to achieve their commitment to a 5% reduction in supply chain waste.

All the changes made by the participants were done without incurring capital costs and the new ways of working

have broad applicability. The main new ways of working that could have wider application to food retailers and

suppliers not involved in this programme included:

improved communications between retailers and suppliers over production planning and order timings;

closer cross-functional team-working within each organisation as well as between them;

joint forecasting both between and within companies using all the expertise available;

range management including removal of slow moving lines (SKU’s);

fixing order quantities based on a significant proportion of current volumes;

reduced packaging and better designs for shelves; and,

changes to the ‘mark down’ windows for products reduced to clear.

4.1 Recommendations

There is a great deal of work being undertaken by WRAP under the second phase of the Courtauld Commitment

and by IGD as part of the ECR (UK) programme to help companies identify and reduce their waste. The following

practices were identified by the participants as being particularly beneficial and they form the recommendations

from this project to the wider industry.

retailers and suppliers should measure waste using tonnes as the common metric;

retailers and suppliers should develop ‘joint business plans’ to drive their supply chain operations with open

and honest sharing of information;

retailers and suppliers should develop an ‘end-to-end’ understanding of each others businesses using tried

and tested approaches such as value stream mapping; and

retailers and suppliers should focus on waste prevention with suppliers through the use of in-store availability

measures in preference to service levels, which usually specifies delivery schedules and quantities.


This work programme and report has emphasised the value of collaborative working between trading partners

through an externally facilitated performance improvement programme as an effective vehicle for waste

prevention. Other sectors of the grocery industry, for example the independent or convenience sector, could

benefit from a similar approach.

Given the benefits that have been identified in this report, WRAP is undertaking similar collaborative programmes

across the home improvement, grocery and food service sectors and encourage industry and business to engage

in the same.


Appendix 1: People

Table 5: People involved; their roles and their attendance at the four main meetings.

Te

am

Role in Prog

Company Individual Job

27

-Ap

r

24

-Ju

n

14

-Se

p

23

-No

v

Cakes

Sponsor

Musgrave

Scott Wharton Supply Chain Director

Participant

Andy Robertson Head Of Network Planning

Allaudin Elias Supply Chain Manager

United Biscuits

Grace McIntyre Supply Chain Development Manager

Chris Vevers National Account Manager

Flo

ral

Sponsor

Sainsbury's

Warren Davis Senior Supply Chain Manager - Fresh Food

Participant

Andy Atherton Senior Supply Chain Manager - Grocery

Donald Matheson Category Supply Manager

Robert Honeysett Technical Manager

World Flowers

Dawn Hampton Sales Support Manager

Bill Brinson Business Unit Manager

Ready M

eals

Sponsor

Morrisons

Malcolm Basey Supply Chain Director

Participant

Stuart McCarthy Fresh Supply Chain Controller

Darren King Senior Sales Team Leader

Kerry-Noon

Colin Dubber Head of Operations

Charlie Heather Account Manager

Citru

s

Participant

Tesco Stores Ltd

Matt Walsh Fresh Commercial Operations Manager

Adam Morris

Dan Britten Technical Manager - Citrus

Andrew Lewis Buyer - Citrus

MM (UK) Matthew Warren

Naomi Pendleton Head of Technical

Sala

ds

Sponsor

Tesco Stores Ltd

Nick Tatum Produce Operations Director

Participant

Jenny Lee-Barber Buying Manager - Salad

Rosie Willis Technical Manager - Salad

Orrett Kennedy Distribution

Natures

Way Foods

Matthew Rowbury Supply Chain Director

Ian Summerfield Chief Commercial Officer

Ben Horlock National Account Manager - Tesco

G's Daniel Cross Account Manager

Sandw

iches

Sponsor

Marks & Spencer

Syd Reid Merchandising Executive

Participant

Andrew Knott Business Architect

Sean Parslow Category Supply Chain Manager

Gerri Scott Foods Buyer

Steve Simpson Business Analyst

Deena Barritt Project Manager Retail Food 2020

Mitul Lakhani Business Analyst - Strategy & Architecture

Uniq Prep-ared Foods

Richard Moorby Account Manager

Darren Atkinson Supply Chain Manager

Oth

ers

Facilitator IGD

James Tupper ECR Learning & Change Manager

Expert Peter Whitehead Agri-business Programme Leader

Sponsor WRAP

Mark Barthel Special Advisor

Sponsor Sarah Macnaughton Retail Supply Chain Programme Manager


Appendix 2: Case Studies

SNACKS AND CAKES PROMOTIONS MANAGEMENT

United Biscuits (UB) and Musgrave worked on this project to align their forecasts and production

planning more closely to tackle the high levels of waste (56% of all waste), which was arising from

promotional lines. Forecast accuracy improved and promotional waste as a % of sales fell by over

13% points.

Measure and Understand

The Musgrave and United Biscuits team identified significant opportunities through: mind-mapping, scoping and

prioritisation; end-to-end supply chain ‘walk-through’; KPI information gathering; and ‘Lean’ methodology and

process mapping. This process is summarised in Figure 1.

Figure 1: Musgrave – United Biscuits use of LEAN methodology and process mapping.

Improving promotions management was one of three key opportunities identified. Promotional lines represented

over half (56%) of wastage (£). Cakes and Crisps/Snacks/Nuts were the key priority areas.

Redesign & Pilot

The following new ways of working were developed collaboratively:

Strategy Improved joint business planning.

Budget forecasting and assumptions more visible.

Better alignment of timelines.

Planning Working to one aligned process and timeline.

Better understanding of accountabilities and dependencies along the supply chain.

More collaborative forecasting within/between companies.

Earlier forecasting in line with production planning.

Improved planning and communication (e.g. a weekly meeting).

Execution More focus on initial stock phasing into depot.

Improved communication of ‘actual’ versus ‘planned’ performance.

Collaborative monitoring and adjustment of orders.

Focus on end of promotion execution and exit strategy.

Review Category team post promotion review (process and KPIs).

Learnings built into next promotional cycle.


Key Findings and Benefits

Store forecasts shared earlier to ensure they are built into production planning.

Time used for planning rather than wasted on ‘fire-fighting’.

Fewer last minute UB volume amendments.

Short Notice Amended Forecast (SNAF) reduction from average of approximately 10 lines pre-pilot to one line

in current promotional cycle.

Musgrave forecast accuracy has been sustained (76% actual versus forecast).

Promotional wastage as a % of sales is down from 19.5% to 6.3%.

Roll-out & Sustain

Since the 13th September consumer start date, the new integrated UB/Musgrave promotional process and ways of

working have been ‘business as usual’ with post promotional reviews in place.

Figure 2: Feedback on UB/Musgrave ‘business as usual’ promotional process and ways of working

Changes

As a result of the WRAP funded IGD programme Musgrave and United Biscuits have seen significant benefit.

Table 1: Musgrave and United Biscuits Promotions Management – what’s changed?

Before Programme As a Result of Programme

Bu

sin

ess

Re

su

lts 2.93% Product Wastage (% of sales) 1.16% Product Wastage (% of sales)

19.50% Promotional Line Wastage 6.30% Promotional Line Wastage

75% Promotional Forecast Accuracy 76% Promotional Forecast Accuracy

Jo

b B

eh

avio

ur

Insufficient collaborative planning leading to

reactive fire-fighting and non-value added

activities.

Lack of two-way communications and insufficient /

inaccurate information lows (e.g. forecasting) both

o across functions within Musgrave and UB; and

o between companies inc. function to function.

Lack of understanding and alignment of key

business processes (e.g. promotions, seasonal

management).

Unclear people structures and roles /

responsibilities, with ‘silo’ mentality between

businesses and across functions.

Lack of visibility and alignment of Commercial and

Supply Chain strategies and some conflicting

KPI’s.

Promotions process aligned between

Musgrave / UB and within companies across

functions:

o Musgrave / UB integrated process and

timeline;

o roles and responsibilities understood

o communications line clear;

o collaborative planning and review to

build continuous improvement and

reduce non-value adding activities;

o improved alignment of strategic and

commercial planning; and

o end-to-end approach and measurement

Built learnings of collaborative promotions to

other key business process (e.g. seasonal

management).

Musgrave and United Biscuits believe these principles and a streamlined approach could be applied to other

trading partners for mutual benefit.


BISCUITS AND SNACKS RANGE MANAGEMENT

United Biscuits and Musgrave examined their range and found that 60% of products sell less than

10 cases a week and account for over 80% of waste (at value). By looking at minimum order

quantities and removing lines where this is the best commercial decision there is an opportunity to

reduce waste without compromising margin.



prioritisation; end-to-end supply chain ‘walk-through’; KPI information gathering; and Lean methodology and

process mapping. Figure 1 shows performance data collected by the team.

Figure 1: Musgrave – United Biscuits gathered KPI information

Improving range management was one of three key opportunities identified. Non-promotional lines represented

just under half (44%) of wastage (£).

The Musgrave and United Biscuits team analysed the wastage of low volume lines. They found that ~60% of the

range is slow selling (<10 cases/week). The slow sellers represented:

~ 25% of sales £;

~ 13% of volume;

over 80% of wastage at value; and

~ 7% as a proportion of sales.

Low volume lines are driving waste mainly in Cakes and Crisps/Snacks/Nuts. There are some lines were the

minimum order quantity (MOQ) drives more stock than stores will sell in the product’s life!


Redesign & Pilot

As a result of the analysis category teams now focus on the end-to-end value chain:

Consumer offer

Rate of sales and margin

Wastage and stock levels

MOQ versus volume.

Improved reporting and dialogue is creating visibility to net profitability. This is driving better decision making for

the existing range and new lines:

opportunity to drive sales, review store distribution’; and

removing range where this is the best commercial decision (five lines to date).

Silo ‘ways of working’ and KPI’s are being broken down. Decisions are increasingly based on all factors, including

wastage. Five lines have been de-listed and this will reduce wastage by 0.7 tonnes per annum.

Roll-out & Sustain

Commercial team changes at UB and Musgrave have delayed the process. The new team are engaged and

recognise the further opportunities to develop in this area.


FLOWING CAKES THROUGH THE SUPPLY CHAIN – STOCKLESS

United Biscuits and Musgrave identified the benefits of moving to a stockless system to reduce cake

wastage (the biggest single driver of waste by value).



prioritisation; end-to-end supply chain ‘walk-through’; KPI information gathering; and Lean methodology and

process mapping.

Figure 1: Musgrave – United Biscuits did an end-to-end supply chain ‘walk-through’.

Improving cake flow through was one of three key opportunities identified. Cakes are the biggest single wastage

driver (39% at value £). The opportunity was to move cake from stock-held to stock-less and prevent

approximately 14 tonnes of waste per annum.

Redesign & Pilot

Cake is currently delivered into four depots twice a week and stock-held for store picking. The initiative with UB

and other cake suppliers to Musgrave is to move cake to ‘flow through’:

moving from stock held to stock-less (same day stock into and out of depot);

completely removing depot based ‘short-dated’ wastage;

giving retailers and consumers significantly improved product life;

providing the ability to drive promotional sales, improve availability and remove waste; and

removing depot restriction on size of range and NPD.

The key constraint is that this initiative also drives additional transport costs, so the move to flow through needs

to be part of the overall commercial and environmental plan.

Roll-out & Sustain

UB and Musgrave are working through the operational and commercial requirements to commence in early 2011.


FLORAL SUPPLY CHAIN WASTE PREVENTION

World Flowers and Sainsbury’s worked together on this project to tackle volatility, order process

and waste within the floral category. This was achieved by a new process of fixing orders and

extended lead times to both reduce contingency stock in the system and increase the customer

product life.


The Sainsbury’s – World Flowers team mapped their forecast-to-order process

Figure 1: Sainsbury’s – World Flowers demand planning and sales forecasting process flow.


The Sainsbury’s – World Flowers team identified the effects of order changes to forecast.

Table 1: Sainsbury’s – World Flowers effects of order changes to forecast.

Above forecast Below forecast

Order more product to maintain stock levels in UK.

Less product harvested to avoid over stock and

holding time of product.

Airfreight is more expensive as we ship smaller

amounts.

Colour Mixes more difficult to achieve as some

farms not able to react quickly.

Product not at correct cut stage therefore requires

conditioning, which is an extra handling cost.

Too much stock in the system which is moving

towards the end of its holding life.

This older stock [though in spec] has potential to

affect quality.

If we cannot use the stock in time it is thrown away

in the UK having had all the associated costs

applied.

Supply chain again becomes inefficient as we

cancel or delay orders.

Redesign & Pilot

To reduce waste and enable longer runs and better efficiency on production lines, two products were chosen to

put onto fixed orders and onto flexi date code for a trial:

Sweetheart Roses; and

Rose and Carnation Posy.

The change involved forecasting the volume for each line for each day in the week and then fixing orders initially

at 80% of volume. Any daily requirements below the fixed level are increased to the fixed order level. Any daily

requirements above the fixed level are honoured by World Flowers. Sunday is kept as a potential no-delivery day

to allow re-balancing of in store stock levels.

Figure 2: Sainsbury’s – World Flowers Sweetheart volume and availability


Figure 3: Sainsbury’s – World Flowers Sweetheart in store waste JS Year 2010

The Sainsbury’s – World Flowers team have implemented a number of other key actions:

better stock take;

more stable range;

merchandising planners for stores; and

new tiering of products into good / better / best.

Roll-out & Sustain

Sainsbury’s and World Flowers have seen overall store waste stabilise during the past six months.

To date they have seen a smoothing of the line for orders versus forecast and hence a reduction in total waste.

They would like to see the approach extended across the entire core range – which could account for 50% of the

total floral category – in order to drive out the true benefits to both businesses. The team is still working

together towards this.

There are commercial benefits that will continue to drive the new ways of working and resulting waste reduction.

These include savings in labour, air freight, factory efficiency and stock holding.

Figure 4: Sainsbury’s–World Flowers supply chain map.


The impact of fixed orders includes:

stabilising orders and their phasing;

improved product supply chain from grower to fixture; and

reduction of waste in store, at factory and with grower.

The reduction of contingency stock in the supply chain resulted in:

improved vase life of product and fresher product on shelves;

fuller more abundant fixture enhancing consumer choice; and

best until date improvement giving consumers confidence and encouragement for repeat purchase.

Changes

As a result of the WRAP funded IGD programme Sainsbury’s and World Flowers have seen significant benefit.

Table 2: Sainsbury’s–World Flowers fixing orders – what’s changed?


Bu

sin

ess R

esu

lts Fixing 7% of core lines Fixing 15% of core lines

In Store waste erratic Store waste has stabilised

Order fluctuations huge - line efficiencies effected:

too much product ordered little and often and

not efficient; and

too little product and large amount of waste in

UK.

Orders fluctuation still prevalent

Jo

b

Be

ha

vio

ur

Poor communication and lack of confidence in

numbers.

Shared forecasting to build knowledge and trust

Joint Training and evaluation day in January with

JS and WF teams.

Sainsbury’s and World Flowers believe these significant waste reductions could easily be rolled out to other

categories.


READY MEAL SUPPLY CHAIN WASTE PREVENTION

Kerry Noon and Morrisons worked on this project to improve relations and with some simple

changes in working practices, reduced waste product at the point of manufacture by 33%,

increased forecast accuracy by 6% and reduced packaging on some products by 20%. Making

things simple for the customer, retailer and supplier was critical.


The Morrisons – Kerry Noon team walked through processes and systems; on site and face to face:

Sales planning Production

planning

Ordering Factory product Store

This gave the team a better understanding of methods and timings, constraints and deadlines and waste issues.

Redesign & Pilot

To prevent supply chain waste, changes were made to ways of estimating orders, timings of orders were aligned

with production schedules, communications were improved and packaging was changed to improve recognition.

Order Estimates were accurate but ‘rounding rules’ on certain lines distorted figures. Rounding rules for

estimates have now been changed to match the order process. Forecasts are now 93% accurate; against an

industry standard of 87% for ready meals.

Order estimates were sent once per week so any volatility throughout the week could cause issues. Estimates

are now sent twice weekly.

Noon had to produce Monday’s requirements on Saturday morning, before the purchase order was received

from Morrisons. This created issues with over production generating waste or short coded stock. Purchase

orders are now sent to Noon for Saturday morning. Noon reviewed its ‘date code received’ matrix and

process for products delivered to Morrisons. They have been able to extended shelf life on one complete

meal and three ‘market street’ products.

Communication tended to be on a needs-must basis, usually to do with problem resolution. Now a daily email

is circulated at 10am and quarterly meetings are scheduled. Daily telephone conversations now take place to

discuss issues and any over production, as required. Noon has been invited to access Morrisons’ Supplier

Database which provides sales, stock holding, forecast and other information which all help with planning.

Noon also reduced case sizes at no on-cost to improve flow to shelf; increasing availability without increasing

waste.

All labels and outer cases looked similar and caused waste because they were difficult for store staff to

replenish and for the shopper to shop. For example, it was difficult to see the difference between one, two or

four meal bags and bags were left on the shelf because they confused some customers.

Supplier, depot and store team members investigated improvement opportunities. To reduce waste the case

label was improved by using colour, a clearer font and by using only store-relevant abbreviations in the

product description: see examples of old and new in figure 1.


Figure 1: Morrisons-Kerry Noon preventing waste by improving recognition and replenishment.

It was decided further to decrease waste by redesigning the ready meal bags so they were

reduced in size by 20% saving material;

easier to put on shelf and fit more on the shelf;

clearer for customers to understand what they are buying;

easier for the consumer to shop; and

clearly stamped on the label ‘Meal-for-One’.

Figure 2: Morrisons-Kerry Noon preventing waste by redesigning the ready meal bags.

To reduce waste further it was also decided to:

keep meals for one in purple;

move meals for two to clear bags to show off size better;

move meals for four to a box to clearly display value for money;

implement colours for different meals to make easier to shop; and

rearrange ready meals levels and adjust shelf heights.


Figure 3: Morrisons-Kerry Noon preventing waste by improving recognition and shop-ability.

Roll-out & Sustain

The period following the Redesign & Pilot phase included significant promotional activity with large volumes of

stock and two new product range launches involving over 20 product lines; a refresh of the range and a total

review of Indian Meals. All this activity went to plan with minimal problems and waste rates maintained.

Reviews and adjustment was carried out throughout launch weeks to minimise waste and maximise sales. This

was achieved through forward planning and excellent two way communications.

The waste improvement per line was 2.5%. Removing the effects of new product launches and Key Deals this

equates to 11.5%.

Figure 4: Morrisons-Kerry Noon ready meal waste improvement despite significant disruption.

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33

Wa

ste

Week

Morrisons Noon Ready Meal Waste

New range Launches

Promotions

Food waste at Noon has reduced from over 30 tonnes per Month, to just over 23 tonnes per month with a decline

continuing.


Figure 5: Food waste at Kerry Noon during the programme.


COLLABORATIVE FORECASTING OF SANDWICH DEMAND

Uniq Prepared Foods and Marks & Spencer embarked on a journey to discover how much waste can

be saved by careful planning, forecasting excellence and a new collaborative approach. Improved

supplier relationships with better availability and less waste was the outcome.


The M&S and UNIQ Prepared Foods team studied the supplier’s daily process, order fluctuations, order change

impact and raw material usage and the retailer’s replenishment and date code rotation. Improving their

collaborative forecasting was one of three key opportunities identified.

The team analysed order fluctuation by product compared with the ideal requirements and the relationship

between M&S provisional, pre-final and final orders and Uniq demand forecasts. The team undertook a full

review of their sandwich buying and forecasting process. They found that there was a lack of visibility at product

level in terms of current sales performance and forward estimate versus proposed final order. The process was

biased toward buying extras on bigger key lines with limited visibility on requirement for smaller peripheral

products. Assumptions were made around key line requirements. The process did not enable tracking of

products that are consistently under/over ordering.

Redesign & Pilot

The team redesigned working practise. The process was refined as follows:

review stock requirements at product group level initially based on previous days sales and weather forecasts;

re align orders for each group vs. planned estimate by reviewing waste, sell outs and progressive sales;

using newly developed commitment sheet, enter and review orders at line level;

re-align line level estimates and review against finalised order; and

make amendment to finalised order as recommended by new sheet.

Additional routines were introduced:

regular fortnightly meeting with key supplier to discuss:

o product performance

o order fluctuation

o manual amends

o trends and future estimates; and

daily discussion between planners and M&S team around planned orders.

To assess initial results the seven weeks post implementation of the new process was compared with a pre

implementation base period of seven weeks. Waste improved generally due to seasonal changes i.e. better

weather, higher level of sales. However vegetable sandwiches waste reduced to a greater degree.

Table 1: M&S-Uniq pilot collaborative forecasting reduced vegetable sandwiches waste

Cash waste vs.

base period % Waste / sales

vs. base period

% point Products Key

Lines

Total

Lines

Vegetable sandwiches -31 -29 -5

Fish, meat and poultry

sandwiches -16 17 -2


Based on the above 4.6 metric tonnes of waste were saved.

An Individual Commitment Sheet was introduced and refined to:

show orders by line / by day – automated;

highlight shortfalls / high orders – with good visibility of tray quantities;

aid planning for future days –with good visibility of performance vs. estimate and forward estimates;

shows sales vs. last year – on the same sheet; and

stimulate debates and actions around product group performance.

Figure 1: M&S-Uniq introduced and refined an Individual Commitment Sheet (example)

<PRODUCT NAME> COVER FORECAST W/E: TARGET

TRAY VALUE

TRAYS

DELIVERY £ OPEN STOCK £ FORECAST SALES £ ACTUAL SALES £ AVAILABILITY % WASTE % WASTE VALUE £ B/STOCK £

7 DAY COMMITMENT %

STOCK LOSS £ LAST WEEK £ % % TO TOTAL LAST YEAR SALES (DvD)

Roll-out & Sustain

Following successful piloting in vegetable sandwiches, the new line level process was rolled out to meat, fish and

poultry. A six week base period was used to track waste performance compared with last year. Meat, poultry

and fish sandwiches waste in 2010 compared with 2009 in the six week base period was -12%. Post

implementation it was -18% vs. last year. Vegetable sandwich waste improvement remained through this period.

The improvement over the period was worth 1.9 tonnes of waste across all lines.

Final to pre-final forecast accuracy has improved from 8.5% to 5.5% variance by additional focus on line level

commitment by the M&S Merchandising team. This has improved the M&S waste number by 0.5% which is worth

92 tonnes of food waste.


Figure 2: M&S-Uniq final to pre-final forecast accuracy has improved

M&S and Uniq’s forecasts are more aligned delivering a forecast accuracy improvement from 68% to 82%. This

reduces the need to revisit production and is saving around four tonnes of food waste annually.

Figure 3: M&S-Uniq forecast Mean Absolute Percent Error (MAPE)


Changes

As a result of the WRAP funded IGD programme M&S and UNIQ Prepared Foods have seen significant benefit.

Table 2: M&S-Uniq collaborative forecasting – what’s changed?


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Higher waste on high selling key products.

A focus on the availability of ‘core’ best selling lines

at the expense of smaller lines.

Gaps in the understanding about how some

individual products trade and create orders.

Stores get too much of the ‘core’ bestselling lines

creating waste.

Stores do not get enough of the smaller lines leaving

potential gaps.

Reduced waste levels on best-selling lines in stores.

Reduced waste at suppliers.

Greater availability across the entire range.

Improved awareness of supplier constraints and

lead times.

Better planning at suppliers.

Greater understanding of how individual products

trade.

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ur Forward estimates planned at product level.

Use ‘core’ best selling lines to build up to required

stock levels.

Acceptance of higher waste on best selling lines to

increase availability.

Better forecasts through greater collaboration i.e.

daily forecast checks over the phone, knowledge

exchange on volatile ingredients.

Improved planning of future weeks across all lines.

Developed an effective tool to manage orders and

to more accurately plan orders across all lines

including smaller peripheral products.

Build a forecasting template that we can share info

around performance and agree actions to

counteract any problems.

Improved collaboration with regular structured

meeting between key suppliers and M&S team.

Waste managed holistically across all lines.

M&S and UNIQ Prepared Foods believe these significant waste reductions could easily be rolled out to other

categories / customers.


CUTTING UNPROFITABLE SANDWICH LINES TO REDUCE WASTE

Uniq Prepared Food and Marks & Spencer wished to create a decision making tool for analysing

poor performing lines that will reduce waste and cut through endless debate on how to handle

these products. The new tool can help all businesses arrive at the correct decision fast.



impact and raw material usage and the retailer’s replenishment and date code rotation. Improving de-listing

decisions about wasteful low volume lines was one of three key opportunities that they identified.

The team identified that weak underlying demand is the driver of supplier waste and dumped stock for some

products. They agreed that a true cost analysis needed to be carried out from both a supplier and customer

point of view. How much do these products really add to the bottom line for both companies? Should they

eliminate certain lines?

Redesign & Pilot

The team devised a method of assessing the true profitability of lines within a category and defined a process for

either improving true profitability or eliminating worst performers from the category. So that the impact on waste

could be assessed, waste tonnage was measured for a defined basket of low volume lines.

Figure 1: M&S-Uniq line review process redesigned to address wasteful low volume lines.

An analysis tool was devised and applied to a selected basket of Food on the Move (FOTM) lines for a 12 week

period.


Figure 2: M&S-Uniq analysis toll introduced to address wasteful low volume lines.

The baseline retail waste generated by the selected basket of FOTM lines alone was 0.9 tonnes per week.

Following the 12 week trial this dropped to 0.14 tonnes per week – an annualised saving of 39.5 tonnes.

Roll-out & Sustain

Analysis has been re-run for total FOTM catalogue. Impact of dumped stock, write-off, multi-buy costs and net

reductions has been taken into account. The entire category has been ranked ‘red/yellow/green’.

Figure 3: M&S-Uniq analysis for total ‘ood on the Move’ catalogue.

The total baseline waste has been measured across all lines equating to 28 tonnes per week. The next basket of

‘problem children’ has been selected and key actions identified against each.


Figure 4: M&S-Uniq analysis of problem children and actions.

Success criteria for the above type of actions have been identified. Progress is being reviewed at bi-weekly

commercial and supply chain review.

Changes

M&S and UNIQ Prepared Foods have seen significant benefit through the completion of the WRAP funded IGD

programme.

Table 1: M&S-Uniq de-listing decisions about wasteful low volume lines – what’s changed?


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Variable waste across the catalogue. Full understanding of contribution lines made to the

catalogue.

Lines de-listed based on waste. De-list decisions made on total business case –

ultimately driving profitability of the catalogue.

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ur Decisions made on whether to keep lines in the

catalogue made on available data. Comprehensive total-cost based decision making.

Supplier giving a greater focus to maintaining and

growing the range.

Collaborative approach to range changes based on

what is best for the category.




REDUCING TO CLEAR AND PREVENT SANDWICH WASTE

Marks & Spencer demonstrate in this case study the benefits of an additional price reduction point

earlier in the day and the introduction of additional price points into the policy thereby securing a

greater margin on waste sales to customers.



impact and raw material usage and the retailer’s replenishment and date code rotation. Improving reduce to

clear routines in store was one of three key opportunities identified.

Redesign & Pilot

The team focused on reducing the amount of product that goes unsold and to waste. They decided to extend

the reduction window before the end of trade on all categories from four to eight hours. They undertook a four

week trial. They measured baseline waste tonnage for a defined basket of low volume lines to understand the

improvement achieved by the extended reduction window.

Baseline waste was 4.6 tonnes over a four week period. During the trial waste was 3.5 tonnes; giving a 24%

reduction in waste sent to landfill. In terms of product value (£), gross waste did not increase with the extended

window, 12% more was recovered and there was a reduction in write off stock as a percentage of sales.

Following the initial trial, two further subsequent trials were introduced:

1. Two reductions daily and early reduction start-

four additional price points introduced;

first done in the morning post opening at approximately 10am; and,

second done one hour before close of trade.

2. Three reductions daily and later reduction start-

four additional price points introduced;

first done in the afternoon post lunch trade at approximately 2pm;

second done four hours before close of trade; and,

third done one hour before close of trade.

The analyses of both trials are shown below.

Figure 1: M&S-Uniq reduce to clear trial results (with numbers removed to protect confidentiality).


The team saw the amount of product waste (Net Waste / Sales %) reduced on average by 12% between the two

subsequent trials. The amount of product not sold at full price (Gross Waste / Sales %) increased by 12%

however 57% more of this was recovered through the additional price reduction. The amount of product that

went unsold decreased significantly and there was a 25% reduction in losses (Net Loss / Sales %) for the retailer.

Roll-out & Sustain

The team will present their findings to senior management at M&S for sign-off and roll-out across the estate.

Changes

As a result of the WRAP funded IGD programme M&S and UNIQ Prepared Foods have seen significant benefit.

Table 1: M&S-Uniq reduce to clear – what’s changed?


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Greater amounts of short-life food going to waste. Reduced (by 25%) amounts of short-life food

going to waste.

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Products that have end of day shelf life reduced

four hours before close of trade.

Products that have end of day shelf life reduced

eight hours before close of trade – pending review

of all trials.



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