Quantifying the potential to improve on food waste, freshness and sales for perishables in supermarkets

The focus of this paper is on improving the performance of fresh departments in supermarkets by reducing food waste, increasing freshness and/or increasing sales. First, two concepts will be introduced to quantify the improvement potential. Next, these concepts will be applied on empirical data for 3 product categories in 27 stores from 3 large retailers in Europe. The two concepts to quantify the improvement potential are called the Fresh Case Cover and the Efficient Frontier. The Fresh Case Cover is defined as the case pack size divided by the average demand during the store shelf life. A regression analysis shows that this single variable explains 42% of the variation in waste. The Efficient Frontier represents a lower bound on the waste needed in a store for any given On-Shelf Availability (OSA). It is demonstrated how the Efficient Frontier can be used to quantify the benefits from supply chain improvement projects and to evaluate fresh departments within a store. To quantify product freshness, an exact expression is derived and an approximation is developed and tested. To quantify waste an existing approximation is generalized. The results show that the improvement potential is very large. For example, increasing the store shelf life with just one day results in 43.1% less waste and 17% more freshness (or in 3.4% higher OSA) and unpacking in the DC results in 34.8% less waste and 1.6% more freshness (or in 2.0% higher OSA). Improving the store replenishment and execution is especially beneficial for medium and large stores.