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Supply Chain

Machine learning could save UK’s largest retailers £144 million in food waste

by Max Smolaks
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Turns out improving sustainability can improve the bottom line

by Max Smolaks 29 October 2019

Data scientists at Blue Yonder, a JDA
company, have estimated that adopting artificial intelligence tools for stock
optimization could stop each of the eight largest British supermarket chains from
sending seven tons of food to the landfill every year, resulting in cost savings
of around £144 million ($185m).

The challenge here is to stock enough food to
satisfy customer demand, while simultaneously avoiding empty shelves. With
clever algorithms, it is possible to manage the entire retail supply chain,
from predicting demand through to getting items in store on time and then
setting the right price when items are on the shelf.

Blue Yonder is currently working with
Morrisons, the UK’s fourth largest grocery retailer, to do exactly that - improving
its sustainability efforts while also improving the bottom line. The company
claims Morrisons is now making 13 million automated stock decisions every day.

“Sustainability is no longer just a
buzzword, it could really make-or-break grocery retailers over the coming
years,” said Michael Feindt, founder
and chief scientist at Blue Yonder. “Retailers know they must take
serious action; using AI and ML across their supply chains provides a tangible
way for them to cut food waste. Enabling grocery retailers to make more
intelligent, data-driven, decisions, can put them on the road to significant
environmental and financial savings.”

According to Blue Yonder, today’s machine learning algorithms can produce more accurate demand forecasts by considering factors such as weather, day of week or time of year. They can also manage inventory levels for every individual item and set the right price by taking into account the amount of goods left and their expiry date. And finally, machine learning can oversee the supply chain and advise how to react to potential transportation disruptions, or help to avoid them altogether - something that's especially important for perishable goods.

“Supply chains are the ideal place for
grocery retailers to practice what they preach when it comes to making
sustainability gains,” commented Wayne Snyder, VP for Retail Industry Strategy
EMEA at JDA.

Michael Feindt previously spoke about fighting food waste during his keynote at the AI Summit San Francisco. You can watch our interview here.

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