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RedBlack
Forecasting: how 90,000 tonnes of waste can earn you cash and kudos
06 December 2016
Waste is a touchy subject for food retailers. According to industry pressure group WRAP, the total food waste (both avoidable and unavoidable) in the UK grocery supply chain currently stands at 1.9 million tonnes per year.

1.7 million tonnes of this waste arise during manufacture. Just 210,000 tonnes arise during retail. In fact, retail food surplus and waste represent the equivalent of less than 1% of the total annual food waste in the UK.

Nevertheless, WRAP estimates that the retail bakery, cake and cereals sector still produces an avoidable 90,000 tonnes of waste per year. That’s a pretty daunting figure. Looked at another way, though, it’s a 90,000 tonne mountain of opportunity to make relatively easy savings, improved profits and increased productivity.

The fact is that bakers have had to forecast daily demand for their wares since the dawn of civilisation. It is literally an age-old dilemma: make too much and throw money in the bin at the end of the day, make too little and you miss out on sales.

Little wonder, then, that modern day retailers have been trying to crack the forecasting nut for decades. In 1951, London’s once-mighty J. Lyons & Co installed the LEO 1, the world’s first commercial computer. Production forecasting was one of its first key jobs. Its programmers even took the weather into account to ensure goods carried by Lyons’ delivery vans did not go to waste.

Nowadays, there are a number of forecasting solutions aimed at food retailers. Some operate at a high level of statistical abstraction. Others are obscure add-ons to big-ticket, high-cost ERP platforms. But few seem to really get to grips with the nuanced and complex demand cycles of outlets that make or prepare fresh food to go on their shelves, especially larger operations.

Maybe this inflexibility and lack of granularity can be written off when business is booming. But in the UK, competition in the grocery, bakery and food-to-go markets is fiercer right now than it has ever been. And that’s against a backdrop of rising ingredients costs and other Brexit-related uncertainties.

Easy wins


With this in mind, now is a perfect time to review the relatively easy wins that can be gained by what we at RedBlack would call proper forecasting. Apart from the satisfaction of doing the right thing and controlling what can be controlled, each pound saved on waste goes pretty much directly on your bottom line.

In order to tackle waste well and increase availability at the right times, however, a good forecasting system has to have a number of key qualities or, in our opinion, it will fail.

For example, if you do have a forecasting system in place, how flexible is it? If you want to make changes to the way it makes its calculations, can you? And, if you can, can you do it yourself or do you have to go back to the supplier to make any tweaks to its algorithms?

Another question: can it handle multiple waves of production? While this may seem like a fairly obvious prerequisite for food-related forecasting, some systems don’t appear to allow for the way that production waves differ throughout the day. Your late-breakfast period, for instance, will have a dynamic that is distinct from the lunchtime rush.

Linked to this is another important factor. Can your system use today’s live sales data to adjust production to today’s trading? If not, your final production waves of the day are likely to consist of little other than surplus goods.

Lastly, does your forecasting system include ways to ensure that your staff stick to the production plan? If not, how can you keep track of whether your waste-cutting initiative is working or not?

We have all the above and more covered in our BakePlan forecasting solution. But whether you reach out to us or not, our experience in the field would suggest that production prediction is very much a hot industry topic.

There’s no question that there is a prevailing wind behind waste reduction in the food industry right now. Get it right and you’ll earn serious kudos within your business as well as potentially generating your firm some great PR.

Martin Coyle

If you would like either an online or face-to-face demo to see how BakePlan can cut your waste by at least 20%, please ring 01904 622888 or drop us a line at info@bakeplan.co.uk