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Reducing the hidden costs of food waste carried by Australian manufacturers

Australian food manufacturers are carrying hidden costs of food waste due to retail oversupply, according to software provider UpClear.

UpClear estimates oversupply costs Australian suppliers more than 80 per cent of a product’s standard margin to produce, ship, and fund overstocks – even more if ‘clearance payments’ for promoted lines are included.

OzHarvest estimates food waste costs the Australian economy $20 billion – with about 50 percent coming from outside of homes.

UpClear CEO Thierry Soudee said while much of our food waste was fresh, about $1 billion of pre-packed and long-life goods were also binned – with significant supply chain wastage in getting food from the paddock to the plate.

He believes manufacturers can help prevent food waste and increase profits by optimising promotional activities so the right amount of stock is produced and delivered to retailers in the first place.

“Dealing with food waste is complex and stakeholders agree an integrated approach is needed. There’s many opportunities to rethink how we can prevent food waste at the supply chain level,” Mr Soudee says.

“If a supplier can accurately forecast the amount of stock needed when a brand is promoted, they can more easily maintain desired profit margins, and deliver efficiencies across the whole supply chain. It reduces costs of over production and transporting this surplus to stores, where it’s eventually sold off too cheaply or thrown away.

“It’s only a small part of tackling the food waste problem, but for suppliers with the right information having appropriate amounts of stock on shelves avoids waste, reduces pollution and increases profitability.”

The 2017 RaboDirect Financial Health Barometer found Australians throw away nearly $10 billion in food waste each year with households throwing away more than $1000 annually – an increase of $1.6 billion on the previous year.

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UpClear is the leading software solutions provider and revenue management consulting partner for the consumer goods sector globally. Its rapidly deployed SaaS solution provides best-in-class capability to manage the commercial lifecycle, including trade promotion management, joint business planning, customer terms, pricing, advanced analytics and optimisation.