Big changes needed if retail is to hit wastage targets
By Jon Whiteaker - 08:58AM - Fri 3rd February 2012
The British Retail Consortium (BRC) was rightly very proud this week to announce that retailers were either on or ahead of government set environmental targets.
UK retailers have been asked to significantly reduce their impact on the environment over the next few years and the BRC’s ‘A Better Retailing Climate’ report shows that considerable progress has already been made by the industry on reducing carbon emissions, water waste, landfill tipping, carrier bag numbers and various other forms of pollution.
BRC Director General Stephen Robertson said that the findings proved that retailers “take climate change seriously” and the report received backing from the government’s Secretary for the Environment Caroline Spellman.
However in one area retail has fallen well short of its ambitions; with product and packaging waste in the supply chain down just 0.4 per cent between 2009 to 2010 whereas the sector was set a target of a five per cent drop two years ago.
Not only is this a detriment to the industry’s environmental efforts but it is also has major financial implications, with Wrap, the government’s waste advisor, estimating that annual waste in this area amounts to 6.6 million tonnes a year at a cost of £5 billion.
So what can be done?
Razat Gaurav, Senior Vice President EMEA for supply chain management solutions firm JDA Software, argues that the problem is a big one and that it will take lots of changes in both the structure and mentality of retailers to fix it.
“The problem of waste or spoilage is an inherent and systemic issue within the industry,” Gaurav said.
“Wastage accounts for millions of pounds, particularly in regards to perishable goods and that is where we see the biggest challenge for the industry, but unfortunately there is no silver bullet solution.”
Gaurav believes that there is a discrepancy between demand and supply caused by the type of goods sourced by retailers, where they come from and where the inventory is stored, making business less able to adapt to changes.
Sourcing goods internationally means long lead times which make it hard to change product orders to fit in with weather fluctuations or other unseen affects on trading, leading to more goods going to waste.
But Gaurav thinks it will take more than just sourcing more goods locally or improving supply cahin software to improve reaction times, he argues that demand is often managed by different departments, all with there own different interpretations and priorities, effectively operating in separate silos from each other.
“Most retailers do not have a single view of demand today and retailers must make their operations more agile to deal to be able to respond more quickly and intelligently to volatility in demand,” he continued.
“Having more sophisticated systems is not the only answer; businesses need an organisational model that allows for agility.
“They need to build fundamental business processes which allow you to react more quickly, which empower certain individuals to take these decisions instead of being bureaucratic about it.”
The business case for change is compelling and all retailers are trying to reduce waste but Gaurav worries that not enough firms will see this report as a wake-up call it should be.
Without wholesales changes to the way demand in the supply chain is managed, he believes government targets will continue to be missed.