Artificial intelligence (AI) and machine learning (ML) can help the UK’s eight large grocery retailers prevent £144 million of food waste a year, predict data scientists from Blue Yonder, a JDA company. More intelligent decision-making could help the UK’s ‘Big Eight’ supermarkets each reduce food wastage by on average seven tonnes per year, representing a positive step in the sector’s battle to curb unnecessary waste.
AI and ML can drive sustainability by helping retailers make smarter decisions based on the data they have at their disposal – from the start of the supply chain to the shop floor. Applying this insight will enable grocery retailers to hit the right balance of food stock: enough to satisfy demand, while reducing unnecessary waste.
“Sustainability is no longer just a buzzword, it could really make-or-break grocery retailers over the coming years,” says 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.”
Blue Yonder says AI and ML can deliver four key benefits:
1) Improve demand forecasting. The basis of minimising food waste is to forecast as accurately as possible, and with AI grocery retailers can now significantly improve their accuracy by taking into account hundreds of forecast factors such as weather, day of week or time of year. The clearer and more accurate the signal, the more successful grocery retailers can be in reducing the environmental impact of waste.
2) Improve availability whilst minimising wastage. By understanding the risk of lost sales and wastage, retailers can now ensure the right balance when managing inventory – individually for every item in every store. Not only does this cut food waste, it also makes the stock ordering process a less labour-intensive task and can improve shelf presentation.
3) Setting the right price. AI can put grocery retailers in a better position to set the right price than ever before. Retailers need to find the right balance between selling at a profit and clearing stock that’s going out of date, and AI can make a real difference in this process by automatically setting prices based on information such as time of day amount of goods left and expiry date. By gradually reducing items rather than following rigid markdown procedures, they can boost profitability and ensure products sell.
4) Sensing and avoiding transportation disruption. By analysing a range of factors including weather, time of day and expiration date of products, Machine Learning can advise how to react to potential disruptions or help to avoid them altogether. For example, if rough seas could potentially lead to a port being closed, ML can help grocery retailers navigate the problem by advising another route to take; a delay to a boatful of bananas could lead to them having a shorter shelf life, or even perishing before they reach the store. Avoiding these kinds of logistical problems could dramatically cut waste.
Using Blue Yonder’s Demand Forecast & Replenishment solution, powered by cutting-edge AI Morrisons can now make 430 million calculations and 13 million automatic decisions every single day. This has enabled Morrison to reduce its stockholding in store by 2-3 days meaning it has been able to reduce wastage and markdowns.
“Like society as a whole, the UK grocery sector is understanding its role in helping the environment. Simply put, customers today expect more from grocery retailers when it comes to reducing unnecessary waste,” added Wayne Snyder, Vice President Retail Industry Strategy EMEA at JDA. “Supply chains are the ideal place for grocery retailers to practice what they preach when it comes to making sustainability gains. Through using AI and Machine Learning, grocery retailers can better optimise their supply chain operations, ensuring the right amount of goods are on store shelves.”