Logistics and Physical Distribution Management for Food Leftover Sharing

Introduction

Food leftovers form a significant part of landfill waste. They mostly come from grocery stores that have pounds of unsold stock of perishable food that are either sold at low prices or expire and are thrown away as garbage (Pearson and Perera, 2018). In North America and the United Kingdom (UK), it is estimated that 160 billion pounds of food is disposed as waste (Swinburne and Sandson, 2019). When these organic products are thrown into the landfills, they mix with other forms of garbage and decompose in a process that pollutes the environment (Scott and Vallen, 2019; De Medina-Salas et al., 2019).

For example, the decomposition process produces methane, which increases the concentration of greenhouse gases in the atmosphere, thereby contributing to climate change (Longjan and Dehouche, 2018; Achinas and Euverink, 2019; Wang and Stanisavljevic, 2019). Therefore, the poor management of waste is both an economic and environmental concern.

Retailers have been forced to think of innovative ways of managing the food waste problem. Some of them have provided fridges to preserve unsold products, while others collect and package excess produce for charity (Grosso and Falasconi, 2018). Governments have also been involved in collecting food from retailers and distributing it to those in need. These types of solutions have been hailed as practical strategies of waste management (Baron et al., 2018). However, recent advances in technology have brought new solutions such as the use of applications (apps) to manage the food waste crisis. Most of these developments are anchored on the sharing economy model, which optimises resources for better value creation.

This document explores the logistics and physical distribution management for food leftover sharing in the sharing economy based on a Canadian-based food-sharing app – “Flashfood.” The app was developed to reduce food wastages by allowing shoppers to buy soon-to-expire foods at a discounted rate. At the time of its inception, the company has been operating in only a few areas within Canada but over the years, it has grown to cover the entire country (Martinko, 2020).

It works by allowing shoppers to pay for their food on the app and collect them at physical distribution points. According to Martinko (2020), the Flashfood App has prevented up to 50,000 pounds of food from being dumped in the landfill. This action is in line with the company’s mission, which is to stop food waste and feed the people (Flashfood Inc., 2019). It uses a sharing economy design to achieve this objective.

From its adoption, Flashfood has helped shoppers to save money on their grocery purchases by shortening its supply chain to make sure customers receive fresh goods. This strategy aligns with the economic principles of the sharing economy, which supports lean systems (Muñoz and Cohen, 2018).

Improvements in procurement and operating procedures have further increased the responsiveness of the supply chain system to market needs. This report explores Flashfood’s logistics and physical distribution activities by addressing two fundamental aspects of its supply chain activities: distribution management and information systems for logistics. The evidence uncovered will highlight some of its main logistics and distribution challenges to find possible solutions.

Food Leftover Sharing Logistics Network

Detailed Category of Product

The Flashfood app packages food items that are nearing their expiry date and sell them at a discount. Most of the products sold by the company are perishable and need to be refrigerated or consumed within a short time. Some of the most commonly sold goods include yoghurts, pasta, and cereals (Mertz, 2019). The integration of digital supply chain systems into Flashfood’s distribution model has made it possible for customers to buy products from the comfort of their homes. According to Flashfood’s chief executive officer, Josh Domingues, the app acts like a discount food rack on a shopper’s mobile phone that has features, which allow customers to see the products they are going to buy and ascertain their condition before making a purchase (Chubb, 2016). The information is available on a shared platform that maximises efficiency.

Source of Food Leftovers

Grocery retailers are the main suppliers of Flashfood’s products. They provide the company with goods that they would have otherwise thrown away had there be no other channel to exploit their utility. Flashfood packages these products and sells them at a discount. There is usually a 50% significant reduction in the sales price, which allows the company to easily sustain its sales because most of the produce sold was obtained cheaply or freely (Flashfood Inc., 2019). Through these trade practices, Flashfood has not only managed to develop a sustainable business model but also minimise its carbon footprint by running lean operations.

Partners/ Supply Chain Members

Flashfood’s main markets are in Canada and the US. In the US, the company’s main partner is Meijer and Hy-Vee stores, which has more than 246 physical locations where customers pick their products after purchase (Martinko, 2020). SpartanNash (2020) is another key partner in the US market that supports Flashfood’s operations from its Byron Center headquarters in Michigan. The company is a natural partner for Flashfood because its main business is grocery distribution. In fact, according to the organisation’s website, the firm is the fifth-largest grocery distributor in the United States (US) (SpartanNash Company, 2020). Its distribution network is served by 155 corporate-owned retail stores and more than 2,000 independent distribution points (SpartanNash Company, 2020). The company is responsible for most of Flashfood’s US market sales.

In Canada, Flashfood has collaborated with Loblaws to roll out physical retail stores in selected provinces, such as Quebec. The partner operates a series of corporate and independently owned stores, which house about 2,000 employees (Loblaw Companies Limited, 2020). Based on this partnership, Flashfood has developed a robust distribution system throughout Canada.

Collection Centres

Flashfood has an elaborate distribution network that includes collection centres in Michigan and Wisconsin. These centres act as operational hubs for the company’s vast operations which are domiciled in different countries around the world, including Egypt, Columbia, Europe, Cuba, Puerto Rico, Bahrain, and Djibouti (SpartanNash Company, 2020). Through its key partnerships with other companies, including Loblaws, Meijer and Hy-Vee stores and SpartanNash, most of Fashfood’s products are collected dry or refrigerated.

Key Logistics and Physical Distribution Challenges

The Flashfood app significantly depends on the availability of a reliable digital infrastructure that allows customers to perform all necessary purchase tasks as they would do in a physical store. As highlighted in this report, the firm’s product range covers a selection of items that are sold either at a discount or as specialised goods. Flashfood’s partnership with its main Canadian and American partners is currently under review to explore new ways of expanding the current distribution network out of North America (Loblaw Companies Limited, 2020).

However, the reliability of this digital infrastructure to support such growth has been questioned because customers have complained of several app issues that either prevent them from making purchases or impede the purchasing process (Flashfood Inc., 2019). For example, some customers have reported issues with incorrect location settings on their apps, unverifiable amounts being posted on their tabs and the failure to find their preferred location (distribution) points on the map (Flashfood Inc., 2019). Therefore, the technicality of the app functionality has been questioned.

These issues have prevented some customers from enjoying their buying experience. Additionally, they have made it difficult to justify the economic viability of Flashfood’s business model because it is predicated on proper app functionality. Aragie, Balié and MoralesOpazo (2018) draw attention to the need to adopt economically viable food waste management models and the app crashes are threatening this fundamental principle of business management. This issue further highlights the need to have a proper waste management design that is free from the peculiarities of unreliable virtual distribution models (Vinck, Scheelen and Du Bois, 2019). From Flashfood’s logistics perspective, the app crashes and malfunctions will create a bottleneck in product delivery that may have far-reaching implications on other layers of the distribution system.

The link between the app issues mentioned above and Flashfood’s distribution system can be further evaluated by reviewing factors influencing distribution network design performance. This review is normally done in two dimensions. The first one involves meeting customer needs, which is regarded as the “key spirit” in the entire logistics and distribution model.

The second one is the cost of meeting customer needs through improved efficiency and effectiveness. Flashfood has a good record on the second measure as it has a lean supply chain system that ensures goods are delivered to customers efficiently and on time. However, its app reliability problems undermine the first criteria of review, which is meeting customer needs.

Lastly, from a physical distribution perspective, concerns about the safe handling of food and the possibility that some customers may become sick from the consumption of bad produce have undermined Flashfood’s operations. This concern stems from the types of foods Fastfood distributes because they are normally fresh and need to be stored under strict temperature ranges; failure to which, contamination may occur (Flashfood Inc., 2019). This challenge creates a “liability barrier” in the company’s physical distribution network, which may affect its operational activities in the long run.

Solutions

As highlighted above, one logistical problem associated with Flashfood’s operations is the frequent crashing of the main app. This problem could be addressed by adding a tertiary information collection layer to the existing system that would correct crash error reports and convey them to the company’s IT department for correction, as recommended by Huawei (2020). This tertiary layer of cognition will act in the same manner as an alarm does by notifying the company of outstanding issues, except that it will be more accurate in diagnosing the problem as opposed to merely reporting it.

This detection system applies to the internal mechanism of Flashfood’s operations but appeals to the general waste management principles outlined by Welch, Swaffield and Evans (2018), which suggest that all stakeholders should take responsibility for their roles in the supply chain process. In line with this requirement, Flashfood should encourage shoppers to leave an email address or a phone number that will be used to notify them of the status of their error reports. Therefore, they will have sufficient information regarding what has happened and what can be done to correct the problem. This solution speaks to the need to have a reliable and effective communication stream between the company and its customers that will update the latter group on the efforts being made by the company to address their concerns.

To overcome the liability challenges associated with the safe handling of food mentioned in section 2.1 above, the company could have its customers sign a liability waiver form that relieves it of the responsibility to accept damages from the consumption of unsafe food. This recommendation is rooted in the 1996 Bill Emerson Good Samaritan Food Donation Act, which protects companies or individuals that donate or distribute food in good faith (Feeding America, 2020). Equivalent legal protections should be sought in the UK and other markets.

Europe is currently streamlining some of its food safety and distribution laws to improve service delivery in the food waste management sector (UK Parliament, 2020). While it may be prudent to seek legal protection from such issues, some exceptions may be made in instances where Flashfood engages in gross negligence. This layer of protection against the company’s incompetence will instil confidence among operators of the company’s logistics and distribution system to carry out their work effectively because they will be less fearful of being sued.

Using such robust systems, Flashfood will continue to play a critical role in reducing the volume of food waste that goes to the landfill and expanding access to affordable groceries to more consumers around the world. This practice will contribute to a reduction of the effects of climate change, as explained by Wang and Stanisavljevic (2019), who link food waste management systems to the global quest for better environmental management. Flashfood’s supply chain model will contribute to this development by improving distribution management for food leftovers in the sharing economy.

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