We often read or hear stories of global food insecurity. The Food and Agriculture Organization of the United Nations (FAO) estimates that about one in every nine people suffers from hunger across the globe. At the same time, as a result of inefficiencies throughout the food supply chain system, an estimated 1/3 of all food produced is either lost or wasted.
But, it wasn’t until I spent 14 months traveling with my family to more than 30 countries that I truly appreciated the scale of the problem. During our travels, we saw thousands of people starving, vast amounts of crops rotting in fields and food that went bad or was thrown out before it ever reached a human.
When I returned to the U.S., my business partner, Dag Liodden, and I decided to tackle the staggering paradox of waste, hunger and unsustainable environmental impact. We needed to understand the root cause of all this inefficiency. We learned that a lot of loss throughout the food chain can be attributed to a supply chain theory known as the ‘bullwhip effect,’ in which a change of ±5% in actual consumer demand can result in companies further back in the chain being off target by up to ±40%. This effect is amplified by thousands of supply chain partners across the globe.
Fortunately, recent advances in technology are enabling companies to address the problem of incomplete, inaccurate data moving slowly through the complex food supply chain. We’ve reached a tipping point in our ability to leverage big data analytical platforms, artificial intelligence (AI), machine learning (ML) and agile forecasting models to quickly and efficiently incorporate numerous demand signals to generate significantly more reliable and accessible forecasts. Advanced forecasting platforms use data and cloud-based technology to move away from static models (which rely primarily on sales history) and toward dynamic demand-based influencers and algorithms, which more accurately predict the future.
We decided that we could leverage the cloud to improve forecast accuracy to reduce food waste and increase profitability. While normal IT projects in this industry take millions of dollars and several years just to get started, we have launched a cloud-based solution where you can be up and forecasting in under 60 minutes with a minimal investment.
Crisp provides a data-driven forecasting solution with the mission of providing a single-source of truth for the entire food value chain through improved forecast accuracy, leading to more efficient operations across the supply chain. By capturing and integrating all relevant demand signals and influences, such as shopping patterns, weather events, trade tariffs, and strategic retailer initiatives, we help our customers develop a highly accurate forecast.
We’ve started by partnering with food manufacturers to help them forecast demand down to the SKU and individual store level, ensuring the right amount of product gets to the right store at the right time – with minimal waste. With high-precision forecasting, companies can optimize remaining shelf life, prevent out-of- stocks, and limit mark-downs needed to move short-dated products. For fresh products, planting, harvesting, and sourcing plans can be better aligned with actual demand.
At a minimum, the result is an increase in the predictability of retail purchase orders. Ultimately, forecasting accuracy also provides the confidence needed to source raw ingredients and schedule production in anticipation of customer orders.
Our customers have already seen strong results. Nounós Creamery uses our automated demand forecasting to drop time spent on forecasting from two hours each week to just 10 minutes, with a 40 percent reduction in overproduction of goods. More timely projections are enabling Nounós Creamery to anticipate actual expected demand for each flavor of yogurt they make, creating a more efficient manufacturing process.
If you consider the ripple effect that an accurate demand forecast has on reducing food waste while improving total company performance and profitability, the decision to take forecasting competencies to the next level becomes easy to make. The good news is that the ability to identify and capture those demand signals and influences is greater than ever before. With the availability of technological tools like artificial intelligence, advanced analytics, and cloud-based software solutions, companies can now leverage technology to fight food waste.
Traasdahl is a frequent contributor for outlets such as CNBC and Bloomberg News, and he has been featured in Forbes, the Wall Street Journal, Ad Age and other major news publications. He was named Global Startup Awards™ Founder of the Year in 2016 and EY Entrepreneur of the Year in 2014.