Inventory (featrues)

Fresh produce supply chain management app
Fresh produce supply chain management app for fresh produce packers, processor, shippers, exporter.

Fresh produce supply chain management app

Fresh produce supply chain management app: demand forecasting, pricing

Why is the Distribution Supply Chain So Complex?

Many factors are contributing to increasing complexity in these forecasts, including outbound customer demand volatility, managing multiple suppliers with long lead times (especially overseas), constrained transportation capacity, and increasing inbound supply line volatility.

Food supply chain planning, demand forecasting, pricing
Food supply chain planning, demand forecasting, pricing

The Logistics of Fresh Foods Retail Supply Chain in 2020 and Beyond

Fresh Food Supply Chain Challenges
Fresh produce supply chain management app

The Coronavirus crisis has redefined consumer shopping habits and established some new trends in retail and consumer goods markets. Stockpiling of essentials, online shopping of consumer goods, and convenient contactless deliveries are some of the most talked about topics these days. One of the biggest trends seen in the retail market this year is the growing demand for fresh foods — fruits and vegetables, meat, seafood, fish, dairy, baked goods, deli products, and more.

According to a Deloitte report titled The Future of Fresh, fresh food sales are an important growth driver for retailers and a priority for shoppers who want to ensure their household has ample fresh food in hand. Sales of fresh produce were up $4.5 billion between January and August, 2020, compared to the same period last year. In terms of consumer preferences, fresh foods are more valued than ever; 9 in 10 respondents say it literally makes them happy.

The availability of fresh foods is a key driver of in-store traffic in supermarkets and convenience stores. The most important attributes shoppers say when selecting their primary stores include high quality fruits and vegetables — 80%, high quality meat — 77%, and fresh food deli — 53%.

A number of fresh foods start ups have sprung up since the onset of the pandemic, getting investor attention as well as popularity among consumers. Impossible Foods, Memphis Meats, Nature’s Fynd, Alpha Foods, and Kate Farms are some of the top fresh foods startups of 2020 in the United States. In India too, there has been a spike in sales and investor interest for businesses in the fresh food space such as FreshToHome, Country Delight, Gourmet Garden, and Licious.

While the fresh foods market is soaring high, it is also one of the most complex supply chains to manage. The perishable nature of fresh produce makes their storage, transportation, and shelf-management a tightrope walk for fresh foods retailers.

Suboptimal Sourcing

Many retailers approach procurement of fresh foods unsystematically and thus end up paying above-market prices. Retailers need to source fresh produce strategically, keeping in mind seasonal demand fluctuations, supplier costs, as well as supplier location.

Every supplier relationship should be based on the product’s supply volatility — in quality and volume. Products with high supply volatility are best sourced primarily through stable suppliers, whereas products that are less volatile, can be sourced through transactional or even spot-market purchasing, which allows retailers to respond to changes in demand.

Maintaining Freshness and Quality

From the minute meat is butchered, eggs are laid, milk is packaged, fruit and vegetables are harvested and a loaf of bread leaves the oven, the freshness and quality of fresh foods is at risk. It is important to keep fresh foods at the right levels of temperature and humidity throughout the supply chain. Fruits like oranges, grapes, and cherries need a temperature range of 0 to 2 degrees Celsius and 95% to 100% humidity. Items like garlic and onions, on the other hand, need to be stored at a similar temperature but at humidity levels from 65% to 75%, as high humidity is harmful to them.

Other products like bananas, avocados, and mangos can be damaged by the cold, and they must be kept in the range of 13 to 15 degrees Celsius and between 85% to 90% humidity. Meat, poultry and dairy produce such as eggs, milk, yoghurt, and cheese need cold storage facilities. The storage and transportation of these temperature and time-sensitive fresh foods is therefore difficult, as compared to other durable products.

Packaging, Shipment, and Transportation Challenges

Fresh foods come in a variety of types, and must be packaged and shipped according to their durability and nature. Fresh produce such as apples, pineapples, pears, watermelons, or onions can be easily packaged into wooden trays. Foods such as tomatoes, eggs, softer fruits, and leafy vegetables, on the other hand must be packaged and handled carefully.

Once these foods are packaged, they must be shipped in ideal carriages, keeping in mind that some foods cannot be shipped together, some foods can travel longer, some foods need fast transportation, and some foods need a cold storage container. Delays in transit can significantly reduce the available shelf life of fresh produce in stores which can be off-putting to customers and a waste for retailers.

Lack of Visibility in the Supply Chain

Did you know? Supermarkets throw away 43 billion pounds of stale food every year that remains unsold. Almost 30% of high-quality fruits and vegetables fall through the grid of trade chains and large supermarket chains only because of optical flaws. Lack of supply chain visibility is one of the biggest logistical challenges in fresh foods retail.

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Due to this, retailers and logistics managers are unable to take preventive measures to salvage fresh produce when there is a delay in transportation or temperature instability at any point. Lack of visibility also leads to poor communication between sellers and retailers, as well as between retailers and customers.

Logistics Tech Can Optimize the Fresh Foods Supply Chain

Digitization of the fresh food supply chain is a must, now more than ever due to the rising demand for safe, contactless, same-day deliveries and the intense competition in the market. Despite the serious challenges in the storage, shipment and logistics of perishable produce, the gaps in the fresh food supply chain can be filled with the help of logistics technology.

Technology such as Route Optimization can help retailers plan order dispatches and last-mile deliveries efficiently, and real-time visibility tools can help logistics managers to be on top of distribution and on-ground operations.

By implementing AI-driven logistics solutions, bran

Large Assortments

Distributors face even greater complexity in managing their supply chains. Large assortments to serve existing customers has become key to differentiation, but introduces an ever larger assortment with intermittent, lumpy and sparse demand in the “long tail.”

Fulfillment Standards

Multiple distribution centers serving a demanding customer base with increased expectations of rapid and reliable fulfillment introduces further complexity to the multiple echelons of inventory. Finally, increasing sales on mobile, ecommerce, and other direct channels is growing and competing with traditional channels for inventory and adds to inventory volatility across channels and echelons.

Sophisticated Science and Analytics

One solution to address this complexity is advanced analytics that can handle large data sets down to transaction-level details. Demand classification is key to identifying the type of demand for each product on each channel to apply the best forecasting techniques.

Advanced seasonality techniques are critical for identifying recurring seasonal trends, de-seasonalizing demand, and determining baseline demand. This supports flagging peaks in demand above baseline that can be associated with events like promotional activities, non-recurring natural incidents, and other factors driving demand forecast anomalies.

Machine Learning Tools for Inventory Optimization

Sophisticated science also improves inventory optimization. Machine learning is becoming a more significant addition to the demand forecasting toolkit, and is being widely used to optimize inventory forecasting accuracy.

Food supply chain planning, demand forecasting, pricing
Food supply chain planning, demand forecasting, pricing

Price Elasticity and Price Optimization

A crucial piece of the supply chain planning puzzle is price optimization. Since distributors face increasing transparency and competition, there is growing price sensitivity across channels and customer segments. Price elasticity must use similar techniques to demand forecasting in de-seasonalizing demand to determine baseline and measure response to price changes.

A proven practice for using elasticity of demand to measure willingness-to-pay is to measure price sensitivity for products sold on all channels and locations down to the customer level.

Another critical practice is using product attributes to infer price elasticity deeper into the assortment using Bayesian inference and other techniques. Remember analyzing large data sets down to the transaction level? Invoice-level data and analysis is part of this approach.


Long- and Short-Term Supply Chain Planning

Short Term:  Sales & Operations Execution (S&OE)

Demand forecasting, Multi-Echelon Inventory Optimization (MEIO), and Price Optimization science certainly complement each other in tactical, shorter term (12-18 month) supply chain planning. I refer to the concept of short-term SCP + Pricing = Demand Shaping as “Sales & Operations Execution (S&OE)”. But what about using these advanced techniques in longer-term S&OP?

Longer-Term:  Sales & Operations Planning (S&OP)

There is indeed a role for science in S&OP more long-term. Pricing scenarios can consider projected costs, including potential tariffs for future periods, to compare financial impacts and choose the right approach by pricing segment and customer segment. Price elasticity is a key component in recommending better prices in different scenarios to test and select the best way to achieve desired financial objectives for future periods. These science-driven decisions feed directly into S&OP processes as alternatives for evaluation.

Inventory Optimization for Alternative Trade-Offs

Inventory optimization can also be applied to consider alternative supply chain configurations, such as alternate distribution center locations, evaluating forward buying opportunities in advance of supplier cost changes, and other long-term inventory and service level trade-offs.

Food supply chain planning, demand forecasting, pricing
Food supply chain planning, demand forecasting, pricing

An unconstrained forecast from pricing systems isn’t enough. Supply chain and inventory constraints must be considered to evaluate alternate plans. Strategic planning organizations spend more time evaluating planning decisions to understand the optimal way to invest in inventory to maximize customer service and free working capital.

IBP: The Next-Gen S&OP Solution

Demand forecasting also plays a key role in long-term S&OP processes. Integrated Business Planning (IBP), the next generation of S&OP solutions, extends S&OP processes from within a company’s four walls to include downstream customers. These customer-level demand forecasts provide additional inputs to drive to a consensus forecast.

Effective IBP also includes upstream suppliers to provide better insight into planned demand changes to feed rough-cut capacity planning; production scheduling and other sourcing; assembly; and manufacturing processes. Once a consensus long-term forecast is chosen, direct integration with tactical demand forecasts is critical to ensure demand planning and purchase order recommendations are updated. This is especially critical for communications to suppliers with extremely long lead times to avoid inventory shortfalls.

Modern Tools Support Collaborative Planning and Forecasting

These three key scientific techniques combine to improve IBP process outcomes and supplement collaborative and effective sales operations planning across a company, downstream to customers, and upstream to suppliers. This is especially important in the face of increasing supply chain complexity. Distributors face an even greater challenge as they increase assortment sizes while combating the “Amazon effect” rapidly entering distribution.

Fresh Produce Supply Chain

Delivered July 26th, 2019. Contributors: Abelardo C., Agnidip M. and 3 others

Fresh Produce Supply Chain

The supply chain for fresh produce starts with the grower/farmer who sells their produce to primary processors that process the products before they are packed and sent to distributors. From the distributors, products are stored in warehouses before they are repacked and sent to retailers and service providers who sell the produce to consumers or utilize the produce to provide a service to consumers. An in-depth overview of the fresh produce supply chain, as well as a breakdown of the food dollar, is available below.




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  • Wholesale produce companies or distributors store fresh produce in a network of warehouses and then sell and distribute these to retail stores and service providers such as supermarkets and restaurants through an extensive transportation infrastructure.
  • Fresh produce distributors ensure that they only receive fresh produce from approved suppliers/processors to further ensure food safety. They keep a list of approved suppliers, together with dates of delivery of produce and packaging supplies to maintain traceability of the produce that they store.
  • Produce are marked with dates so that a "first in; first-out" (FIFO) stock rotation can be observed. This means that produce received earlier should be the first ones shipped to the next step of the supply chain.
  • Produce are repacked into appropriate food containers before being transported to retailers or service providers.
  • Fresh produce is ideally transported via trucks with refrigerated storage to maintain their freshness.
  • Research has found that over US$7 billion worth of fresh produce in North America spoils in the back of trucks while in transit or warehouses before they are even received by consumers. Temperature control and monitoring is utilized to lessen produce spoilage, however, it has been suggested that an evaluation of actual shelf life with the use of technology will do better to mitigate the risk of spoilage of produce while being transported.




  • According to 2017 data gathered by the USDA Economic Research Service, for every $1 spent on food by US consumers, 7.8 cents goes to farm production. This is the share of the food dollar that goes to farmers. Together with the 2.1 cents that go into the Agribusiness industry group, a total of 9.9 cents goes into the first step of the fresh produce supply chain — the grower.
  • 17.3 cents of the food dollar go into the "processor" step of the fresh produce supply chain. This accounts for the food processing (15.0 cents) and packaging (2.3 cents) of the fresh produce.
  • 12.6 cents of the food dollar go into the "distributor" step of the fresh produce supply chain. This accounts for the wholesale trade (9.1 cents) and transportation (3.5 cents) of the fresh produce.
  • Most of the food dollar goes into the "retailer & service provider" step of the fresh produce supply chain, receiving 49.3 cents of it. This includes the retail trade of fresh produce (12.6 cents) and foodservice (36.7 cents).
  • 10.9 cents of the food dollar is likely shared among all parts of the supply chain as it accounts for energy (3.8 cents), finance and insurance (3.2 cents), advertising (2.6 cents), and legal and accounting (1.3 cents) costs which all parts of the chain utilize.


In order to complete this research, we leveraged on various articles and reports from credible sites such as the USDA for insights into the fresh produce supply chain and food dollar breakdown. We also consulted various materials, both marketing and information documents, for those involved in the fresh produce supply chain such as in processing and distributing to better understand what is expected of companies participating in the supply chain and how the different parts of the chain work together to deliver fresh produce from the farm to the consumer.

We have broken down the food dollar according to where each of the expenditure fits in the supply chain. The source that supplied the breakdown of the food dollar also contained definitions of the industry groups that receive part of the food dollar. We matched these industry groups to where they likely fall in the supply chain according to the previously identified definition of each step in the supply chain.



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Ugly Produce Supply Chain

According to the Center of Biological Diversity, ugly produce accounts for 40% of the food produced in the US. Farmers leave up to 30% of their produce in the field because of being "ugly" while retailers either market the imperfections positively or slash prices by 30 to 50%. Thirty-four percent of store owners, on the other hand, just throw out the substandard fruits and vegetables.


  • In the field, ugly fruits and vegetables are often kept unharvested and left to rot.
  • Produce that make it past the production stage of the supply chain are either culled by inspectors or refused by retailers.
  • Produce that make the cut in the inspection stage and make it into a store is more likely to perish in a bin than be taken home.
  • One of the reasons that some produce end up "ugly" is the shipping and handling, which is inevitable in the modern food supply chain.
  • At the end of the supply chain, although a lot of the ugly produce goes to waste, there’s also a huge part of it that goes to foodservice. Also, a lot of ugly produce ends as animal feed when there’s no human market for it.
  • According to Dr. Oliver Hedgepeth, who is a full-time professor at American Public University (APU), ugly produce and other foods have their place in the supply chain. Farmers sell their ugly produce to manufacturers who store their purchases in huge containers, and then these containers are often transported by trucks, trains, and ships to factories where the produce is made into pies, cakes, cookies, and bags of frozen chopped vegetables.


  • An analysis by the Center of Biological Diversity found out that ugly produce alone accounts for 40% of the food produced in the US.
  • The National Farmers Union found out that around 20% of Gala apples were being wasted before leaving the farm gate as they weren’t at least 50% red in color.
  • According to Wayde Kirschenman, whose family has been growing potatoes and other vegetables near Bakersfield, California, since the 1930s, at times, 25% of the crop is just thrown away or fed to cattle for not meeting the cosmetic standards.
  • According to a study published by the American Marketing Association, farmers leave up to 30% of their produce in the field because of being "ugly."
  • In the next stage of the supply chain, retailers take one of the two approaches to selling ugly produce: positively marketing the imperfections and/or slashing prices by 30% to 50%.
  • When it goes from retailers to store owners, 34% of store owners just throw out substandard fruits and vegetables and another 34% discount it significantly.
  • To sell ugly produce, grocers offered a 45% discount on average.


According to Inspira Farms—a company that supplies a highly adaptable energy-efficient refrigerated storage and food processing solution for agribusinesses that face problems of loss reduction, energy reliability, and market access—the following improvements can be done at each stage of the supply chain:



  • The stakeholders of this stage can make value-added products from discarded produce by converting low-priced produce into high-value products, such as prepackaged chopped vegetables, puree mixes for soups, stews, and baby food.


  • The stakeholders in this stage are trying to increase shelf life by investing in better handling, packing, and assuring a constant cold chain from farm to shelf.
  • Supermarkets can also educate consumers on what produce looks like at different stages of maturity, which is expected to make buyers more willing to purchase a diverse type of produce.


  • As the final point of the supply chain, consumers need to be conscious about the reality of fruit & vegetable production, understanding that is natural for some produce to be misshapen or look imperfect.
  • Also, if an investment is made into greenhouse farming, it is expected to reduce the volume unmarketable produce as the plants are not getting exposed to rain and whipped around by the wind.
  • Also, several venture capital-backed companies—such as Imperfect Produce, Full Harvest, Hungry Harvest, and Misfits Market—are providing a solution to the problem creating a new channel of distribution for farmers, offering customers ugly produce at a significant discount to what the groceries would cost at retail, and then donating the rest to food banks.



Although we could not find the exact breakdown of the food dollar regarding ugly produce, the breakdown of the farm share of the food dollar, overall, is as follows:


To find the supply chain for ugly produce from farm to consumer, areas where it can be improved, and a breakdown of how the food dollar is spent regarding ugly produce, we looked into several academic and scientific journals and articles on fresh produce. While there were articles that have information on ugly produce, the challenges of marketing these produce, and areas for improvement in the ugly produce industry, we could not find anything specific to the breakdown of food dollar for ugly produce.

Next, we expanded our research to include reports and publications by the government and credible third-party media publications to look for the dollar breakdown of ugly produce. However, the closest information we found was the general food dollar breakdown by the United States Department of Agriculture. We presented the general food dollar breakdown under "Relevant Findings" above.

Lastly, we looked into the websites of companies that tackle defective produce, such as Imperfect Produce, Full Harvest, Hungry Harvest, and Misfits Market, to see if they have published any information regarding the food dollar breakdown of ugly produce. However, we also could not find the information we were looking for through this strategy. The lack of information on the dollar breakdown specific to ugly produce could be because this food niche is just emerging, and studies about it may be carried out by interested private parties and reports on those studies may not be publicly available yet.


Fresh produce supply chain management app

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