Adopting a circular economy model in the food and beverage industry

In a resource-constrained world, there is a noticeable trend of organisations opting into the circular economy model. A recent Sage report cites that nearly 75% of food and beverage distributors have noted that they are responding or intend to respond to recent climate pressures by businesses and consumers by adopting a circular economy strategy. The same report found that the most common practices today for this approach are product recycling and reverse logistics (73%), low/no emission internal logistics (65%) and low/no emission internal supply chain (61%).

For food and beverage companies, this shift involves a move away from the “take-make-dispose” process and a step towards increased responsibility over the total lifecycle of a product, any waste and its environmental impact. But to close the loop, food and beverage companies need to embrace change and learn to adapt their processes and consumable products.

However, without a strong operational foundation, your business may struggle to achieve optimal results in your initiative to support a circular economy. The right cross-functional digital platform that can help drive holistic change – like an Enterprise Resource Planning (ERP) solution built for the food and beverage industry – can be a game-changer for organisations looking to adopt a circular economy model.

Circular economy for food and beverage companies

For the food and beverage industry, food waste can be repurposed and recycled at several different steps in the cycle, from manufacturing to distribution to the consumer use phase.

It’s important to note that producers for certain categories experience specific challenges in implementing a circular economy. For example, frozen food producers must navigate the resource-intensive process of managing perishable products, adhering to safety regulations, managing recalls and preventing contamination. These challenges, coupled with broader hurdles such as managing the global agricultural supply chain and changing customer tastes, create a massive challenge and big opportunities for those that innovate their way to become more circle.

However, opportunities arising from the circular economy are being realised today. Food and beverage manufacturers are digitising their businesses to enable end-to-end supply chain visibility. Additionally, migrating data and operations to the cloud helps these companies take advantage of technologies including automation, artificial intelligence (AI), and data analytics in support of waste reduction. ERP data can be particularly useful for circular economy strategies, as it helps reduce costs, extend visibility and optimise manufacturing processes to minimise waste.

4 best practices for creating a circular economy model

Implementing circular thinking is challenging; it’s difficult to know where and how to start. Conducting a life cycle analysis is a crucial step in identifying potential opportunities for improvement in waste reduction and resource reuse. In addition, there are a few key places that businesses in the food and beverage industries can look to start and advance the conversation:

1. Sustainable products and processes

A product “teardown” (disassembling a product, such that it helps to identify its component parts, functionality and component costing information) for each food and beverage item can help identify various potential sources of waste.

2. Reduce and repurpose waste

The second consideration involves examining the consumer and post-consumer use phases. Companies can use creativity and innovation for sustainable end-of-life strategies to lower food waste and overall promote an equitable food system that minimises food inequalities and insecurities that are prevalent across the globe.

3. Re-optimise supply chains and distribution

Companies can find potential issues when diving further into suppliers and distribution; it’s essential to know the practices of partners, as they are critical to the reputation of the business. Companies should strive to understand completely the sources of their raw materials.

4. Invest in data visibility technologies

Investing in data capabilities can create that end-to-end visibility and drive better decision-making. Technology is a crucial tool when assessing circularity metrics across the life cycle. For challenging to-measure components of the value chain, companies are leveraging new models like to better understand what was previously ambiguous and drive better decisions. Similarly, an ERP system, like Sage X3, can provide the foundation to enable a circular economy model; with its mobile automation, powerful analytics capabilities and visibility into the supply chain.

Download our Adopting a circular economy model in the food and beverage industry guide to find out more about best practices for adopting a circular economy model and how an ERP system can help food and beverage businesses accelerate their efforts in building a circular economy model.

* A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning and reasoning to help decision-making.

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