Enhancing Food Distribution in the US through Logistics Tech & Innovation
The U.S. food system is broken.
By: Sam Burns (M&T ‘18)
In September, the U.S. Department of Agriculture released its annual report on domestic food security. An estimated 12.3 percent of American households were food insecure at some time during the year in 2016, meaning they lacked access to enough food for an active, healthy life for all household members. While biotechnology breakthroughs like high-yielding seeds and pest-resistant crops show promise for addressing food supply, distribution in the food value chain is grossly inefficient and is a major contributor to food insecurity in the U.S.
Inefficiencies and barriers to food distribution result from a variety of geographic, financial, and political factors. For example, some rural areas tend to be food deserts, because there is little incentive for a brick-and-mortar grocery store, selling healthy and wholesome food, to set up shop in a low traffic area. Food deserts are also present in some urban neighborhoods where transportation or financial access to nutritious groceries is limited.
With potent growth in logistics-based technology and investment, we are developing better tools to strengthen value chains and unleash new efficiencies, particularly in the realm of distribution. Can we leverage the tech industry’s affection and enthusiasm for logistics and distribution in order to improve the U.S. food system value chain?
A role for big players
Amazon’s $13.7 billion acquisition of Whole Foods this summer gave people a lot to chew on. Amazon, a logistics titan, has already begun to make ripples in the grocery industry by slashing prices on Whole Foods products over the past few months. Amazon also recently unveiled its new program for offering discounted Prime memberships for low-income customers on government assistance. With Amazon’s unique expertise in logistics, it may be able to transcend geographic and economic barriers to offer groceries to customers in food desert areas — something that traditional brick-and-mortar stores cannot financially justify in their current business operations.
There are several new startups that have begun to apply logistics technology to make food distribution more efficient. One such example is Goodr , an Atlanta-based company which developed an app-based tool to efficiently redistribute surplus food from restaurants and grocery stores to food banks and pantries. Described as an “Uber for food waste,” Goodr uses matching algorithms to lower the cost and improve the convenience of redistributing food.
Another example is SpoilerAlert, an inventory management software for food manufacturers, grocery retailers and wholesale distributors. SpoilerAlert tracks when certain foods are about to spoil, and connects the user with potential sales outlets at a discounted price before the product ends up in the trash. The software integrates financial, environmental, and social impact dashboards in order facilitate seamless distribution decisions for managers.
Health care systems are also looking for new solutions to get better food to the patients they serve. One example is Geisinger Healthcare System, based in Danville, PA. Geisinger has piloted a “healthy food pharmacy” program that delivers wholesome groceries to their Type-2 diabetes patients living in local food desert areas. Geisinger realized that this program, which costs approximately $1,000 per participating patient, can ultimately be cheaper than having to treat these diabetic patients for more serious health conditions down the road. Technology that could help source and distribute food to patient communities, as well as track nutrition and health improvements, could be instrumental for encouraging other health systems to adopt this model.
Some food for thought…
The food system is ripe for innovation. When considering marketable opportunities, low-income shoppers are not the only customers involved. Young entrepreneurs exploring this space should consider how institutions, like grocery stores and health care systems, are also customers seeking logistics-based food system solutions. With creativity and technology, we can target where market incentives are aligned to develop profitable ways to feed more people across all areas of the United States.
Sam is a senior at Penn, studying Materials Engineering (SEAS) and Marketing & Operations Management (Wharton). Outside of her role as the co-chair of the Innovation Fund, she can also be found working in her roles as a project leader for MUSE Consulting and a teaching assistant for a nanoscale technology lab. Sam is an avid fan of ballet and nachos.
Weiss Tech House Innovation Fund is dedicated to funding, promoting, cultivating, and supporting student entrepreneurship in the UPenn community. Working on a startup and want to apply? Fill out our application here. Interested in partnering? Want to get involved? Drop us a line at apply.innovationfund at gmail.com.