- 1
Close to 19% of the food available worldwide is wasted, and food service accounts for around 28% of that waste.
- 2
Portfolio complexity is a cost that does not appear on any line of the income statement, but it affects everything.
- 3
Standardizing is not homogenizing: standard components make customization at scale possible.
Waste as a symptom
The United Nations Environment Programme’s Food Waste Index 2024 estimated that in 2022 about 1,050 million tonnes of food were wasted, around 19% of what was available to consumers. Households account for about 60%, food service around 28% and retail about 12% (AP via PBS).
For a food services company, waste is the most visible symptom of a broader problem: operational complexity. When every contract introduces a variation, every variation becomes a new SKU, and every SKU requires its own inputs, portion weights, training and controls. The result is a system that works thanks to people’s effort, not thanks to design.
How complexity grows
In our work with a food services business group, the product portfolio had grown disproportionately during years of commercial expansion. No individual decision was irrational: a client asked for a variation and the sales team granted it to win or retain the contract. But the sum produced a matrix that was hard to control, out of step with consumer trends and at risk of losing the technical know-how that gave the offer its identity.
Complexity had knock-on effects. In the kitchens, the original standards blurred for lack of effective controls. In procurement, input estimates were done manually and with high variability. In quality, non-conforming product and waste carried significant weight. On the commercial side, customizing a contract took too long because there were no standard building blocks to combine.
The complexity cascade
The complexity cascade: a commercial variation generates a new SKU, which in turn multiplies inputs, portion weights, training and controls, and ends in waste, non-conforming product and longer quoting times.
Standardize to customize
The answer was not to reduce what was offered to the client, but to redesign how it is built. The principle was to treat standard products as building blocks: a streamlined core of SKUs, each with a single technical sheet that includes ingredients, portion weights, procedures, nutritional information, cost and contractual customization variables. On top of that core, customization is assembled by combining blocks, not by creating new SKUs.
This approach has three conditions. First, a systematic clean-up of the portfolio, with criteria for relevance, frequency of use and alignment with trends. Second, a knowledge management system that preserves the techniques that differentiate the company, because standardizing without documenting destroys the very asset you want to protect. Third, certified training for those who execute, so that the standard does not depend on supervision.
Control at the point of execution
A standard is worth little if it doesn’t reach the place where the work is done. In operations spread across many sites, the gap between the central standard and local practice is the main source of variation. The solutions we prioritized were simple: digital standards available at the workstation, with photos and exact portion weights; monitoring of input consumption with deviation alerts integrated into the ERP; and demand estimation based on historical data, instead of manual processes at the start of each month.
The lesson is that operational excellence rarely requires sophisticated technology at the outset. It requires the right information to be in the right place and someone to look at it regularly.
From the central standard to the point of execution
From the central standard to the point of execution: four layers (single technical sheet, certified training, digital standard at the workstation and monitoring with alerts) and the indicator each layer moves: non-conforming product, waste, productivity and customization time.
Measure complexity to manage it
One of the difficulties was building the baseline. Non-conforming product was reported, but without a classification that would allow a Pareto analysis. Inventory shortfalls were known in aggregate, but not by cause. Without that granularity, prioritizing was impossible.
That is why we recommend that any operational excellence program start by classifying losses: what is lost, where, why and how often. Classification turns a diffuse problem into a prioritized list of causes, and allows the business case to be built on facts rather than perceptions.
Complexity also lives in the plant and the warehouse
Portfolio complexity doesn’t stay in the kitchen or on the production line. It spreads to the warehouse, where every SKU requires space, rotation and control; to logistics, where more SKUs mean more split shipments; and to systems, where every variation is a new record someone has to maintain. In our work, the plant excellence, logistics and procurement initiatives shared a common root: a portfolio that had grown without rules.
That is why operational excellence pays off more when it is approached as a system. Reducing portfolio complexity frees up plant capacity, simplifies inventory and improves the demand forecast. Optimizing each link separately produces local improvements that fade at the next one.
The role of the sales function
No complexity reduction program survives if the sales function doesn’t take part. It is the one that grants the variations, and it does so for good reasons: winning contracts and retaining clients. The solution is not to forbid it from customizing, but to give it tools to do so with standard blocks. A quoting tool that allows standardized products to be combined, with automatic calculation of costs and specifications, turns customization into an informed decision rather than an exception that operations absorb.
In our experience, that change also shortens the sales cycle. When the sales team can put together a customized proposal quickly, with reliable costs, it competes better. Standardization stops being seen as an operational constraint and comes to be seen as a commercial advantage.
What can leaders do?
- Measure the real size of the portfolio and each SKU’s share of volume and margin.
- Set a rule for new SKUs: every commercial variation must be justified against the existing standard blocks.
- Create a single technical sheet per product or service, with cost and customization variables.
- Classify losses (non-conformity, waste, shortfalls) before setting reduction targets.
- Take the standard to the point of execution with simple tools and certified training.
- Protect technical know-how with a knowledge management system, not just with manuals.
Sources
Practice article Operational Excellence.
