MANAGING FOOD WASTE - SOUNDS SIMPLE BUT NOT THAT SIMPLE - Nik Zafri

Photo Source : Wikipedia

Taking care of the economics and the well-being of everyone. This has always been the popular motto or the typical slogan or any entities wishing to be part of Social Responsibility.

It is estimated that 1/3 of food produced around the world constitute approximately more than 1 billion tonnes of waste per annum.

Imagine also those who are being denied access to food. They are so used to starving and sleeping without dinner and breakfast. Most of them, famine is no longer news - it is a NORM. Only the toughest shall survive.

These big loss and waste are also the main root-causes for other environmental impacts - from pollution to soil erosion. On the food production factories/producers, there are waste almost at every process - not to mention the greenhouse gas emissions.

I think most of us are not surprised (are you?) if I say that private household food waste is always on top of the list! 

Well, whilst we professionals are too busy creating great awareness or even developing a sophisticated fool-proof system to manage food waste in industries or events, unfortunately, we tend to forget household food waste from (surprisingly) those countries claimed to be advanced nations (but not with a so advanced mindset (...awkward...)

Many studies I've read that the No. 1 issue is due to BEHAVIOUR (and probably PERCEPTION) - namely (I'm just being blunt) - laziness and hesitation. Those having "great ambition" to reduce food waste are those likely ending up with NO ACTION at all. But those who are brought up with great discipline and perserverance are more likely to reduce food waste. These marvelous figures are also likely to be the ones initiating the effort and usually be perceived as the role models for others. 

There should be some proper planning to reduce food waste : planning of what to shop, quantity to be purchased, buying what you need rather what you want and properly checking the stock (especially "the expiry date") It is not at all surprising for many of us are still keeping food in the refrigerator - then we forget all about it - only to discover later that the food is no longer edible (not to mention leftovers) - and DEFINITELY becoming a waste.

Cooking is a great thing. But it can also be a very negative one. When there is too much food being prepared, it will likely ending up being disposed. Always look at Michelin-class chefs - don't only look for great recipes but do some research of your own on their principles of food waste management. I find that these great chefs are really "experts" in controlling and managing the food that they cook at home. A simple attitude is to always ask your household tenants if they will be home for dinner or they have eaten outside. And please try not rely too much on fast and instant food as it will be a potential food waste as well.

Finally - disposal - the biggest waste contributor of all. I do support any effort of redistributing "still edible and fresh" food to your neighbours* or closed relatives* or the best - to those really need and APPRECIATE food - in most cases the needies e.g. homeless. ( *Some quarters perceive the "still edible, untouched and fresh food" being redistributed are "bad" or the "egoistic ones" would feel that "Hey, I cooked my own food..I don't need waste!" ( Personally, I've seen this attitude before - very dumb!)

I think continual monitoring and enforcement are equally important than merely having Acts, Standards and Regulations  (Simply for the sake of having them). It has been proven that "wasters" are scared of the law rather than being aware of how important NOT to waste food. But if law can work on them, by all means, IMPLEMENT it!

Now for household awareness : ask this question first : "how to make the wasters feel guilty about wasting food?"

Corporate Governance as a management science (a reevaluation) - Nik Zafri

(The author would like to thank The Organisation for Economic Co-operation and Development (OECD) for the promotion of policies that will improve the economic and social well-being of people around the world including the proper implementation of Corporate Governance)

Despite being popular for more than a decade, many corporations still tend to view Corporate Governance as some "legal constraints" on them. While this is not entirely true, we still find corporate leaders and the executive board fear the auditors with the notion that they might have broken the law or some misdeeds may have occurred.

As a result we still see corporations winding up - some did not even have to. It's shocking to find corporations being liquidated simply because they did not submit the proper papers on time to the authorities.

Citing OECD - Implementing Governance, Chapter 6, Page 162. 2nd para :

"Following the series of scandals in the US and elsewhere involving big corporations, the market has become increasingly demanding regarding improvements in corporate governance practices and INTERNAL CONTROL to increase investor confidence. The awareness that followed the scandals created an environment conducive to better governance. This was seen in Latin America, in countries like Brazil; after the initial period when investors were pushing for basic governance measures, they now are refining their requests by seeking improvement in QUALITY of disclosure, composition of boards and more. Lessons learned from the BENCHMARKING process can be used as the starting point and as a CONTINUOUS LEARNING PROCESS."

When corporate governance been too intertwined with rules and regulations, there is no room for management tools to come in. Corporate Governance is not merely about legalities as "hijacked" by scholars, company secretaries and authorities. 

Corporate governance prevailing practices ironically failed to be seen as a management science - as it should have been. It is about achieving corporate democracy for shareholders and "other interested parties". 

It is not always about the Board of Directors but it also concerns a network of supply chain as well ("Other Interested Parties" - such as employees, consumers, surroundings and even community at large.

Now the laws are there in place...what's next?

The issue now is how to MANAGE it?

Whenever there is a law, there will also be suggestions of the usage of standards and codes of practice. Standards give birth to Manuals, Procedures, Work Instructions and Checklist - all under "controlled conditions" (Refer to ISO 9001:2008)

Let's look back at the 5 core pillars of Corporate Governance:

1) Rights and equitable treatment of shareholders : Corporations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings

Keyword : Communication (internal and external)

Communications can be complicated especially dealing with information being ambiguous or inaccurate. In my experience, communication is mainly the highest contributing factor towards the failure of a management system - especially dealing with unhealthy office politics.

A corporation has a business to run based on a certain core business process as stated in the Manual. It requires inputs to flow from one process and outputs to flow to another process. There is a continuous (communication) flow regarding tangible (materials and product) and intangible (information) inputs and outputs taking place within a corporation.

Thus, the board of directors should come out with methods and resources using the process and deploy these methods through ICT; logistic and HR processes (documents, meetings, directives, e-mails, intranet, visual etc) Get feedbacks from recipients and incorporate them in the policy, objectives and goals. Make your staff feel important that they are the 'guardians' and 'watchdogs'.

2) Interests of other stakeholders : Corporations should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers.

Keyword : Stakeholders

This MUST be stated in corporate’s mission and relays the processes used to get the corporation there. Let the values guide the culture and not vice-versa. Stakeholders should always be put first. They must be made aware of what is going on in a corporation especially any new management system to support the law. They must be well briefed of the long term benefits seeking and achieving the recognitions from the relevant bodies.

3) Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment.

Keyword : Commitment

A successful implementation of systems and methods can positively affect the corporation’s reputation, growth and profitability. This can only happen if there is a strong commitment from the board. The willingness to invest for a long-term management program that will positive affect the corporation is very important rather than meeting the minimum, mediocre, or sub-standard requirements. And this should be communicated throughout the organization.

4) Integrity and ethical behavior: Integrity should be a fundamental requirement in choosing corporate officers and board members. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.

Keyword : Professionalism

There is a need for a code of conduct to be developed. A typical code of conduct should not be viewed as an expression of a set of laws but also implying the management methodologies as well.

a) Duties and Responsibilities - A proper Job Description, Organizational Chart and Master Responsibility Matrix - should be in place - to also reflect the Board, Associates, Officers and Corporate Compliance Officers.

b) Honesty, Ethical Conduct, Fair Dealing

c) Procedures dealing with a bunch of issues such as Human Resources, Environmental Health and Safety, Gifts/Gratuities/Entertaintments, Records/Documentation Management, Reporting and Training

5) Disclosure and transparency: Corporations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

Keyword : Transparency

Once again, a proper Job Description (JD) and documented procedures are required. When making a Job Description, ensure that the duties are arranged according to their utmost priority. A simple percentile management tool would help via a brainstorming session. 

Once the JD is in place, use the cascading principle so that the JD is related to other tools such as (pick one) - Key Performance Indicators, Key Result Areas, Balance Scorecard etc.

Secondly, you need to develop procedures with simple templates such as process flow, responsibility and reference documents/records. (Again, refer to ISO 9001:2008 Standards)

Nik Zafri is an Associate Consultant with TIJ Consultants Group (Malaysia and Singapore)

Something to ponder. There are some 'good lessons' we can learn here. The article may appear 'a bit old' but most of what the author suggested here still apply! Having reading it, it makes me wonder sometimes...are we or are we not doing the right thing? Read it and tell me what you think.

Original Source : http://www.deanlebaron.com/book/ultimate/chapters/econ_forecast.html

Economic Forecasting (updated 27 Feb 99)

Almost every financial services firm has an extensive economic forecasting effort. It is usually part of a so-called 'top-down' investment process, which starts with an outlook for the economy and monetary conditions, continues to the strongest industries, follows with detailed company study for stock selection and may include an overlay of technical analysis to provide a timing dimension. Some would add analysis of social and political conditions even before economic studies

Economic forecasts derive from models - usually of the aggregate national or global economy, but sometimes of parts of those economies: particular industrial sectors, regions of the world or even single products or firms. Basic approaches to forecasting simply extrapolate the past; more sophisticated models attempt to understand the sources of past changes and build them into their forecasts. The latter requires knowledge of economic history and economic principles, though, even then, forecasting is by no means an exact science. But while the accuracy of economists' predictions is frequently a target of jokes, forecasting remains a popular pursuit.

Forecasts for the macroeconomy are published regularly by academic institutions, thinktanks, governments, central banks and international organizations like the OECD and the IMF. In these places, modeling can, to a certain extent, be conducted free of the constraint of producing quick and usable data on a daily basis. But in the investment world, forecasts are required to be done 'early and often'. A relatively short-term outlook is normally the limit of their aspirations - what will happen to interest rates within the next month? - with decision-makers demanding rapid output that they hope will be directly relevant to their immediate problems.

Much of the output of financial market models is naturally closely guarded in the hope that it may bring advantage to its owners and their clients. But, at the same time, investment economists like to maintain a public profile for marketing purposes, and are often called on by the media to give their opinion on the latest macroeconomic developments. Their interpretations of economic data may give some clues as to how the financial markets will react, though more often than not, they are explaining why the markets have already reacted as they did. Invariably, too, there are disagreements about what various indicators mean, depending on different beliefs about the economy, and whether the firm is taking an optimistic or pessimistic view of the markets.

Each month, the Economist polls a group of financial forecasters and calculates the average of their predictions for real GDP growth, consumer price inflation and current account balances in a variety of countries. More specialized services like Consensus Economics survey over three hundred economists each month and offer details on average private sector predictions.

Economic forecasting guru: Peter Bernstein

Despite the pressures for 'early and often' forecasts, a number of Wall Street and City economists do as good a job as any forecasters, among them Abby Joseph Cohen, Steve Roach and Ed Hyman. Most such investment economists are good students of market conditions - careful keepers of useful data, and on occasion creative in extracting some kind of signal out of the noise. Ed Yardeni, for example, the chief economist at Deutsche Bank Securities, turns his website into a cyber chart room. If you want to access data and view charts, Yardeni's site is an essential stop. He also makes his commentary available in a section for clients that is password protected, but a substantial amount of the content is openly accessible.

One economic commentator stands amid the few that many of us would class as the best: Peter Bernstein. He grew up heading his father's investment firm, Bernstein MacCauley in New York. He was the first editor of the Journal of Portfolio Management, founded by Gil Kaplan, and has received many awards, among them the highest honor granted by the investment management industry's professional body, the Association of Investment Management & Research.

Bernstein is able to walk on both streets - with practitioners and academics. He writes a newsletter, Economics and Portfolio Strategy, to test and disseminate his analyses. And writing is one of his main strengths: his two books on the history of risk and on how 'capital ideas' came to Wall Street have been regulars on the business bestseller lists during the 1990s.

Like a good academic, Bernstein marshals all the arguments, especially those that are counter to his own position. His mid-February 1998 letter, for example, examined the case for exuberant stock prices in the United States, giving particular emphasis to the markets' reliance upon an all-knowing Federal Reserve for economic management. Bernstein concluded that 'stocks are a risky investment and should be managed accordingly'. Since that analysis was approximately the same as his November 1997 conclusion, he was ahead of the wave and for the right reasons. Bernstein is also faster than most to admit where he has been wrong and to try to examine what led him astray - or, as he jokes, 'what led the market astray when it failed to act the way I thought it would'.

Counterpoint

Financial analysts are professional forecasters. But why study the economy, a traditional lagging indicator, if you want to forecast investment measures? The investment record of this process is only rarely better than random - and when you take account of the expenses of achieving these results, they come out a little bit less than chance. Why do it at all with that unconvincing record of success?

Economic forecasts are supposed to be meaningful. But if you believe that asset prices reflect a forecast of future outcomes, it would seem quite difficult to use a technique that reaches back into the past to get an idea of the future. But that is what economic forecasting does. It is teased for forecasting three recessions for every one that actually happens. No wonder it is called the dismal science.

Financial Times economics columnist Sir Samuel Brittan makes a pointed reflection on the practice of forecasting: 'The golden rule for economic forecasters is: forecast what has already happened and stay at the cautious end. Forecasts tell us more about the present and the recent past than about the future.'

Poor methods, bad models and inaccurate data are all blamed for the recurrence of serious forecast errors. But according to Oxford economics professor David Hendry, these are not the primary cause of systematic mistakes. Rather, unanticipated large changes within the forecast period are the culprit. The primary fault in economic forecasting is not rapidly adjusting the forecasts once they go wrong.

Hendry uses an analogy from rocket science: a rocket to the moon is forecast to reach there at a precise time and location, and usually does so. But if it is hit by a meteor and knocked off course - or destroyed - the forecast is systematically badly wrong. That outcome need not suggest poor engineering or bad forecasting models - and certainly does not suggest that Newtonian gravitation theory is incorrect.

Guru response

Peter Bernstein comments: 'For better or worse, economic forecasting is an essential ingredient in investing because earnings and interest rates are both conditional on economic conditions. So you have to do it or use it in some fashion. Furthermore, although a forecast of next quarter's GDP or even next year's earnings per share may be wrong, the kind of forecasting I do - and really that Abby Cohen does too - is to try to define the basic environment - inflationary or not, fast growth or not, competitive or not, and so on. That kind of thing is most helpful and has paid the biggest dividends over the years, not just in this cycle.'

At the front of this book is further commentary from Peter Bernstein: a grand sweeping history of the markets reprinted from the 1 December 1998 issue of his newsletter.

Where next?

Forecasting is a key task in financial institutions because of the profound effects economic developments can have on potential profits. And while leading economic indicators might provide a hint as to what the economic future holds, they do not anticipate what the additional effects of powerful economic agents like government policy and the financial markets themselves might be. To try to get ahead of the competition, companies will aim to model more accurately, and with more consideration of possible discontinuities in the markets.

One way to make forecasts more useful - though not necessarily better - might be to follow the principle of 'truth-in-labeling' used on food packages and elsewhere. We could describe the kind of forecast we are making more accurately. For example, if we are using backtesting, we should say that that is exactly what we are doing and which of two varieties.

One form of backtesting is 'momentum': the forecast is derived from a view that the past momentum will continue in roughly the same direction - often straight line - as it has in the past. The other form is 'regression to the mean': we think things will not go back or up or down, but return to average conditions. This is like a series of coin flips that goes ninety-nine times in one direction, and we think the next event is related to the preceding one.

Alternatively, we can say that our forecast comes from our own insight or novelty, and label it that way so we know that it is essentially out of our head and our own creativity - or lack of creativity, which we will know in time. Sometimes different techniques like high-frequency forecasting come from this. Or it can come from news and our response to new news. This is not necessarily insider information but news that is not necessarily generally recognized by others - a form of forecasting derived from information.

Finally, the most common form of forecasting is waffle: we do benchmark investing or stick to the middle because we do not know what else to do. That is perfectly all right, but we should label it as such. Let us say that is what we are doing, so people can understand what they are getting when they listen to us. Most of the time, a waffle is the right thing to do, but at all times, we can make our forecasts better by correctly labeling them.

Read on

In print

Peter Bernstein, Against the Gods: The Remarkable Story of Risk Peter Bernstein, Capital Ideas: The Improbable Origins of Modern Wall Street Peter Bernstein's newsletter Economics and Portfolio Strategy Reports from Consensus Economics

Online

econwpa.wustl.edu/EconFAQ/ - Bill Goffe's 'resources for economists on the internet', one of the best entry points on the internet for economic information
www.economics.ox.ac.uk/hendry/Frontpage.htm - David Hendry's research project on the econometrics of macroeconomic forecasting
www.economist.com - website of The Economist
www.ft.com - website of the Financial Times
www.yardeni.com - Ed Yardeni's website
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Almerica's Response (in blue) : Posted: 18 September 2005 at 10:27pm and Nik Zafri's Response (in red) : 24 September 2005 at 7:53pm

nikzafri wrote:

.....But, at the same time, investment economists like to maintain a public profile for marketing purposes, and are often called on by the media to give their opinion on the latest macroeconomic developments. Their interpretations of economic data may give some clues as to how the financial markets will react, though more often than not, they are explaining why the markets have already reacted as they did. Invariably, too, there are disagreements about what various indicators mean, depending on different beliefs about the economy, and whether the firm is taking an optimistic or pessimistic view of the markets.

This is where the danger lies where the urge to maintain a public profile for marketing purposes may cloud vital information that could have been made transparent to the public. More often than not publicity seekers thrive on being the bearer of good news and thus conceal certain information on the repercussions that could happen no matter how small the potential risk is which they already know before hand but in their opinion are not likely to occur. Only thing is that things don't always go as planned.

Yeap...highlight the good things and hide the 'bad' things - when we get these kind of people, do reverse reading - highlight the bad things and hide the good things - that's exactly what they are doing.

I ain't worried - as I know that in the end, these kind of 'soothsayers' will ask the infamous question - "who moved my cheese?"

nikzafri wrote:

....The investment record of this process is only rarely better than random - and when you take account of the expenses of achieving these results, they come out a little bit less than chance. Why do it at all with that unconvincing record of success?

It is actually due to the fact that it is the bread and butter of any analysts. lol

I think a true analyst conducts proper analysis. He/she should know for the fact that if there have been repetitive trends of "unconvincing records of success' derived from their so-called 'nostradamous' capabilities - these kind of 'analysts' should seriously consider looking for a new job. When you have to go, you have to go - your time is over - go find something else rather than 'clouding' people's minds.

nikzafri wrote:

Economic forecasts are supposed to be meaningful. But if you believe that asset prices reflect a forecast of future outcomes, it would seem quite difficult to use a technique that reaches back into the past to get an idea of the future. But that is what economic forecasting does. It is teased for forecasting three recessions for every one that actually happens. No wonder it is called the dismal science.

To a certain extent it is important eventhough it is dismal. It serves as a guideline for every individual's decision making process. They need to know the details, what to expect and understand what could and could not happen. They need to know the details so that they will be prepared for any direction the market turns. Many plan and know what they will do when they get windfalls but how many have a plan B or plan C to prepare themselves for adverse situations. So such economic forecasts which are genuine and transparent are always needed but to the individual it is not a recipe of success but rather an eye opener to help you prepare for the potential good as well as the potential bad.

Yes my friend, nowadays, nobody can really forecast by merely depending/trusting figures/statistics or merely conventional economic hypotheses - you have to 'experience' it yourself....there is a saying - "The analysis tools/mechanisms are not meant to change the formal decision making - sometimes good decisions are based merely on intuition" Despite there are abundance of these tools, sometimes a real businessman should trust his 'business instinct'

nikzafri wrote:

Financial Times economics columnist Sir Samuel Brittan makes a pointed reflection on the practice of forecasting: 'The golden rule for economic forecasters is: forecast what has already happened and stay at the cautious end. Forecasts tell us more about the present and the recent past than about the future.' Hendry uses an analogy from rocket science: a rocket to the moon is forecast to reach there at a precise time and location, and usually does so. But if it is hit by a meteor and knocked off course - or destroyed - the forecast is systematically badly wrong. That outcome need not suggest poor engineering or bad forecasting models - and certainly does not suggest that Newtonian gravitation theory is incorrect.

This is absolutely true. Notice how inaccurate certain analysis have been at times. Many are still not aware that it is no longer the reliable and predictable conditions that we have all been so accustomed to throughout the past one or two decades. There have been quantum leaps of advancements and the extent that what is a sure thing today could be a thing of the past. At the draw of a pen, embargos could be imposed or lifted, closed economies could be opened up. Tecnological discoveries occur almost every week...what was once invested as a need suddenly becomes a white elephant even before the investments have been amortized. What was once affordable could suddenly become free thus opening the gates to all of your competitors which run at lower operating costs to eat into your business. And then you get the daily news of violence and natural disasters. Economic analysts can never provide the framework of what to do when such things occur because it was never expected in the first place. Therefore the risks today deepens because the number of affecting factors (besides just statistical numbers and charts) have just grown out of hand.

I call this 'unwanted risk taking' and 'gambling' - based on luck and a little bit of law of probability..that's all. Indeed, the most dangerous path and pitfall!

nikzafri wrote:

Where next? Forecasting is a key task in financial institutions because of the profound effects economic developments can have on potential profits. And while leading economic indicators might provide a hint as to what the economic future holds, they do not anticipate what the additional effects of powerful economic agents like government policy and the financial markets themselves might be. To try to get ahead of the competition, companies will aim to model more accurately, and with more consideration of possible discontinuities in the markets. One way to make forecasts more useful - though not necessarily better - might be to follow the principle of 'truth-in-labeling' used on food packages and elsewhere. We could describe the kind of forecast we are making more accurately...

Exactly!