When the Food Bank Loses its Business Model
Food banks are suffering from significantly lower food donations nationwide, as Lauren Etter reported in The Wall Street Journal in May, which is “the down side of a drive in recent years by manufacturers and retailers for greater supply chain efficiency [reducing waste and overstocks.”
To make up for the loss of donations of imperfect and overstocked food, Etter reports, “ food banks are seeking ways to raise money to buy more food. They are also looking for new types of food, including perishables. Some food banks are hiring trucks to pick up food directly from farms.”
If food banks are buying food, they are losing their business model at worst, and shifting it at best. In business parlance, their supply chain is drying up, although demand is as strong as ever. The logical response would be to find other sources of supply. But in a sector that is already undercapitalized, does it make sense that food banks necessarily find another source of food, even if they have to buy it, to meet demand? Aren’t they in a different business if they do that? Aren’t there others (like Walmart) who could source supply more effectively?
Sounds like prime territory for a series of social business enterprises between the food banks and the big retailers to me. (See my prior posting on social business enterprise.) Food banks can reach people even Walmart cannot, and can bring charitable funding to ensure they do so. But Walmart can surely get better deals on food than food banks can. Granted, this is an easy enough call from the armchair, I hope the experts will weigh in.