According to the Food and Agriculture Organization of the United Nations, approximately 3.1 billion people worldwide were unable to afford a healthy diet in 2020. Meanwhile, in 2021 close to 2.3 billion people were moderately or severely food insecure. Given the strong link between malnutrition and income disparity, the numbers paint a grim picture representing one of the grand challenges of our time.
“I’m probably an idealist,” says MIT Research Scientist Christopher Mejía Argueta, “but I really believe that if we change our diets and think about ways to help others, we can make a difference — that’s my motivation.”
Mejía Argueta is the founder and director of the MIT Food and Retail Operations Lab (FaROL). He has more than a decade of experience in supply chain management, optimization, and effective data-driven decision-making on pressing issues like the evolution of end consumers for retail and e-tail supply chains, food waste, and equitable access to nutrition.
Supply chain network designs typically focus on minimizing costs without considering the implications (e.g., cost) of changes in consumer behavior. Mejía Argueta and his colleagues at the FaROL, however, are working to understand and design optimal supply chains to create high-performance operations based on consumer choice. “Understanding the significant factors of consumer choice and analyzing their evolution over time becomes critical to designing forward-looking retail operations with data-driven and customer-centric supply chains, inventory management, and distribution systems,” explains Mejía Argueta.
One of his recent projects examined the challenges of small retailers worldwide. These mom-and-pop outlets, or nanostores, account for 50 percent of the global market share and are the primary source of consumer packaged goods for people in urban areas. Worldwide there are nearly 50 million nanostores, each serving between 100-200 households in a community. In India alone, there are 14 million nanostores known as kiranas. And while these retailers are more prevalent in emerging markets, they play an important role in developed markets, particularly in under-resourced communities, and are frequently located in “food deserts,” where they are the only source of essential goods for the community.
These small retailers thrive thanks, partly, to their ability to offer the right combination of affordability and convenience while fostering trust with local customers, who often lack access to a supermarket or a grocery store. They often exist in fragmented, densely populated areas where infrastructure and public transportation services are poor and consumers have limited purchasing power. But nanostore shopkeepers and owners are intimately familiar with their customers and their consumption patterns, which means they can connect those consumption patterns or information to the larger supply chain. According to Mejía Argueta, when it comes to the future of retail, nanostores will be the cornerstones of growth in emerging economies.
But it’s a complicated scenario. Mom-and-pop shops don’t have the capacity to offer a broad range of products to their customers, and often, they lack access to nutritious food options. Logistically speaking, it is expensive to supply them, and the cost-to-serve (i.e., the logistics cost) is between 10 to 30 percent more expensive than other retailers. According to Mejía Argueta, this has a significant ripple effect, impacting education, productivity, and, eventually, the economic performance of an entire nation.
“The high fragmentation of nanostores causes substantial distribution inefficiencies, especially in congested megacities,” he says. “At my lab, we study how to make nanostores more efficient and effective by considering various commercial and logistics strategies while considering inherent technical challenges. We need to serve these small retailers better to help them survive and thrive, to provide a greater impact for underserved communities and the entire economic ecosystem.”
Mejía Argueta and his team recently collaborated with Tufts University and the City of Somerville, Massachusetts, to conduct research on food access models in underserved communities. The Somerville Project explored various interventions to supply fresh produce in food desert neighborhoods.
“A lack of nutrition does not simply mean a lack of food,” Mejía Argueta says. “It can also be caused by an overabundance of unhealthy foods in a given market, which is particularly troublesome for U.S. cities where people in underserved communities don’t have access to healthy food options. We believe that one way to combat the problem of food deserts is to supply these areas with healthy food options affordably and create awareness programs.”
The collaborative project saw Mejía Argueta and his colleagues assessing the impact of several intervention schemes designed to empower the end consumer. For example, they implemented a low-cost grocery delivery model similar to Instacart as well as a ride sharing system to transport people from their homes to grocery stores and back. They also collaborated with a nonprofit organization, Partnership for a Healthier America, and began working with retailers to deliver “veggie boxes” in underserved communities. Models like these provide low-income people access to food while providing dignity of choice, Mejía Argueta explains.
When it comes to supply chain management research, sustainability and societal impact often fall by the wayside, but Mejía Argueta’s bottom-up approach shirks tradition. “We’re trying to build a community, employing a socially driven perspective because if you work with the community, you gain their trust. If you want to make something sustainable in the long term, people need to trust in these solutions and engage with the ecosystem as a whole.”
And to achieve real-world impact, collaboration is key. Mejía Argueta says that government has an important role to play, developing policy to connect the models he and his colleagues develop in academia to societal challenges. Meanwhile, he believes startups and entrepreneurs can function as bridge-builders to link the flows of information, the flows of goods and cash, and even knowledge and security in an ecosystem that suffers from fragmentation and siloed thinking among stakeholders.
Finally, Mejía Argueta reflects on the role of corporations and his belief that the MIT Industrial Liaison Program is essential to getting his research to the frontline of business challenges. “The Industrial Liaison Program does a fantastic job of connecting our research to real-world scenarios,” he says. “It creates opportunities for us to have meaningful interactions with corporates for real-world impact. I believe strongly in the MIT motto ‘mens et manus,’ and ILP helps drive our research into practice.”
Courtesy MIT. By Daniel de Wolff. Article available here.