When Stefan Kalb was running Molly’s Salads, a grab-and-go company he’d founded in 2009, he noticed that a lot of product was going to waste. While he needed a good amount of inventory to ensure shelves were stocked, Kalb thought there had to be a better way to forecast it. So he reached out to his friend Bede Jordan, then a software engineer at Microsoft, for help creating a solution.

Bede Jordan, Co-Founder and CTO, and Stefan Kalb, Co-Founder and CEO, Shelf Engine

The program Kalb and Jordan developed ended up cutting Molly’s food waste in half—to 13 percent. The pair knew they’d created a valuable tool that could be used more widely, and by 2016, they had turned it into a company called Shelf Engine.

“Our mission is to reduce food waste through automation,” says Amanda Sonenberg, Shelf Engine’s director of partnerships for vendors & associations. “Today, Shelf Engine uses its proprietary artificial intelligence and machine learning technology to forecast and order highly perishable foods for the nation’s top grocers.”

Amanda Sonenberg, Director of Partnerships for Vendors & Associations, Shelf Engine

For decades, retailers have ordered perishable items manually or via computer-assisted ordering software designed for non-perishable inventory. “Both processes are laborious and error-prone, especially when applied across thousands of items,” Sonenberg says.

“Today, Shelf Engine uses its proprietary artificial intelligence and machine learning technology to forecast and order highly perishable foods for the nation’s top grocers.” - Amanda Sonenberg

By contrast, Shelf Engine offers a highly accurate, automated solution that also reduces waste. “Our technology forecasts the precise order volume that optimizes each item’s sales potential,” Sonenberg says. “In doing so, we’re able to drastically reduce the food waste that results from over-ordering. Shelf Engine’s platform makes over one million predictions each week to anticipate consumer demand under a variety of conditions. We then marry these predictions with a store’s historical and daily sales data to generate probabilistic models for each unique SKU we manage in every store, every day.”

Shelf Engine currently works with large grocery chains, such as Whole Foods, as well as regional and local grocers, such as Harding’s (in Michigan and Indiana) and Bi-Rite (in San Francisco). As part of its service, the company has a national field team that visits stores to observe and collect inventory information to further improve Shelf Engine’s AI ordering system.

“Shelf Engine reduces a retailer’s staffing requirement by an average of five hours per category, per store, per week by automating their ordering responsibilities,” says Sonenberg, noting that this labor savings is especially relevant given the current labor crisis.

One of the most unique things about Shelf Engine is that it covers the cost of any unsold inventory that a retailer orders through its system. “We become the vendor of record to our retail customers, paying suppliers and distributors directly for everything they deliver,” says Sonenberg. “We only charge retailers for the items that sell, eliminating inventory risk for the grocer while providing the benefit of a guaranteed sale to suppliers.”

“Shelf Engine reduces a retailer’s staffing requirement by an average of five hours per category, per store, per week by automating their ordering responsibilities.” - Amanda Sonenberg

“The sales guarantee on any waste is really a big part of what attracted us to working with Shelf Engine,” says one regional grocer. “To not have to worry about the financial impact of any product that’s left over really allows us to be a lot more aggressive and go after sales and also go after new products.”

Sonenberg notes that the risk-free ordering benefit of Shelf Engine is particularly relevant for stores who are thinking about increasing their organic produce offerings. “Suppose a retailer wants to expand its selection of fresh organics but has resisted experimenting, fearing that they’ll be stuck with the shrink,” she says. “Now that retailer can confidently chase sales of new items with Shelf Engine, knowing that whatever doesn’t sell won’t eat away at their margins. In fact, retailers using Shelf Engine experience a 7 percent sales lift and a 15 percent gross margin expansion on average.”

“We only charge retailers for the items that sell, eliminating inventory risk for the grocer while providing the benefit of a guaranteed sale to suppliers.” - Amanda Sonenberg

In addition to retailers, Shelf Engine also works with hundreds of suppliers and distributors, including Taylor Farms, Russ Davis, and Urban Remedy. “Shelf Engine works with any supplier that a retail customer partners with,” says Sonenberg. “We preserve existing relationships between retailers and suppliers and can set up an association with any perishable supplier.”

Like retailers, Sonenberg says that suppliers and distributors are drawn to working with Shelf Engine because it’s risk free. “Shelf Engine is set up as a scan-based trade (SBT) vendor with retailers. That means we manage the orders with suppliers on behalf of the retailer, pay the suppliers for everything they deliver, and only charge the retailer for what it sells,” she explains. “Shelf Engine only profits if its retailers and suppliers profit. ... It’s in our best interests to get the order right.”

“Retailers using Shelf Engine experience a 7 percent sales lift and a 15 percent gross margin expansion on average.” - Amanda Sonenberg

Looking ahead, Shelf Engine is planning for significant expansion, aiming to boost its store count by over 200 percent to 5,000 locations this year—and to triple its footprint within each of those stores.

“We are excited to support organic produce farmers and manufacturers as they continue to scale to meet growing demand,” says Sonenberg.

“Shelf Engine’s goal is to support the grocery industry by increasing profitability within the fresh categories that account for a shocking amount of supermarket food waste,” Sonenberg says, noting that last year the company reduced its retail customers’ food waste by 32 percent. “We’re able to prevent grocers from over-ordering food that our technology knows will spoil on the shelf. We’re uniquely positioned to help retailers stock and sell perishables—especially produce, Shelf Engine’s bread and butter—to capture all possible sales with the least amount of waste to benefit retailers, suppliers, and the planet.”