cold chain Archives

How Cold Chain Logistic Providers Build Trust with Traceability

Warehouse Management Systems | By Matthew Deep • 07/15/2021

The global cold chain market is rapidly growing, primarily driven by an evolving shift in consumer habits and the changing perceptions of frozen food. Valued at nearly $210.49 billion in 2020, the cold chain market is expected to reach more than $628 billion in 2028, nearly tripling its growth in less than ten years, according to a market analysis report by Grand View Research.

At the same time, cold chain logistics, one of the most complex divisions of supply chain logistics, is also facing increased regulations and pressure for more accountability throughout the entire supply chain. This leads to the need for traceability, the ability to track a specific item along every stage of the workflow, which is increasingly required due to regulatory, ethical and environmental issues.

Understanding the growth of the global cold chain market starts in Asia, where e-commerce sales are fast increasing as a result of growing economies and populations gaining wealth. This has led to a dramatic change in the perception of frozen and refrigerated foods, as consumers now have access to products previously unavailable to them. This change in perception, coupled with rapid urbanization, means more Asian consumers are using the web for food purchasing and are comfortable buying frozen foods online.

In the Philippines, there is another ongoing shift in food purchasing habits. Local consumers are turning to supermarkets to buy their fresh and frozen foods, rather than the traditional wet markets. The growth of online grocery shopping and an increasing demand for fresh products continues to drive the expansion of cold storage facilities and logistics.

In the western hemisphere, demand for healthy, convenient meals is also driving an increase in ready-made meals and prepare-at-home meal kits that are delivered with fresh ingredients directly to the consumer’s home. The focus on health is also accelerating the desire for more organic foods, further pushing the demand for cold storage and a frozen or cooled supply chain.

As more and more consumers rely on the cold chain market for their perishable goods, the potential for waste increases. In addition, as more consumers use e-commerce, they become accustomed to the guarantee of fast, free shipping. They begin to expect all of their online orders arrive quickly and with no fees. Online grocery orders are no exception from these expectations.

Because of this, retailers are under pressure to deliver faster and for less. To keep up with the demand, retailers have to place orders more frequently, meaning their orders are often smaller and made up of more variety, and all with much shorter lead times. This variety also leads to more SKUs to manage and more countries of origin entering the supply chain.

Even before the increased consumer pressure for faster deliveries, cold chain logistics already faced several challenges. Due their short “shelf life,” perishable products require temperature control at every stage in the supply chain. Many items, such as meat, poultry, fish, dairy products, fruit and vegetables must be kept fresh for as long as possible to avoid spoilage and the food going to waste.

In fact, according to the United Nations, globally, around 14% of food produced is lost between harvest and retail, and for fruits and vegetables, more than 20% is lost. Plus, any irregular change in temperature during transport, or even in the warehouse where the product is stored, doesn’t just cause the food to go to waste, but can cause a food safety issue.

To address the safety issue, improve sustainability and meet the never-ending pressure to deliver products faster, it is critical for third-party logistic providers to have traceability built into their digital infrastructure. For food specifically, it is a critical tool that allows everyone from the growers and manufacturers to the distributors and retailers to ensure the products arrive on time and in the right conditions for safe consumption.

The level of detailed data provided through traceability can be incredibly specific, and as it becomes an increasingly critical part of supply chain management the data provided will only become more sophisticated. Take tracking produce, for example. Traceability can identify its exact place of origin, if pesticides were used, the date it was harvested, where and how it was stored, how long it was in transit and much more. It also takes the guess work out of the ideal conditions needed for storage and provides information such as exactly how much time the product has to safely reach its next destination.

And while traceability is critically important from a safety and sustainability perspective, it also plays an important role in building trust with consumers. In the wake of the COVID-19 pandemic, which impacted supply chains all over the globe, more consumers than ever before have begun to understand the significance of the supply chain. This increased understanding has also inspired new interest and scrutiny, leading to a growing desire from consumers for more transparency. They want to know more about the supply chains behind the products they buy, such as who is making them and where they come from, especially when it comes to food products.

While the phrase “farm to fork,” is not new, it’s becoming more common for everyday consumers to want to understand each step of the journey their food went on to get to their plate. And being able to have that information available for retailers to share with consumers helps not only build confidence and trust with the end consumer, it also helps build trust with the third-party logistic providers. As consumers continue to expect access to details about their foods’ supply chain, the more traceability becomes an expected part of the process for all third-party logistic providers.

Temperature-sensitive products beyond food also rely on traceability. The pharmaceutical industry, for example, has increased compliance requirements for the safe and effective transfer of medicine and vaccines, which means traceability and putting in place track-and-trace software to manage the exact whereabouts of the product along the entire supply chain.

One essential component of traceability is the warehouse management system (WMS). While the process of handling products during transit is important, much of the time those products are in storage. The WMS should make decisions around quality of goods whenever a traceable event is not within the boundary. Key attributes, such as expected temperature for a product, should flag inventory whenever an excursion takes place. This should prevent the WMS from shipping a compromised product to the customer

As the global cold chain market continues to expand and evolve in response to consumer trends or shifts in behavior, its reliance on technology will continue to grow. Cold storage is a very reactive market that requires a level of flexibility and adaptability, which means it’s the providers that are able to adjust quickly that will be able to service the ever-changing needs of the market. But providing those services starts with trust. and Investing in traceability is one critical way to provide confidence and transparency in every step of the supply chain. Retailers and third-party logistics providers that acknowledge and embrace that accountability also help customers to trust their processes and have confidence in their service.

Matthew Deep VP of Professional Services Software, Körber Business Area Supply Chain.

Lineage Logistics: A Data-Driven Approach to Cold Chain

Food & Beverage Industry | By Chris Cunnane • 06/06/2018

Towards the end of last year, Steve Banker and I met with Greg Lehmkuhl, President & CEO, Sudarsan Thattai, CIO, and Chris Timmer, SVP Sales and Value-Added Services from Lineage Logistics. The name Lineage Logistics may not be a household name, but that is something the leadership team is used to. However, Lineage, a mid-cap company based in Detroit, Michigan, is one of the world’s largest and most innovative temperature-controlled supply chain providers. The temperature-controlled supply chain, also known as cold chain, is used to keep products at specified temperatures to preserve food safety and, generally increase shelf life. The company operates over 120 facilities in four countries, with over 700 million cubic feet of storage. The company’s solutions include warehousing, managed transportation, re-distribution, high pressure processing, packaging, and more.

According to Lineage, one of the interesting components of the cold chain is the size of the market. While the market itself is huge, cost barriers make it difficult for new entrants to the market. Cold storage is significantly more expensive than dry storage due to energy, equipment and specialized insulated construction materials required to maintain ideal temperatures. The growth in demand for frozen and perishable foods has been rising for a decade, but investments in the cold chain were historically low due to the recession. With the economy recovering and demand rising, the industry is seeing more capital inflows – and people are paying attention.

One of the major challenges facing companies is the fact that it is difficult to achieve consistent utilization in warehouses due to the seasonality of food. In the warehouse, space is money, and operations need to be sustainable. The solution for Lineage was for its applied sciences team to take on the task of making the warehouses more efficient with the goal of driving sustainability. Namely, the applied scientists team created highly accurate models of the inside of warehouses, providing a sub-millimeter-accurate measurement. Using that data along with other inventory data, Lineage is able to optimize use of the warehouse resulting in both better utilization of the limited space along with more accurate movement of product to better serve customers.

Greg Lehmkuhl pointed out two distinct areas where Lineage was able to use its applied sciences team to improve operational efficiency and profitability: Sustainability and Energy.

Not surprisingly, in the cold chain, energy is a huge expense. The solution was to put sensors in their cold storage warehouses to monitor the temperature throughout. Using the sensors, Lineage was able to build a model to more accurately determine, track, and optimize the way energy is used to cool the warehouse. Lineage is working to take that knowledge a step further to automate, centrally control, and optimize energy use throughout its facilities to further maximize efficiencies.

The result was a solution that maximized energy consumption and reduced the total cost of energy to operate cold storage warehouses. Lineage has been able to do this by adjusting energy consumption based on energy prices while still ensuring that the temperature in the warehouse maintains compliance with customer temperature requirements. So how effective is this method? Last year, based on the amount of cold storage Lineage provided, energy costs should have risen 8 percent. Instead, due to their warehouse models, the company reduced its average cost per KWh by almost 10 percent.

Such energy optimization also helps Lineage better utilize intermittent, but renewable sources of electricity, such as wind turbines and solar panels.

The Lineage team shared one other interesting anecdote about how their applied sciences team was reducing energy consumption. Lineage stores more of the strawberries in the United States than any other warehouse. Historically, the strawberries have been put in a blast freezer to rapidly freeze them for an extended shelf life. With the 2015 bumper crop coming in, they simply couldn’t handle the increased capacity and freeze everything in time. So, they put the applied sciences team on the task again. The team created thermodynamic and aerodynamic models normally employed in the aerospace industry, creating new proprietary blast freeze technology in the process. As a result, Lineage was able to freeze strawberries in approximately 60% of the time as before, with commensurate energy savings and capacity increases.

The cold chain is a vital component to the food and beverage supply chain. With increased demand comes increased opportunity. However, much like every other market, technology innovation becomes a critical component to seizing these opportunities. Lineage is using a data-driven approach to improve efficiencies for how products are stored and how energy is consumed. The results speak for themselves, Lineage has managed to reduce energy costs while increasing throughput and density. This is a reminder of the importance of a data-driven approach to business.

The Dubious Reliability of Online Pharmacies Cold Chains

Pharma & Life Sciences | By Steve Banker • 01/05/2010

My ARC colleague Janice Abel told me a story recently that is making me question the safety and efficacy of prescription drugs purchased online.

Janice was visiting her stepfather who had been away from home for a long weekend. When he returned and went out to the mailbox, on a hot summer day in the 90s, he saw that his diabetes medicine had arrived, but the ice pack in the package had melted. He asked Janice if the drugs were still okay, so she tracked the shipment online to see when it was delivered. It had been delivered five days earlier. Janice suggested that he call the online pharmacy and explain the situation. He did and the customer service person told him not to worry about it, the drugs were probably still fine. Janice then read the drug insert which stated the drug was only approved up to 84 degrees. Janice had her stepfather call the online pharmacy back to relay this information to them, along with the fact that the medication looked unusually cloudy. This time he managed to convince the pharmacy to send him a new shipment without charge.

Janice is our principal analyst focused on the Life Sciences industry, and she has written about cold chain issues for ARC. This is why she had her stepfather push the issue with the online pharmacy, because she knew that some biologic drugs can be rendered useless if they fall outside their specified temperature range. There is a reason why drugs are tested and approved by the U.S. FDA for efficacy within a specific temperature range.

I went back to some of Janice’s cold chain writings (here and here, available to ARC clients only) and discovered that the number of temperature-sensitive products, such as vaccines, insulin, biologics, specimens, and blood products, is on the rise. Keeping drugs in a desired temperature range when they are inside a factory or warehouse is hard enough. But now think of these drugs sitting at loading docks while trucks are loaded and unloaded, or sitting in a hot mail box for hours or days, which happens with online pharmacy supply chains.

The cold chain is also getting more complex because we are dealing with not just domestic cold chains, but regional and international logistics as well. For example, the pharmaceutical supply chain in Europe is particularly complex. In virtually any supply chain, you have manufacturers, distributors, and retailers. In the European Union there is something known as “parallel trade” that allows wholesalers in different nations to trade drugs in order to allow more favorable pricing for consumers (too bad this idea was not discussed in the healthcare reform debate going on here in the U.S.).

At the global level, clinical trials are increasingly being conducted in third world countries, which typically have relatively poor logistics infrastructures. Pharma companies are doing this to cut costs out of the development process.

Certain technologies can help companies effectively manage a cold chain. At the low end, there are temperature indicators that can track whether a shipment has gone outside the desired temperature range. However, this is a reactive rather than a proactive approach. The International Society for Pharmaceutical Engineering (ISPE), a not-for-profit association for pharmaceutical manufacturing professionals, has written about using RFID and GPS systems linked to temperature sensors to proactively manage a reliable cold chain. ISPE also highlights the use of passive coolers made out of Phase Change Materials (PCMs). Unlike conventional shipping materials, when PCMs reach a certain temperature, they change phase (either melt or solidify) and absorb or release energy (hot or cold) at an almost constant temperature. My assumption, based on Janice’s story, is that PCM packaging is more the exception than the rule.

ISPE is in the process of developing cold chain good practice guidelines for its manufacturing subscribers. Janice is one of the industry experts ISPE has asked to review the guidelines. In developing these guidelines, ISPE will have to wrestle with two key questions: how far down the extended supply chain manufacturers should track their products (to distributors? to drug stores? all the way to the mail box?), and how granular should that tracking be (one-step recall capabilities or true end-to-end traceability?).

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