The Six Characteristics of a Best-In-Class Cold Supply Chain
- February 02, 2023
The unanticipated shift of consumer behavior toward cold chains and e-commerce, particularly with e-groceries, was one of the most significant effects of the COVID-19 pandemic. Our 2023 27th Annual Third-Party Logistics Study found that 74% of shippers and 91% of third-party logistics (3PLs) providers saw increased demand for cold chain and cold chain services. Furthermore, e-commerce will account for 20% of the US grocery market by 2026.
Given the nature of e-commerce, digital app and online experiences remain critical to consumer loyalty and satisfaction. The seamlessness of their experience, delivery reliability, and access to information are all essential considerations for today’s e-grocery consumers.
Due to the perishability of products and increased customer demand, every link in supply chains must operate at peak efficiency to ensure on-time delivery. The adage that a supply chain is only as strong as its weakest link applies especially to cold chain operations.
What does it take to make a best-in-class cold chain? Our research and industry experience shows six specific capabilities that organizations must focus on:
End-to-end temperature control monitoring and tracking
Correctly monitoring and tracking a product’s temperature as it is prepped and transported is vital to a successful cold chain network. All cold chain products have a range of temperatures that must be maintained to prevent spoilage. The temperature must be around 40°F (4°C) for perishable food. Drug storage temperatures, meanwhile, can range from below 77° F (25°C) to between 36°F and 46°F (2°C and 8°C, respectively).
IoT sensors, digital twins and predictive analytics can help cold chains monitor and proactively adjust temperatures when needed. New capabilities to reduce food waste and consolidate trucking loads of refrigerated and frozen foods, such as real-time data loggers, should also be considered.
Food waste and sustainability
Approximately 931 million tons of food are lost or wasted globally every year. There has been a growing awareness and studies on the environmental and socioeconomic impacts of food loss and food wastage footprints.
Supply chain emissions account for approximately 92% of an organization’s greenhouse gas emissions. Integrated environmental, social, and governance (ESG) dashboards can give companies a high-level view to track their emissions and reduce food waste. Providing actual numbers around sustainability improvements, whether through an annual report or an ESG statement, is essential, especially with customers increasingly preferring environmentally conscious companies.
Other advances in sustainability, such as clean transportation, the adoption of electric vehicles, sustainable facilities, the use of more natural refrigerants, solar energy, and decarbonization, can help cold chains become efficient and establish a unique brand identity. Solutions currently being implemented to meet sustainability, energy, carbon, and food waste reduction goals include natural refrigerant containers, commercial systems, and freight-lane mapping with low Global Warming Potential (GWP).
Given the increased demand for cold chain and cold chain transportation, companies have re-assessed and re-invented their packaging portfolios. For instance, to ship COVID-19 vaccines, Pfizer developed a thermal shipper. This small technological marvel kept products stable for 10 days at remote locations and was also reusable, light, and easy to pick and pack.
Innovations to address food waste include packaging augmented with modern IoT sensors to track the journey of products throughout the entire supply chain. Enhanced packaging allows more visibility and access to real-time data to preserve assets. Integrating cold chain packaging with near real-time asset tracking solutions will give companies greater visibility of conditions faced in transit.
Modernization is also being applied to cold chain materials such as dry ice. Companies are looking for alternative solutions since dry ice poses a potential safety hazard to aircraft. Dry ice expands by 600% in volume when carbon dioxide changes from solid to gas and can become a suffocation hazard. Enhanced processes featuring active temperature management, re-usability, and improved cleaning procedures are being implemented to avoid cross-contamination.
Perfect order mentality
Reliability is critical for operating a best-in-class cold chain. Late or spoiled products are unacceptable for many customers, who can easily shop elsewhere. In the inevitable case of out-of-stock products, replacement items must be offered to the customer, along with personalized messaging and interactions, to ensure satisfaction.
Sensors, real-time data, and seamless updates ensure that a cold chain provider’s inventory is updated continuously and represents an accurate count for both in-store and e-commerce customers. Customer interactions must also be designed to be simple, fast, and easy, with seamless hand-offs between store employees and the customer.
Advanced supplier relationships
Ongoing global conflicts, labor shortages and port congestion mean best-in-class cold chains must have backup plans for unplanned events. Alternative 3PL providers offer critical functions that can be outsourced, including manual workers, drivers, trailers, and more.
In the case of critical products, cold chains can also use 3PLs to freight forward specific shipments to reach the end consumer quickly. By outsourcing various functions to 3PLs, best-in-class cold chains can ensure they have the flexibility necessary to adjust to ongoing disruptions.
Having a 360-degree view of inventory is essential for any cold chain. Control towers, cloud-based solutions, and IoT sensors can display inventory levels throughout the supply chain, showing low-level warnings and preventative maintenance messages. Additionally, fourth-party logistics (4PLs) providers offer cold chains a broader view over entire warehouses, shippers, freight forwarders, agents, and more networks.
Building a best-in-class cold chain today requires a mix of time-tested supply chain principles and the implementation of advanced technologies to deliver on these concepts. Leaders in today’s e-commerce industry continue to show and redefine what is required to be a best-in-class cold chain while focusing on their customers and improving their in-store and online experiences.
If you would like to learn more about the future of cold chains, we invite you to download the 2023 27th Annual Third-Party Logistics Study.
This post is part of a multi-part series on the Cold Chain. View the introductory post.