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Cold Chain Networking
Unlike hard goods, the food industry must work within seasonal constraints. For perishable foods, there are supply adjustments necessary to get products closer to consumption. Perishability creates its own demand cycles, on top of the ongoing demands that people will eat. Food is going to move one way or another
—Petersen”
Chapter Objectives
To understand:
- What is cold chain?
- Drivers to cold chain infrastructure
- Cold supply chain models
- Cold supply chain problems and issues
Cold chain Networking
Cold chain is a logistic system for movement of perishable products (vegetables, fruits and other food items) under controlled temperature from the point of origin to the point of consumption. The cold chain helps to reduce product spoilage and retains its quality. The cold supply chain is designed and built in an integrated manner. It used for storage of primary produce in agriculture, horticulture, fisheries and aquaculture sectors. The intermediaries like the manufacturers who process the food for ready-to-eat or cook format together with the packaging companies make use of cold chain. The retailers, wholesalers and caterers are in the last stage of the cold supply chain. The other industries that need a well synchronized cold supply chain are pharmaceuticals, biotechnology, health care, blood transfusion, seafood, frozen foods, meats, dairy and hospitals
Snowman Frozen Foods1: Providing Cold Chain Solution
Snowman Frozen Foods Ltd. is a Bangalore (India) based company founded in 1997 having a joint venture between Gateway Distriparks Ltd. of Singapore, Mitsubishi Corporation (global trading company) of Japan, and Nichirei Logistics Group Inc (temperature controlled logistics service provider) of Japan.
Snowman with its capabilities is a single window temperature controlled logistics solution provider offering the entire range of integrated logistics services. Snowman cold storage maintains the air temperature for storage at –20 ° C in order to retain the temperature of product stored at –18 ° C which is international standards for frozen food. The freezer storage has been designed for operation at –25 ° C with flexibility of incoming materials up to –15 ° C. The material storage arrangement is on standard two deep racking systems, which can store materials on Euro pallets ofsize 1,000x 1,200 x 1,500 mm with vertically high arrangements. The pallet movement is with the help of battery operate electric forklift reach truck suitable for lifting the material from fourth level and second depth of the rack. The suitable dock levellers are used to loading and unloading of the materials from or into the refrigerated truck.
Transportation through the Snowman reefer vehicle ensures temperature reliability and prompt delivery. The company also possesses a well connected communication network which provides immediate information to the client on the movement of goods. Snowman current fleet size is 100 in number ranging from 6 ft to 24 ft trucks equipped with thermo-packing and carrier refrigeration units. Frozen food transportation covers around 100 cities in India which offers fixed schedule operation.
The Snowman stores are built to meet international standards of temperature and hygiene for frozen foods, vegetarian and non-vegetarian products. The cold storage facilities provide for computer controlled inventory management system and have palletized storage system, racked storage system and concept of sharing the cold store. The company has a comprehensive MIS for monitoring payment collection from the market and sales tax administration. Snowman’s distribution network covers more than 75 cities throughout the country to reach all major markets quickly.
Snowman has over five fruits and vegetable processing centres at major fruit farm produce areas to cover the maximum geography. Major activities involve pre-cooling, washing, sorting, grading, waxing, packing, weighing, ripening and quality testing. Snowman supports and maintains the cold chain from post harvest till it reaches to the customer. Snowman’s IT-enabled information service has always resulted in innovative services and solutions in pre-and post-harvest fruits and vegetable transportation and processing.
INTRODUCTION
As per Meckanzy reports, about 30 per cent of the fruits and vegetables grown in India get wasted annually due to non-availability of cold chain. There are no adequate infrastructure of cold storage facilities in close proximity to farms and refrigerated transportation facility. In addition to fruits and vegetables, cold chain infrastructure can be deployed for storing chocolates, ice cream, dairy products, pharmaceuticals, meat, fish and poultry products. The cold chain unit is very essential and important as to reduce the post harvest losses of commodities during transit from field to market. The cold chain is defined as:
A cold chain is basically a logistics system, which helps in maintaining and providing a series of facilities for ensuring ideal storage conditions for the perishables from the point of origin to the point of sale. A well developed and efficiently organized cold chain reduces wastage, spoilage and helps keeps the perishables intact thereby helping to maintain the quality of the harvested food products ultimately making the whole system cost effective to the farmers and that which ensures top-notch quality to the end user.2
The cold chains play a significant role in retail food market and pharmaceutical markets as well. In recent years, there is a significant growth in fast foods, ready-to-eat and frozen food markets. In storage of these foods there are several food temperature levels required to suit different types of products. The success of implementing cold chain management involves continual monitoring of product temperature throughout distribution of the products. A well designed and maintained cold chain helps to:
- Reduce costs
- Maintain product quality and freshness
- Reduce wastages
- Reduce returns of expired stocks
- Increase customer satisfaction
The cold chain logistics infrastructure generally consists of pre-cooling facilities, cold storages, refrigerated transportation vans, thermal packaging, warehousing, and efficient information systems to trace and track the product.
The customers growing demand for affordable, high quality agricultural produce and perishable products throughout the year is putting tremendous pressure on the entire supply chain. As the perishable products like fruits, vegetables, meat, poultry, seafood and bakery products are highly susceptible to quality loss based on time, temperature and humidity, the infrastructure of cold chain is a must. There are many challenges in implementing cold supply chain infrastructure such as to source products from vendors, having it delivered to the shelves in optimum conditions, sell it at a price that is reasonable to the customer, all the while maintaining consistent product quality without loss of flavour and taste.
Cold chain management, in other words, is a specialized element of supply chain for perishable and temperature-sensitive products. In every stage of the supply chain there is loss of product quality. The great damage to perishable products results from a breakdown in the cold chain and/or poor handling. However, by monitoring and analysing the cold supply chain partners, the product loss can be minimized and the bottom line maximized.
With the well designed cold chain, the damage to the quality of the perishable products can be greatly reduced. The cold chain infrastructure in general covers the following:
- Pre-cooling facilities
- Cold warehouses
- Temperature controlled transport
- Insulated packaging
- Information management systems
- Traceability
There are lots of logistics challenges in food (cold) chains, which is a very cost-conscious industry. In addition, there are several governmental regulations forcing manufacturers and retailers to maintain hygiene and product quality.
DRIVERS TO COLD CHAIN
In recent years, due to growth in Indian economy and the consumer needs, preferences have changed drastically. The food habits and product preferences have forced industries to change the ways they are reaching out their products, which need controlled environment and have short life cycle with expiry dates. This changed market scenario is driving the cold chain industry to grow. The few other drivers adding to the industry growth are as follows.
Growth in Organized Retail
The retail chains markets lot of perishable products. These products need temperature controlled logistics networks and system. Due to multi-location procurement and distribution the retails sector needs nationwide cold chain to store the products during different stages in goods movement in supply chain. As the organized retailing is set for high growth in India, the existing cold storage capacity is grossly inadequate. The booming retail sector has set off growth in the cold chain segment. It is a highly specialized service and caters to time-sensitive and perishable items.
Shift Towards Horticultural Crops
India in the last decade has become the second largest producer of fruits and vegetables in the world, next only to China. India currently produces about 190 million tonnes of fruits and vegetables. Diversification and value addition are the key words in the Indian agriculture today. These changes along with the emerging food retail sector, especially with the opening up of foreign direct investment, have brought in a lot of opportunities in the domestic sector. Market liberalization and increasing shift in consumer demand have also offered attractive opportunities for agricultural exporters from developing countries. However, one of the biggest constraints witnessed in the horticulture sector has been the extent of losses, which is huge and the wastages occur due to poor cold chain infrastructures. The World Bank and other studies have also pointed to the development and strengthening of the integrated cold chain as the most essential intervention in infrastructure, if India has to reap the advantages gained through low cost production of perishable.
Growth in Processed Food Sector
India has tremendous potential to become the primary source of processed food products in the world. It has about 53 per cent of arable land (land available for cultivation of crops as compared to a measly average of about 11 per cent for the rest of the world). India is the second highest fruits and vegetables producer in the world, sixth largest producer of fish, but still doesn't make up to the top 10 food exporting countries. However, the vision 2015 document outlines the Indian government's goal of Rs 13,500,000 million size of the processed food industry to go by 2014–15. This translates into an overall growth target of 10 per cent p.a. in this sector. The government has announced lot of incentives in food producing industry sector. There are many private players who have jumped into the sector. The need for cold chains is triggered.
Demand from Pharmaceuticals Sector
Storage condition of pharmaceuticals goods is becoming a public issue. Majority of the medicines needs to be stored under cool conditions (below 35 ° C) and the day time temperatures in India cross above 40 ° C making the efficacy of the medicines questionable. Hence, chemists will have to have their outlets under temperature controlled to maintain the efficacy and shelf-life of the medicines. For stockists, the cold storage facilities are a must. As the pharmaceutical sector is growing, the requirement of cold chain is growing at a rapid pace. In addition, FDA (food and drug authority) is tightening the implementation of cold storages for pharmaceutical products distribution down chemists’ level.
Government Initiatives
To reduce the losses of perishable products, the government of India (GOI) has given priority to the cold chains sector. To increase the cold chain infrastructure the government has lifted restrictions on imports of cold storage machinery and the FDI (foreign direct investment) is increased to 51 per cent. In addition, NHB (national horticulture board) is grating 25 per cent subsidy for cold storage projects. Under the tenth plan period, government of India has recommended to create additional cold chain facilities. The government has also encouraged public-private investment participation is cold chain creation. The government has taken lots of steps to support the farm sector by way of developing system covering drip irrigation, food warehousing, cold chain, etc. for better pre-harvest and post-harvest crop management.
Creation of Agri Export Zones (AEZs)
The government has planned and created special agri-export zones to increase international trade in agri-commodities. This is an approach to encourage trade in specific commodities located in contiguous areas (Tamil Nadu would focus on grapes, mangoes and chikkoos; Kerala on vegetables; Punjab and Haryana on kinos, wheat and rice; Karnataka on vegetables and flowers; Maharashtra on mangoes, grapes and flowers; Gujarat on bananas, mangoes, castor and garlic; and Uttaranchal on litchi and medicinal plants).
Private Sector Initiatives
The private sector has also taken lot of initiatives in the food processing and service sectors. In past few years, there is lot of initiatives and investments in cold chains by private sectors in India. To name a few, they are Mcdonalds-India, Amul-GSMDC, E-choupal by ITC, which are the success stories of procurement of produce from small farmers. Snowman has established a nationwide cold chain to serve the manufacturers of perishable goods and commodities.
COLD SUPPLY CHAIN
The cold chain process activities starts at the farm and ends with the consumer.The consumer could be ultimately served through home delivery or through a retailer or a neighbourhood pop and mom retail shop. An international consumer could be served through retail chains or food malls. The product is required for both local and export market as well. It is to be produced locally and delivered at the point of consumption which may also be other country. Hence, the cold supply chain planning process needs to be in place. The demand to be forecasted for each of the channels to serve the customer with expected lead-time. The pricing and the quality of service are the two prime factors for repeat purchase.
Cold Supply Chain for Ice Cream
Supply chain in the ice cream industry has its unique dynamics, owing to its distinct product nature. This calls for efficient cold-chain maintenance as well as sound inventory management. Right from the time ice cream comes out of the factory till it reaches consumer, the entire period requires delicate handling, with focus on temperature and quality. Unlike frozen meat, ice creams cannot sustain their temperature in case of failure of a refrigeration unit. Hence, the chances of wastage are also very high. Here the critical aspect is the time factor. The raw materials and finished products are perishable too and hence quick delivery is of utmost importance. To ensure this, many ice cream manufacturers purchase cream only from dairies lying within a vicinity of 40–50 km from its plant. Hence, ice cream SC involves a closely integrated network that connects procurement, production, transportation, distribution and retail.
Amul, the market leader (37 per cent market share) in Indian ice cream industry, has nine manufacturing plants all across the country. Milk is procured from village-level cooperative societies and stored in bulk chillers. From here, it is transported to the production units. Once the ice cream is ready, it is sent in refrigerated vehicles, with temperature constantly maintained at–20 ° C, to 40 depots (cold rooms) at different locations in India. Further, the ice cream is dispatched to Amul’s 1,500 distributors across the country, who maintains cold storage facilities at their warehouses. Finally, the product is dispatched to around 70,000 retailers, including exclusive outlets and retailers.
For maintenance of desired temperature level at retail points, Amul has come up with an innovative idea of Hamara Apna freezer scheme, and persuaded retailers to buy the refrigeration units from selected vendors at a negotiated price. This has ensured that retailers selling Amul products are using standardized equipments for maintaining the desired temperature levels. Amul also goes for periodic inspection of cold chain equipments at distribution and franchisee points.
Amul uses the packaging material with properties that protect ice creams against moisture and air. For primary unit packs, where the material is in direct contact with the product, food grade materials such as BOPP (bi-axially oriented polypropylene) films, poly-laminated material, papers are used. At the plant, ice cream is dispatched from freezers into cup-filling machines, which fill the ice cream in half litre and one litre cups. These cups are semi-automatically put in 4-litre mini or inner cartons made of duplex board and stored in cold rooms. From here, 12 such mini cartons are set in a master or outer carton made of craft paper and these are then manually loaded in vehicles in air-locked conditions, with temperature at 1–4 ° C. Time is another aspect that governs most of the logistics operations in an ice cream cold chain and impacts the product quality. In general, at Amul factory they ensure that loading 1,500 bulk packages in a vehicle should not take more than 45 minutes.
Ice creams cannot be stocked for more than 6 months and hence proper inventory management is crucial. The same holds true for perishable raw materials. The average gap between milk procurement and putting it into ice cream production process should not be more than 6–8 hours. However, for meeting sudden rise in demand, they store ingredients that have conserved properties, such as cream and milk powder. These can be used during peak demand. Amul keeps stocks of (2 months consumption) other ingredients, such as dry fruits, syrups, colours and chocolates. They do daily analysis of market demand to match production with demand to avoid stocks piling up. Amul depots can store from 10, 000 to 1 lakh litres of ice cream. During peak seasons, it goes upto 50, 000 litres.
The risk of temperature abuse calls for close monitoring at all points: transportation, distributors’ and retailers’ ends. Amul for recording temperatures during dispatch and receipt of ice creams at transfer points, use data loggers fitted in vehicles and depots and set to record temperature at regular intervals. Later, a graph is prepared to monitor temperature variations, if any, and corrective action is taken. Thus, staying cool in ice cream SC is a challenge. It calls for quick decisions, high flexibility and a focused approach throughout.
Source: Mohan Das, Staying Cool in Scorching Heat, Fastrack, Issue 17, Apr—Jun 2008
In formulating the policies of farming, production, processing, distribution and retailing and also in financing these activities the governments play leading role. At present this plays great importance in view of the globalization of the food industry.
There are several regulatory measures handled by many government departments. These need to streamlined for the cold supply chain to be productive. The industries that need a well synchronized cold supply chain are pharmaceuticals, biotechnology, health care, blood transport, seafood, frozen foods, meats, dairy and hospitals. These cold chains require maintaining temperature controls in the most stringent terms due to the nature of the products (for human consumption) being handled.
The suppliers of food items face challenges in creating and preserving the unique characteristics of their products and conveying information about those characteristics to consumers. This calls for a well designed cold chain information system. The information system should supplement sharing and the coordination of activities, product monitoring and quality assurance, and efficient allocation of costs and returns.
In cold supply chain, product-temperature configuration forms the biggest challenge. Quality and safety of chilled foods during storage are largely determined by time-temperature tolerance. The storage life is directly dependent on storage temperature. The other threat is potential growth of microorganisms such as Listeria, Yersenia and Aeromonas at chill temperatures.
With the multiple trans-shipment and handling, the distribution process of perishables has become very complex. Fresh vegetables and fruits transportation from farm to retail stores requires temperature controlled vehicles. In this complex chain, the product is often mishandled. Regardless of what point a perishable product is in transit, it is always susceptible to temperature abuse. It may so happen that in the long journey the perishables remain too long in an open air at a distribution centre or above an acceptable control temperature setting at the wrong section of a multi-refrigerated trailer. To avoid this, the following measures suggested to control of product quality:
- Deploying temperature controlled vehicles
- Maintaining temperature during transport.
- Defined pick-up and delivery times.
- Better handling procedures.
- Mechanized equipments to reduce product damages in handling.
A process-oriented approach towards cold chain needs to develop an end-to-end cold chain visibility solution. This is based on IT-enabled network that can give managers a reliable and precise overview of what a perishable product has endured on its journey from the farm all the way to the shelf.
To ensure that Standard Operating Procedures are followed to take care of the health of the general public. Within the cold chain, it has been common practice to embed temperature sensing devices inside boxes, on pallets, and within trucks moving toward distributors, restaurants, grocers, and other recipients as well to make the decision of whether or not to accept or reject the shipment.
SUMMARY
Cold chain refers to the storage and movement of temperature-sensitive products from the point of origin to end customers in the best possible quality. Such products require temperature-control and can only accept a certain range of temperature fluctuations during transportation and storage. Maintaining the temperature within the desired range for every shipment is the challenge of cold chain logistics. Close monitoring at periodic stages is essential and such audits help to identify areas of weakness where logistics professionals can implement and devise the right tools to support and maintain the cold chain.
Humidity, temperature and environment monitoring in the present-day technological devices can drive full monitoring platforms, which include the management of requirements such as humidity, temperature and environment measurement from wall-to-wall and floor-to-ceiling. In addition, remote monitoring is possible via global positioning systems (GPS), along with online or Web-based systems for rapid alert functions. Such technologies, of course, do not come cheap.
Global regulatory requirements for the handling, storage and distribution of temperature-controlled goods and commodities have emphasized the importance of assuring product quality and integrity. These requirements are not compromised in the distribution channel. The guidelines on cold chain outline a comprehensive view of cold chain management across the supply chain, including manufacturers, warehouses, distributors, transporters and retailers. The cold chain is a highly capital-intensive industry. Even for the cold chain of large capacity a payback period is very long.
With the change in the consumption patterns of Indians, the demand for frozen food has gone up drastically. Even next door grocery stores are stocked with imported fruits. These factors are contributing to the huge demand for cold chain infrastructure in the country.
REVIEW QUESTIONS
- What is cold chain and its scope in various sectors?
- What are the drivers to cold chain infrastructure in India?
- Discuss the various challenges in building cold chain infrastructure in India.
INTERNET EXERCISE
- Sensitech offers complete cold chain solutions for monitoring temperature-sensitive products enabling customers to track and monitor assets from beginning to end of the cold chain. For studying white papers and articles on cold chain, visit http://www.sensitech.com/about/index.html
VIDEO LINKS
- Transport of perishable goods http://www.youtube.com/watch?v=2IAXwqAFiM4&feature=related
- One of South Africa's leading cold chain specialists, Dr Malcolm Dodd, of the fresh produce exporters forum, talks to Fruitnet TV about managing the costs of supplying fresh produce from around the world http://www.youtube.com/watch?v=818CjQyuMOw
PROJECT ASSIGNMENT
- National Dairy (Safal) or Reliance Fresh are the leading retail chains for fruits and vegetables in the country. Study their cold chain infrastructure, standards and procedures they follow to deliver fresh farm products to the end customers at affordable price and simultaneously keeping the cost of delivery low.