Fruit and vegetables, fish, bread, packaged salads, fresh meals; so many consumer products rely on supply chains that can bring perishable goods to retailers’ shelves quickly, and in the best possible condition.

This article provides an inside look at today’s fresh supply chains around the world, and at how smart producers and retailers meet cool-chain challenges, especially as those chains increasingly span global distances and competitive markets expand.

 

Global Cold Supply Chain Growth

 

For any fresh-food retail or supply business professional, the following seven insights into fresh supply chains around the world offer some ideas and innovations to consider, the adoption of which can open doors to meaningful cool-chain performance improvement.

 

Things You Need For Fresh Supply Chain Success

 

1. Know Your Supply Chain Challenges

Time and distance are probably the two biggest challenges facing fresh supply chain operators. This is nothing new of course. It’s always been the case. However, few commercial sectors have been untouched by globalisation, and the market for fresh produce is no exception.

Longer, more complex supply chains have only increased the need to focus on speed and efficiency, to ensure that fresh really does mean fresh.

Velocity is imperative: Supply chain distances and times have increased a great deal (more in some corners of the world than others), and so have the challenges involved in getting fresh produce from source to destination before spoilage renders it unsalable.

 

Fresh Produce Shelf-Life

 

From the moment the fish is landed, the beast slaughtered, the fruit or vegetable is harvested, or the bread leaves the oven, time and distance become the enemies of freshness. In fact, fresh produce typically spends up to half of its shelf life in transit between supplier and retailer, so the clock is ticking from the moment it begins its journey to retailers’ shelves.

Equipment and technology intensive: The fresh supply chain operator must utilise specialised—and expensive—equipment and technology to prolong the freshness of produce and present it to consumers in the best possible condition. There’s simply no room for penny-pinching in this supply chain sector.

Poor control of quality and freshness leads not only to shrinkage and spoilage, but can also have further-reaching impacts. No retailer or producer for example, wants to be implicated in a consumer health scare resulting from poor quality-management in their supply chain.

In comparison to many other product supply chains then, the fresh supply chain must be faster, must handle goods with more care, use more specialised and expensive hardware, and focus more intently on quality through every leg in the journey from producer to retail store.

Other fresh supply chain challenges: Time and distance might be the main challenges faced by fresh supply chain operators, but there are plenty of others, for example:

  • The supply of fresh produce is sensitive to weather and other naturally occurring disruptions
  • Sanitary practices must be maintained from source to shelf
  • Many fresh products require specialised handling and packaging
  • Seasonality issues mean fresh produce must often be sourced from a variety of geographies
  • Labeling and traceability obligations can be challenging for operators, especially in global fresh supply chains

So how to tackle these challenges? The following sections explore some key priorities for logistics operators wishing to meet the imperatives of speed, product quality, waste reduction, and efficiency in fresh supply chains.

 

The fresh supply chain must be faster and must handle goods with more care. Click To Tweet

 

2. Achieving Faster Fresh Supply Chains

Minimising the time produce spends in the fresh supply chain is largely a matter of control. Leading companies in the fresh produce sector have recognised this and are taking more control of the end-to-end value chain—some to a much greater degree than others.

Vertical Integration: The trend among fresh supply chain leaders is one of vertical integration. In order to attain control over the entire supply chain, some larger supermarket chains are becoming directly involved in production activity—farming for example.

A number of large retail companies are acquiring their own farms and production facilities, while others focus on building close collaborative relationships with producers and growers. Either way, leading retailers believe vertical integration is a key approach to reducing lead times and moving products more quickly “from paddock to plate.”

 

Vertically Integrated Supply Chain

 

Increased Collaboration Among Fresh Supply Chain Partners: Of course vertical integration may not be feasible for many retailers, but the next best thing is to work more collaboratively with supply chain partners. Fresh supply chain leaders are turning increasingly to initiatives that involve sharing of distribution networks, infrastructure, and even vehicles.

Again, these initiatives are intended to close gaps between producers, vendors, customers, and consumers, improving the speed of the fresh supply chain and ensuring produce arrives in stores as soon as possible after harvest/production.

Network Optimisation: Along with collaboration, optimisation is playing an important part in speeding up fresh supply chains. Smart companies, whether retailers, wholesalers, or producers, are reviewing their distribution networks for fresh produce, and realigning where necessary to increase velocity and improve responsiveness to variations in supply or demand.

Visibility and Communication: Top performing companies are quick to leverage technology advances to make their supply chains faster. Poor supply chain visibility commonly leads to fresh produce shrinkage, and in many cases, results in entire shipments failing to arrive on store shelves.

In order to reduce the cost of losses, leading organisations are leveraging the latest in real-time tracking technology, using shared platforms to ensure producers, carriers, warehouse operators and even store managers know exactly where shipments are in the supply chain and why.

This enables more proactive mitigation of problems and implementation of alternative solutions, thus ensuring that produce arrives in stores with plenty of remaining shelf-life.

 

3. Keep Your Cool in the Fresh Supply Chain

It’s only possible to improve fresh supply chain velocity up to a certain point: speed alone can’t provide assurance of freshness and quality. Temperature control is a vital component in fresh supply chains, and therefore, maintaining an unbroken “cold chain” from farm/producer to store is critical.

 

Maintaining the Cold Chain

 

In fact, many companies still fail to pay sufficient attention to this vital aspect of fresh supply chain operation.

 

Even for those that do their utmost though, challenges exist which are often beyond the shippers’ or the receivers’ control, especially in global cold chains where produce must pass through seaports or airports. Here produce might sit in environments where temperature is not controlled, while waiting for customs clearance, for example.

Much of the onus for improving cold chain integrity lies with companies and organisations involved in transport infrastructure, such as port authorities and air and sea carriers. However, leading fresh supply chain operators know that they can also work within their businesses to strengthen the cold chain.

There are three key cold chain areas that forward-thinking companies focus on for improvement. These are:

  • Technology to aid temperature control in processing and transport
  • Leveraging human capital during fresh produce transportation and handovers
  • Utilisation of third-party logistics specialists

Temperature control technology: Technology investments favoured by industry leaders include:

  • RFID tags – which record and forward real-time temperature data to produce suppliers
  • Real-time GPS tracking – to provide visibility of shipment progress
  • Active monitoring solutions – which adjust temperature in the event of fluctuations
  • Passive monitoring – which can provide historical shipment data

The Human Element: Companies committed to fresh supply chain excellence know just how much difference their people can make. These organisations are passionate about training warehouse operatives and drivers to use available technology and follow stringent quality procedures during production, loading/unloading, and transportation.

Third-party Cold Chain Logistics: Cold chain logistics operations are expensive to maintain because of the capital investment needed for temperature-controlled storage and transportation. At the same time, the demand for fresh produce is increasing on a worldwide basis. The trend has spawned growth in 3PL specialists keen to meet the fresh supply chain needs of suppliers and retailers.

Suppliers and retailers, in the meantime, are increasingly prepared to outsource cold chain logistics, since by doing so; they can conserve capital for growth in core operations and, access the economies of scale offered by cold chain 3PLs.

Some advantages of outsourcing temperature-controlled logistics include:

  • Access to advanced temperature tracking technology and data
  • Cold chain 3PLs can help to maintain temperature control throughout the supply chain
  • Shared 3PL warehouses and transport assets reduce the cost of fresh supply chain operations
  • Third-party logistics providers can dynamically plan transport routes to minimize hand-offs

The last point on the list is a particularly important one, especially when fresh goods must pass through regions where temperatures may be extreme. In fact, operators should look for any way possible to reduce the amount of times fresh produce is handled, handed-off, and exposed to the risk of temperature fluctuations.

 

Suppliers and retailers are increasingly prepared to outsource cold chain logistics. Click To Tweet

 

4. The Trouble With Handling in the Fresh Supply Chain

Fresh produce spoils easily. Worst of all, in many cases, it doesn’t show signs of spoiling until it’s too late, resulting in shipments being rejected at the very end of the fresh supply chain. This typically leaves the supplier, producer, or grower bearing the cost of the loss.

 

Food Borne Illnesses Statistic

 

To minimise losses, it’s necessary to minimise handling, which has the added advantage of reducing damage as well as spoilage risks. Leading companies approach this challenge in a number of ways.

Logistics Partnerships: As already mentioned, the use of cold chain 3PLs plays an important role in handling reduction, particularly in terms of identification and use of appropriate transport routes, modes and methods to eliminate touch points in the supply chain.

Where global transportation is necessary, 3PLs are also valued for their knowledge and experience in working with border and port authorities, which helps shippers to anticipate and prevent delays, and ensure produce is handled correctly during mode switches or handoffs.

Fresh and Lean: The best fresh produce suppliers and buyers also collaborate to reduce handling in the supply chain. Lean process thinking is often used to identify opportunities to reduce handling and handoffs throughout the fresh supply chain, as well as to eliminate waste.

Some companies focus on direct-store deliveries, and/or are otherwise shifting fresh produce lines away from centralised distribution methods, sometimes maintaining small branch warehouses close to their retail customer base.

In these scenarios, use is increasingly being made of multi-temperature trucks and trailers, with retailers receiving frequent but small mixed-product orders, often delivered through the front doors of stores.

Protective Measures: While it may be possible to reduce handling, it’s only possible up to a point, so smart operators take steps to protect produce in the fresh supply chain from damage. These steps continually lead to packaging innovations which not only protect against damage, but also help to extend the life of perishable products, especially fruit and vegetables.

In terms of protection, packaging is best designed in a way that spreads and absorbs energy, for example, in the event that a carton is dropped. That said, it seems the jury is out on the shock-absorbing benefits of corrugated cardboard, versus the sustainability and temperature control advantages of returnable plastic crates (more on RPCs later in this article).

However, the greatest and most technical packaging innovations have been those designed to control the life-cycle of fruit during shipping. In New Zealand for example, suppliers use packs containing ethylene capsules, which can be activated to release ethylene gas and effectively ripen fruit on demand.

 

5. Waste Not, Want Not

Waste is a big issue in the fresh supply chain, not merely in the “Tim Wood” sense of operational waste, but also in the physical waste caused by spoilage or damage in transit. This is another reason why lean practices are considered important in the fresh produce industry.

Large retail chains in Europe and the United States have been particularly proactive in cutting fresh supply chain waste, especially with regard to product quality and spoilage issues. Their rationale is twofold.

Firstly, waste food of any kind has become an important sustainability issue, as consumers and society in the developed world increasingly feel a sense of responsibility for the plight of starving millions in the third world. Secondly, food waste costs an inordinate amount in lost revenue when compared with other consumer products.

 

Food Spoilage Statistic

 

Perhaps ironically, given the finicky nature of food shoppers and concerns over health risks, retailers such as Tesco are promoting a change in thinking, not just within their own organisations, but across the fresh produce sector. Their argument is that a great deal of fresh produce goes to waste purely on aesthetic grounds, when in actual fact; it is still in perfectly good edible condition.

To some extent, the problem is exacerbated by industry imposed shelf-life and sell-by dates, which are displayed on packages for consumers to see and hence, serve as a reason to reject, rather than to buy. In order to reduce visually induced wastage, Tesco and other retailers are finding alternative uses for produce which wouldn’t otherwise make the grade for sale. This includes initiatives such as turning leftover bananas into milkshakes and selling small or second-class products as “value packs.”

Other measures being taken by retailers to reduce waste include:

  • Working directly with suppliers to take steps out of the fresh supply chain. Tesco for example, buys lettuce from Spain for its store in the United Kingdom. The company worked with the supplier to cut out the use of pack-houses and have the lettuce shipped directly from the growers to its UK distribution centres.
  • Guaranteeing their orders from suppliers, which reduces waste incurred when suppliers crops are not purchased in full.
  • Working more closely with growers to find waste-reduction solutions, such as running promotions during crop flushes (over-production) to sell excess produce which would otherwise be wasted by the growers.

 

Waste is such a big issue in the fresh supply chain. Click To Tweet

 

6. Returnable Plastic Crates in the Fresh Supply Chain

Previous sections of this article have explored the importance of temperature control, minimising produce handling, protecting fresh goods from damage, and eliminating waste in the fresh supply chain. For a growing number of growers, producers, and retailers, the adoption of returnable plastic crates is proving advantageous in efforts to meet all these challenges.

 

Use of Returnable Plastic Crates

 

RPCs are becoming a more common sight in most fresh supply chain sectors, but particularly for shipping fresh fruit and vegetables, meat, fish, and bread. Part of their beauty is that they can be utilised throughout the supply chain, from the field to the merchandising displays of retailers, as well as the fact that they can be used repeatedly, provided an effective reverse-logistics system can be implemented.

Other notable advantages of RPCs include:

  • Space Saving: When empty, RPCs can be stacked, collapsed, or even nested, depending on design.
  • Ergonomic Designs: RPCs are typically constructed for safety and ease of handling, including features such as ergonomic handles for safe materials handling throughout the supply chain.
  • Ventilation and Drainage: The open design of RPCs enable plenty of ventilation and drainage of moisture, which is important for temperature control, from post-harvest cooling to temperature maintenance during shipping.
  • Durable Protection: Plastic crates are strong and stack well, ensuring their contents are well protected. Unlike cardboard, the integrity of plastic containers is not compromised by moisture.
  • One-touch Merchandising: With correctly designed retail shelving, RPCs can be placed directly onto shelf displays, eliminating the time and handling involved in removing goods from boxes and building displays.

The environmental benefits of returnable plastic crates are also impressive. According to studies, RPCs reduce deforestation, carbon emissions, water consumption and energy demand. For example, research conducted in 2013 found that in comparison to the use of cardboard packaging, shipping fresh produce in RPCs:

  • Generates 82% less waste
  • Consumes 92% less water
  • Causes 76% less ozone depletion
  • Demands 49% less energy

Given the operational benefits already mentioned, these numbers, if they are to be believed, add up to present a strong argument for the use of RPCs in fresh supply chains, especially as substitutes for the poor-quality packaging solutions used in regions such as Southeast Asia, where many of the western world’s fresh fruit and vegetable shipments originate.

 

7. The Benefits of Improving Fresh Supply Chains

For any organisation involved in the supply of fresh consumer produce, with the exception of carriers, it can be challenging to justify efforts to focus on the supply chain itself. Logistics is rarely considered a core activity for growers, producers, or retail enterprises, hence the growing popularity of cold chain outsourcing.

 

Food Distribution Quote

 

Whether logistics is insourced or outsourced though, there are considerable benefits attached to fresh supply chain improvement. Those companies that get it right are enjoying the fruits of their efforts (pun intended), which include:

  • Better sales results, as less produce is lost through spoilage or damage, and higher quality attracts larger sales orders.
  • Less labour investment in-store, especially when shelf-ready packaging is utilised
  • Cost savings in logistics operations, since waste in the supply chain is reduced
  • Improved brand loyalty as a result of consistent, high-quality, farm-fresh products
  • Reduced risk of consumer health issues arising
  • Increased profits; consumers will pay more for fresher, higher-quality products

While it’s no secret that bringing fresh product to market is more costly and complex than in other consumer sectors, industry leaders are embracing fresh supply chain transformation in order to access the benefits listed above. Why? Because they know supply chain excellence is vital for success in the hugely competitive and growing global market for fresh consumer goods.

Bringing fresh product to market is more costly and complex than in other consumer sectors. Click To Tweet

 

In Summary: Improving the Fresh Supply Chain

The keys to achieving fresh supply chain excellence include end-to-end collaboration, technology to improve temperature control and product traceability, packaging to protect produce and reduce handling, supply chain velocity and responsiveness, commitment to staff training, and where it makes sense, the development of strong partnerships with specialist cold chain logistics providers.

Those are the success factors that work for today’s top food retailers and suppliers—and there’s no reason they can’t make a meaningful and positive difference to any company competing in the fresh product sector today.

 

Contact Rob O'Byrne
Best Regards,
Rob O’Byrne
Email: [email protected]
Phone: +61 417 417 307