Consumers expect fresh, high quality products at the time of purchase. Retailers and manufacturers aim to not only present the product attractively to the shopper, but also provide good shelf-life (read: balance life till expiry). Surely, providing fresher products consistently will convert to higher sales and consumer delight.
Managing an agile supply chain, with special focus on product quality and
freshness thereby funds for itself through increased sales and better service.
Perishable items have limited shelf life and require speedy, temperature-controlled logistics. This poses an arduous challenge of ensuring consistently the speed and dependability of specialised transportation,
storage and handling systems.
In case of many perishable items, significant variations in throughput
(volumes handled) due to seasonality of production and/ or demand add further complexity to supply chain.
Temperature-controlled distribution networks do not have a very different construct from ambient channels. Specialisation, however, is designed in storage, transport and handling systems. This makes the cost-to-serve (i.e. total cost up to placement on retail shelf) greater than that for ambient, non-perishable products.
Here I will deliberate upon the specialisation needs of warehousing for time-sensitive, perishable products. Warehouse Design, Swift Operations, Vigilant Inventory Management are key enablers to ensuring desired service levels at lowest cost.
Design an Agile Warehouse
A good design should not only evaluate current needs, but also the business trends and growth in business five years into the future.
Space and operations related factors are fundamental inputs to the design.
The most important space-related factors are:
• Days On-Hand Inventory Targets
• Seasonality of Sales
• Number of SKUs
• Average unit cube
• Projected growth in business volumes
The most important operating-process-related factors are:
• Order Line Cube Profile
• Receipt Line Cube Profile
• Labour Management Goals
• Daily operating clock / cycle
• Role of facility: Store & dispatch, Cross-dock or flow-through
• Types and volume of products to be cooled and stored Beyond the obvious goals of efficiency and justified capital investment, Flexibility (to suit the change in volume and product-mix) should be the major design goal influencing the shape, size and make-up of the warehouse.
Warehouse building needs to protect the goods from the following:
• Heat damage: caused by external heat in storage or while in-transit
• Chilling or freezing damage: caused by low temperatures
• Moisture and water damage: due to high humidity, condensation on the products
Key factors to be considered when designing and constructing a temperature-controlled facility:
• Location: low temperatures geographic location will help reduce energy
• Insulation on roof and walls to protect from the heat outside
• Reflective (ideally white) paint to be applied to surfaces to reflect and minimize absorbing heat.
• Refrigeration capacity: Floor area and storage volume of the facility are just two factors. This will require a detailed study of more factors.
• For un-interrupted electricity supply, generators are a must for back-up
• Plug-in points for refrigerated trucks waiting at the dock
• Temperature Data-loggers: for monitoring and controlling desired temperature level breaches. It is important to help substantiate damage claims, and provide forewarning of product integrity.
Swift Warehouse Operations
• Accurate Demand Forecasts: Correct data is required (in time) to synchronise warehouse operations to demand. Staffing warehouse to meet inbound and outbound volumes is essential for increasing warehouse speed.
• Slot inventory properly: Understand each SKU’s velocity, and slot inventory accordingly.
• Coordinate with your transporters: Products need to be moved directly into the correct transportation mode without any break in the temperature consistency. Transport and warehouse operations must work in close
• Multi-skilling: Having the right skill staff to process time-sensitive receipts and/or shipments.
• Standard operating processes are important to ensure complete clarity and consistent operations.
• Performance measurement and continuous improvement programs
• Routine check-up and maintenance of air-conditioning and other warehouse equipments.
• Food Safety: Regularly refresh skills and knowledge requirements (staff who handle food); Quality audit of facility and routine pest-control treatments are mandatory part of the schedule.
Vigilant Inventory Management
“Right inventory at the right place” becomes furthermore relevant for perishables supply chain, as any unsold inventory remaining after the lifetime elapses must be discarded.
Owing to the higher cost of transportation and storage (in a cold chain), one is tempted to maximise utilization of assets. Quite often, this lure leads to a less-than-optimum deployment of inventory. It requires a vigilant control to strike the intricate balance between costs and benefit of holding inventory.
Wal-Mart got big by replacing inventory with information. Retailers benefit the most from information sharing where there is: a. high demand variability, b. short product shelf-life, and c. high value of the product.
Timely information flow to larger teams will enable delivering better customer service at a lower total cost (including cost of tradeloads, markdowns, product expiry and cost of disposal).
FEFO (first-expiry-first-out) principle should be practised across the chain to deliver the highest level of freshness.
Role of Packaging
No amount of cooling, however, will improve a poor-quality product. To deliver a high-quality product after storage, we must start with a high-quality product, and thereafter product integrity needs to be maintained all through the chain. Here packaging plays a vital role.
Standard Pack sizes are advisable. This reduces repeated weighing, and drives efficiency in handling, stacking and loading. There are many packaging options available:paper (Corrugated boxes), wood and plastic. Packaging material options may be reviewed in terms of their utility, cost and capacity to enhance the value of the product.
Returns happen for reasons such as damage, end of season, restock, salvage, recycling packaging materials and reconditioning.
Reverse Logistics involves planning and controlling the flow of both materials and information back through the supply chain. Some companies hire 3rd party consolidators to avoid the risk of warehouse contamination, and better use of own resources.
Alternatively, returned stock can be quarantined within the warehouse, until they are finally disposed-off or refurbished.
This article has been authored by Shammi Dua, Lead-Supply Chain CSL at Unilever
(All the views expressed in the article are of the author’s own and do not represent any organisation or association.)