The food industry has changed in recent years. More premium foods are making their way to store shelves; food freshness and quality are more important to the average customer; and food handling and food safety requirements have become stricter. At the same time, these products must arrive to store shelves in a timely manner, safely, with the same freshness and quality as when they left the supplier.
For additional coverage see: Dealing with Energy Costs
This puts a lot of added pressure on the players in the temperature-controlled supply chain, particularly the distribution centres that co-ordinate the cold chain and act as the go-between—receiving products from manufacturers and shipping them to retailers. Not only do these companies have to meet customer requirements, but they have to meet the strict requirements for safe food handling set out by the government. Careful planning, as well as investments in technology and people, are key to ensuring that products are shipped and received safely and in prime condition.
Wal-Mart Logistics: Multiple checkpoints and multiple investments
Retail giant Wal-Mart operates two perishable distribution centres (PDCs) in Canada—one located in Mississauga, Ontario, and the other in Balzac, Alberta. Most of the products that arrive at these facilities are in and out within 20 hours.
The challenge, says Ray Matkovich, operations manager with Wal-Mart’s Alberta PDC, is always trying to be as efficient as possible, but still maintain product integrity.
Wal-Mart Logistics goes to great lengths to ensure the quality of the products it ships, stores and ultimately sells at Wal-Mart stores across the country. Products must pass multiple checkpoints to ensure quality and integrity—all before a trailer is even unloaded at one of the company’s 400,000-square-foot PDCs.
The paperwork is checked, the trailer is checked, the temperature of the trailer is checked. If there are any discrepancies, the quality assurance team gets involved to verify the condition of the product. If all looks okay, the operations team can start to unload at the dock.
“We give them the paperwork, and they need to start working on it almost immediately in order to get that product off the trailer and into the correct temperature zones within the warehouse,” explains Michelle Watson, transportation manager at Wal-Mart’s Alberta PDC.
There are three temperature zones within the warehouse—a 55˚F area for dry produce; a 36˚F area for chilled product; and a -18˚C section for frozen foods.
During the unloading process, the receiving team has guidelines to follow to ensure food safety, which includes taking the temperature of the product with a digital probe. Then the quality control department comes in to inspect the product that enters the building to ensure quality and integrity, before it is received into the DC.
Careful consideration has been given to the layout of the warehouse. If Wal-Mart Logistics needs to make room for additional stores or products, industrial engineers look at reconfiguring the setup to best utilize the space. In addition, operation team leaders carefully plan their picking processes for flow and staple stock so many functions can run at the same time without congestion.
On the outbound side, shipping team leaders make sure the trailers are pre-cooled, and they’re not loaded until the trailers are at the correct temperature. They use laser guns to make sure that the temperature is at the proper set point before loading. The company also requires that drivers have their own digital temperature probes, so that both the store and the driver can check the temperature at time of delivery.
“We just need to make sure that every checkpoint is looked after, and that the process is followed through from the beginning to the end,” Watson explains.
Technology, in fact, greatly contributes to the success of the cold chain. Careful monitoring of temperature is key to ensuring not only quality, but safety as well.
The Alberta PDC has its own fleet of 68 owned or leased trailers. Each of its trailers have alarm codes—a precise, built-in data recorder that will report any issues on the display (e.g., a fault in the heating or cooling cycle) so that the driver can report them immediately. If the trailer is in the DC yard and an alarm code is noted by the device, it will send an email to the transportation team in the building so that they are able to call for service immediately.
Each Wal-Mart reefer has a built-in data recorder that documents the set temperature points, the return air temperature, any time the reefer is shut off or turned on, as well as any alarm codes that may have occurred. These “reefer downloads” are very useful if there are any concerns as to the safety or integrity of food.
“Once you get the information, you can tell where the reefer ran throughout that transit time, if there was any increase in temperature or decrease in temperature, if it didn’t run for a period of time. It tells the whole story,” explains Watson.
Some of Wal-Mart’s vendors include “temptales” on their loads, which record the temperature in the trailer. If there is ever a questionable product, Wal-Mart can download the information at the warehouse to learn where the temperature has been at any given time in transit.
Most of Wal-Mart’s trailers are dual-temperature where, for example, one zone on the trailer is freezer goods and another zone is cooler goods. Recently, however, the company started using tri-temp trailers, giving it the ability to include all three temperature zones in one shipment. These reefers feature a centre wall, which Watson says gives the company greater route flexibility.
“Movable, insulated panels and insulated bulkheads come together to create a specification unique to each trailer. We can transport as many as three different temperature loads in the same trailer without compromising the cold chain,” she says.
The ability to fit one store’s shipment in one trailer, rather than sending multiple trailers with different temperatures to multiple stores, is a win for everyone concerned.
“It’s a win for the store, only having to receive one trailer in a night for labour purposes. It’s a win for the DC [because] it’s easy planning. Everything for one store just goes on one trailer. There’s no dividing of the product between trailers. And I think there’s less chance for temperature issues when there is only one store,” says Watson. “If we can reduce the handling, and reduce the number of times that those doors are opened, it’s going to be a win for the customer in the end.”
This equipment will help the cold chain process run smoother as volume through the PDCs increase. In 2014, the Alberta facility alone saw more than 50 million cases go through its building. But that number is expected to increase this year, as the company shifts its focus to fresher foods and grocery items.
“Our focus is the Wal-Mart mom,” says Watson. “When the mom goes into the store, we want to make sure that product is there when she gets there, in the condition that she wants it to be in.”
VersaCold: Investing in people and technology
VersaCold Logistics Services is the largest provider of temperature-sensitive supply chain solutions in Canada. The company has 31 facilities across the country, ranging in size from 42,000 square feet to 403,000 square feet. Its DCs hold product in temperatures ranging from 5˚C to -20˚C, for as little as a few hours, and up to six months for frozen foods.
VersaCold’s challenge is that, though three of its facilities are each designated to one customer’s needs, the other 28 service a variety of customers—a broad grouping of companies with different needs in terms of process and temperature requirements. This is where careful planning is required right from the start.
The company has an in-house supply chain engineering group that looks at a customer’s material flow and processes to determine how they can help optimize their supply chain. Through that set of analytics, they not only look at how they can bring efficiencies and supply chain opportunities to the table, but they also work with them on understanding their needs in terms of temperature specificity and any unique requirements of their products, drafting out standard operating procedures. They look at things like the optimum location for inventory, the ideal level of inventory, and how to get product to market quicker and at a lower cost.
VersaCold has made many investments to ensure the process runs smoothly—$28 million over the last two years in energy efficiency (see sidebar), various technology projects, highway trailer equipment, building upgrades and more.
Last year the company introduced a cold chain assurance group headed by an individual with a chemistry and biology background. This group works closely with the operations teams, as well as the customers’ teams, around food safety and food quality. They are responsible for ensuring the freshness of product, and meeting food safety requirements.
To ensure integrity of the load during transport, VersaCold monitors temperature throughout the transportation process, and has invested in and implemented real-time reporting capabilities. This allows team members to be aware of issues earlier, so they can work closely with customers in responding to delays, port issues or other challenges that come up.
The company not only monitors temperature during transit, but also when product arrives at the facility and when it leaves.
“When product is delivered into our building, we’ll check the temperature in it in most cases. We’ll record those temperatures. We’ll monitor the temperature while it’s in the building, and probe the temperature on the way out of the building as well,” says Douglas Harrison, president and CEO, VersaCold Logistics Services.
One of the trends Harrison sees is that companies are tightening inventory management processes and requiring faster turnaround times on orders. To deal with this, VersaCold has invested in labour management tools for better scheduling of the workforce to ensure they’re meeting those faster demand requirements. This allows them to look at scheduling shipments or receiving, and scheduling labour requirements in the building to match those needs.
The company has also invested in Power 2.0, its proprietary warehouse management system that allows team members to look deeply at planning, operating efficiency, tracking of product, recall capability of products, etc. It allows for deeper metrics and operational reporting so that facility managers can better manage their business on a daily and hourly basis.
The company has also invested in areas like transportation management, which then integrates back into its warehouse management system to provide that seamless transfer of data and information.
Later this year, the company will launch technology in its transportation fleets that will allow a customer to look at real-time tracking of temperature on its fleet, and receive real-time alerts if a temperature varies outside a certain range.
“The 2,400 employees in the company who care about our customers’ product are very committed to the safety and quality of food in the supply chain,” says Harrison, adding that the company also provides training to employees around food quality and safe food handling. “A lot of training, a lot of investment in people, supported by technology, supported by processes.”
And the company’s efforts are working—the proof is in the numbers.
“Spoilage rates in our organization are incredibly low,” says Harrison. “They’re less than a percentage point because of all the time and resources we invest upfront in ensuring that there is no loss of product.”
The education factor
Education—in customer needs, requirements, safe food handling, etc.—is key to the success of the cold chain.
“We have processes that we’re trained in to be able to maintain product and product freshness, so that when the consumer buys it, the product quality is high, the freshness is high and the integrity of the product is excellent,” says Harrison.
Consistency is important, too.
“With food safety and with temperature-controlled environments, everything has to be done the same, every time, and right,” says Wal-mart’s Watson. “If there’s any break there, you’re going to have issues. Everybody needs to be educated and know exactly how the process needs to go in order to make sure that product arrives at the store in a sellable condition and the highest of quality.”