Big Data in the Supply Chain? Why?

There's big benefits associated with Big Data

There’s big benefits associated with Big Data

Big Data is one of the hottest topics in business today. Companies in the financial, insurance, retail and a host of other industries are quickly realizing that the vast amounts of data being captured and collected can be of incredible strategic value to their business operations. The same holds true in the cold supply chain where literally hundreds of thousands of temperature, condition, waypoint and production data points can be collected for a single shipment.

But what can you do with this data and how do you make sense of it?

Making sense of it requires the ability to sift through the data to identify areas that require specific (and occasionally) immediate attention and essentially archiving and analyzing the rest of the data later to spot macro trends. Fortunately that technology exists to do this. When you identify events or issues that require immediate attention you can focus supply chain personnel’s attention directly on addressing those issues and event. For example, if a pallet of fruit or meat was left sitting on a loading dock, a temperature monitor can identify the issue and, via a reader connected to a cloud-based data service, can then notify a dock worker to collect that pallet and re-chill it immediately resulting in less waste, better quality and cost savings.

Where does the supply chain stand on Big Data?

EyeForTransport, a UK-based provider of business intelligence and C-level networking for the transport, logistics and supply chain industry, recently published their Supply Chain Big Data Report for 2013 (you can get a copy by filling out a form here), along with an accompanying infographic. The report, based on their survey done in February of this year with companies worldwide, reveals some interesting insights.

  • 84% of supply chain executives that think big data will have an impact on their company’s performance.
  • Over 61% of the supply chain executives said they were currently implementing 27.4% or considering (33.7%) implementing a big data analytics project.
  • When asked to rank leaders in the field, nearly 45% cited retailers and over 22% cited consumer goods manufacturers.

Why do so many supply chain executives think so much of Big Data? The top answer: to increase supply chain visibility.  Supply chain visibility means reducing costs (and improving efficiencies).  Respondents also said that they want to move away from making decisions using historical data and move towards real-time decision making.

One last interesting take-away: According to the EyeForTransport survey, of those executives currently implementing Big Data solutions, two thirds of those surveyed expect to see ROI on the project within 12 months.  That’s impressive. There’s that much value in the data and having the ability to improve supply chain visibility and real-time decision making.

Kevin Payne
Senior Director of Marketing

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Invisible Shrink: Better Check that Fuel Gauge!

Shipping produce without knowing its relative remaining shelf life is like flying a plane without a fuel gauge

Shipping produce without knowing its relative remaining shelf life is like flying a plane without a fuel gauge

Ron Pelger, a former director of produce operations in retail grocery, recently wrote an article in The Produce News titled In the Trenches: Are you overlooking invisible shrink?  I’ve commented on this issue of identifying where shrink or waste occurs in the cold chain before but Ron, as a former “trench worker” brings a fresh perspective on the subject.

He writes: Whenever a produce manager was questioned about his or her shrink, the response usually was, “I don’t know where our shrink is occurring. I have a good staff and we faithfully follow all the company shrink programs. The numbers have to be wrong.

Well, the numbers probably aren’t wrong and there may be great shrink control programs in place.  The problem lies in that too many people think that shrink begins at the store.

Ron raises some key points:

  1. The produce industry is muddled in its means of arriving at where exactly shrink originates.
  2. Retail companies are still measuring produce shrink in the same store-level manner.
  3. Retailers focus on produce managers for shrink in the store while it also develops in other exterior areas. (And ones that are completely outside the control of the produce manager!)

He suggests that we considered another reason which he terms “invisible shrink” that results from a myriad of variations in cut-to-cool and pre-cooling that impact produce shelf life and that retail produce managers shouldn’t be held to blame for in-store waste.

Mike Nicometo, cool-chain expert and president of EmpowerTech Inc. says that we shouldn’t discipline the produce manager for problems that they didn’t cause. Mike says that advanced shelf life loss is simply not visible until much later in the supply chain and that, in order to manage shrink and quality, we need to realize that putting product into the cool chain logistics process without knowing how much shelf life it has to start out.  He likens this to sending a fleet of planes to random destinations without knowing how much fuel they have at take-off.

What a great analogy!

Mike explains: When comparing the temperature of each pallet on a load versus the commonly monitored ambient air of the trailer for thousands of pallets during three to five day trucking from Mexico to the U.S., I found over 30 percent of individual pallets were running very warm, causing high levels of advanced shelf life loss. Typically, the advanced shelf life loss was invisible at receiving QR inspections, resulting in product being considered equal. In reality, many pallets were over four days older in terms of shelf life than were the others.

The article goes on to discuss how new software and temperature monitoring technologies can be employed at the pallet-level to help gauge the actual relative remaining shelf life, making the “invisible” data visible and enabling better decision making that can reduce shrink and improve quality.

We’d better start checking that fuel gauge!

Kevin Payne
Senior Director of Marketing

FSMA: The Movie

Leavitt Partners' Jennifer McEntire explains the recent FDA report on FSMA pilots in a short video...well worth the watch!

Leavitt Partners’ Jennifer McEntire explains the recent FDA report on FSMA pilots in a short video

Yesterday I blogged about the FDA’s new 334 page Food Safety Modernization Act Pilot Study Report that was written by the Institute of Food Technologists and Leavitt Partners.  After I published the blog post, I was corresponding with the very helpful Jennifer McEntire of Leavitt Partners who co-authored this report.  I was complimenting her on the report but said I would probably wait “until the movie version came out” (parroting the modern student’s refrain of “why read ‘Gone with the Wind’ when you can watch the movie much more quickly).

Much to my surprise, Jennifer immediately sent me back a link to a three and a half minute video she recorded explaining the report.  Sure, it doesn’t have all of the detail covered in the 334 page document but, for most of us, it’s a great “Cliff Notes” version.  You can watch the video here.

Thanks to Jennifer and Leavitt Partners for sharing this information with all of us.

PS: On March 7, Jennifer McEntire published another excellent newsletter/article on this topic which can be found here.  It also includes a link to an upcoming webinar on the topic.

Kevin Payne
Senior Director of Marketing

Bare Shelves at Walmart? $1.14 Billion in Strawberry Losses! What’s the Connection?

A story in Kevin Coupe’s Morning News Beat references Bloomberg as saying that: at a February 1, 2013 internal Walmart meeting, US CEO Bill Simon said that keeping shelves stocked has become a big problem, is “getting worse,” and is a “self-inflicted wound” that is the company’s “biggest risk.”

Where are my groceries?

Where are my groceries?

According to the piece, Walmart “has been trying to improve its restocking efforts since at least 2011, hiring consultants to walk the aisles and track whether hundreds of items are available. It even reassigned store greeters to replenish merchandise. The restocking challenge emerged as Wal-Mart was returning more merchandise to shelves after a previous effort to de-clutter its stores. Walmart’s inability to keep its shelves stocked coincides with slowing sales growth.”

While Bloomberg reports that Simon’s comments are taken from official minutes of the meeting, company spokesman David Tovar said they were “personal notes from one participant in the meeting and are not official company minutes,” and said that “there are a number of significant misinterpretations and misleading statements that do not accurately reflect the comments by Bill Simon or any other participant in the meeting.”

Tovar said that Walmart is happy with its in-stock positions.

Mr. Coupe then opines: No disrespect to Walmart, but I believe Tovar about as far as I can throw a supercenter. I’ve gotten a number of emails from folks in recent months suggesting that out-of-stocks has become a growing problem for Walmart, one that it has a hard time dealing with.

Coincidently, FreshPlaza recently reported that Walmart is donating $3 million to the University of Arkansas’ Center for Agricultural and Rural Sustainability to create and manage a national competitive grants program, awarding money for projects that will, among other things, expand where strawberries can be grown, enabling shorter trips for the berries between farm and consumer.

The story mentions that: “Strawberries are a highly perishable fruit with a short shelf life in the supply chain,” said Curt Rom, a horticulture professor for the Division of Agriculture, and part of the center’s leadership team. “Strawberries travel an average distance up to or exceeding 3,000 miles from farm to market.” Though prized for their delicate taste and texture, those same qualities can be the berries’ weakness – especially when hauled thousands of miles. It’s estimated that between the time the berries are picked to the time they reach the consumer, losses can reach 36 percent, with an annual value of $1.14 billion, Rom said.

Wow! $1.14 billion in losses – 36% of what’s harvested – between harvest and the consumer? Yikes, that’s a lot of berries! That’s a lot of money! Other academic and industry research shows that half of this loss is due to improper temperature management. One potential consequence of this loss: out-of-stocks.  If you’re a retailer and you’re expecting pallets of strawberries to replenish your shelves and discover upon delivery that they’ve spoiled, you may end up with an empty shelf and an unhappy customer who will turn to another retailer to buy their strawberries.

To be clear, I’m not suggesting that any Walmart out-of-stocks are specifically strawberries but the connection between the two stories is meant to drive home a point about the complexities and challenges associated with managing the supply chain to keep inventory in stock. If it is difficult to do for non-perishable items, imagine how much more challenging it is to ensure your high value produce, meat, seafood, poultry and dairy can be.

Kevin Payne
Senior Director of Marketing

Monetizing the Risks of Food Safety and Traceability

Before you eat that...

Before you eat that…

Yum! Brands, owners of KFC, Taco Bell and Pizza Hut is suffering a significant brand hit due to issues associated with chicken suppliers in China who delivered product to local KFC restaurants that was apparently tainted with too much antibiotics. According to Yum! Brands, it has terminated its relationship with the supplier (Liuhe Group) and will work with others to phase out smaller suppliers and put a more stringent emphasis on food safety. The damage, however, was done…to the bottom line.

We’ve talked frequently with prospective customers, journalists and analysts about the potential costs of a food safety/recall issue on a major global brand.  This story that appeared on the Bloomberg website on February 25 documents some of those costs:

  • Sales at locations in China open at least 12 months fell 6% in the fourth quarter, the first quarterly drop in three years.
  • Comparable store sales in China may decline 25% in the first quarter.
  • Yum stock on the New York Stock Exchange fell after the news from  $66.32 to $64.35 before rebounding slightly.
  • The stock value has dropped 2.5% this year while the S&P Restaurants index gained 4.2%.

It’s hard to say what the long term impact will be for KFC in China and the Yum! Brands family of companies worldwide but the point is clear: Sure, this happened in China but the news is now global. Would you think twice about going into a KFC in California or New York? I admit, I would wonder. If you’re a global, national or even regional brand, you simply must think about this because it could happen to you.

This is yet another example of the critical importance of being able to monitor and manage the cold supply chain. In this case, the product was apparently adulterated with antibiotics. What if it had been salmonella? Listeria?  There are simply too many suppliers, too many linkages from production to retail to rely on antiquated monitoring systems and an incomplete view of your supply chain. You need the data to protect yourself, your reputation and your customers.  Electronic data records captured by tracking the product from the supplier through every leg of the supply chain provides not only information about the supplier but also about proper handling that helps ensure food safety.

It will be interested to see what the long term impacts are…not only on Yum but for the other major global brands who, hopefully, look at this news and take measures to ensure that the next story isn’t about them.

PS: On February 27, World Poultry announced that KFC has cut more than 1,000 farms from its supplier network in China in a measure to ensure food safety following the recent tainted chicken scandal.

Kevin Payne
Senior Director of Marketing

 

Consumers Are Willing to Pay More for Fresh, Sustainable Packaging But…

Packaging is only one component of ensuring freshness and quality

Packaging is only one component of ensuring freshness and quality

Consumers are interested in fresher, higher quality produce. According to an article in Progressive Grocer: consumers are likely to pay more for value-added features that relate to freshness and sustainability, according to a global study conducted by Ipsos InnoQuest. When asked which potential packaging features would motivate them to spend more, consumers indicated they would be inclined to pay more for packaging that:

  • Keeps food fresh longer (55 percent)
  • Is environmentally friendly (55 percent)
  • Is re-usable (42 percent)
  • Is easier to use (39 percent)

In the article, Lauren Demar, Global CEO of Ipsos Innoquest says: Packaging plays a key role in consumer packaged goods innovation, whether marketers are introducing new products or trying to invigorate existing brands. As a key driver in the consumer’s decision to buy, packaging features can often be leveraged to charge a premium. Demar then goes on to suggest that, because consumers place a higher value on packaging that preserves freshness and provides environmental benefits, marketers may have the opportunity “to win over consumers and increase revenues through innovative package designs that deliver sustainability of freshness as well as sustainability of the planet.”

Improving packaging is important but it is only one factor in ensuring that perishable foods are kept fresh. Simply having a super package with lining materials that reduce ethylene (for example) doesn’t do anything to reduce or eliminate issues related to temperature mishandling that can dramatically impact freshness, quality and food safety. While it’s great to see that consumers say that they are willing to spend a bit more for the benefits above, it’s not reasonable for the consumer to understand all of the elements that go into delivering fresh, high quality food.  That’s up to the industry to manage and the consumers look to retailers and brand owners to deliver on this promise.  Learn more about the impact of temperature on quality here.

Kevin Payne
Senior Director of Marketing

FSMA: Threat or Opportunity

I’ve long been a proponent that the Food Safety Modernization Act is an opportunity for the industry, not a threat.  Katie Beissel, Global Industry Manager – Food and Beverage, GE Intelligent Platforms agrees.  In her article titled Planning for FSMA Compliance  posted on Manufacturing.net she writes:

FSMA and other regulations should be viewed as an opportunity for food manufacturers to adopt a more holistic approach to solving food quality and safety concerns. One of the many benefits of FSMA compliance will be increased visualization and control over the manufacturing processes and supply chain. This ability reaches far beyond compliance and can benefit many different aspects of food manufacturing by increasing productivity, improving lean manufacturing processes and developing automated control systems.

An Opportunity to Make Your Customers Happier

She encourages the industry to gain clarity on the new regulations and understand how they impact food safety, risk prevention and reporting and recommends that “Producers must have in-depth visualization of the entire supply chain with the ability to quickly identify and mitigate problems before or just after they occur.”

Accomplishing this requires better data about what is happening in the supply chain from harvest or manufacture through to the retailer. Knowing the condition and history of the product from field or factory to fork is essential and traditional monitoring techniques are quite simply lacking the chops to proactively address FSMA requirements – simply put, they’re inadequate, slow and cumbersome.

Beissel cites what I consider three “abilities” to focus on:

  • The ability to recall products from the market faster. The emphasis is on speed and accuracy of the notification of the FDA of a recall, which means manufacturers need to be able to quickly diagnose and act upon problems anywhere in the supply chain. Producers must, at a minimum, understand the size of the recall, what happened, where the product was produced and what steps to take.
  • The ability to prevent bad quality product from reaching the public. In line with the ability to recall products faster, food manufacturers are now required to follow current good manufacturing practices (cGMP) and use hazard analysis and critical control point processes (HACCP) when developing their food quality safety programs. These new requirements are an attempt to prevent bad quality products from reaching the public and must be readily available for FDA inspection and review at any time.
  • The ability to keep key quality records longer. Key quality data is now required to be kept on record for two years, allowing the FDA to review more of the process issues and the producers’ reactions to them. Previously, these key quality records were only required to be on file for 90 days.

Pallet-level temperature data loggers provide these abilities.  Data about the harvest, manufacture and condition of products can be collected and stored directly on the tag with the product as it moves through the supply chain.  Data can also seamlessly be shared via the cloud to speed recalls. Actionable data about the product’s condition can help prevent bad quality and reduce spoilage.  Data on the tags – and more importantly shared in the cloud or stored in ERP systems – makes it easier to store and access the data.

Sounds like a great opportunity to improve food quality and safety, address regulations and even improve profitability and customer satisfaction.

Kevin Payne

Senior Director of Marketing