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

Food Security: Is it Really About Production?

Maybe production isn't the issue

Maybe production isn’t the issue

A colleague recently sent me a link to an interesting blog Open the Echo Chamber with a recent post by Edward Carr titled Doing Food Security Differently – Theme 1: Get Over Production. The main gist of the blog post has to do with feeding a growing global population.  There are two basic ways to feed an increasing global population:

  1. Produce more food.
  2. Waste less food.

Most commentators tend to focus on finding new technology and tools that will help us produce more food, more efficiently. As I’ve blogged about before, people tend to forget about the second option: finding ways to maximize post-harvest yield and waste less.  (We waste between $35 and $400 or so billion of food each year, depending on which source you cite.)

Carr’s blog post makes the point that production isn’t the issue and that we are already producing more than enough food to feed a growing planet and that we should instead focus our resources on the fact that we waste too much.  Some interesting comments in his blog post:

  • Every year, the Earth produces roughly twice the calories needed to feed every single human being.
  • There is no unavoidable global shortage that creates famine and hunger. Nor, in fact, are we likely to be looking at a global food shortage any time soon.
  • There is less excess marketable supply than ever before.  Note that there is less excess marketable supply – this is the amount of food we produce that actually reaches market, not the total amount of food grown and raised each year.

In Carr’s opinion:

The simple point here is that these trends are manageable if we can get over the idea of food security as a question of production. [Emphasis added.] The idea of scarcity is perhaps the biggest challenge we face in addressing the world’s food needs.  As long as food security policy and programs remain focused on solving scarcity, food security will remain focused on technical fixes for hunger: greater technology, greater inputs, greater efficiency.

Carr then adds:

Simply put, it is cheaper and easier to enhance agricultural extension to improve local food storage techniques, build and maintain good roads, and improve electrical grids and other parts of the cold chain that preserves produce from farm to market than it is to completely reengineer an agricultural ecology.  [Emphasis added.] It makes far more sense to make basic infrastructural investments than it does to tether ever more farmers to inputs that require finite fossil fuel and mineral resources.  It makes more sense to better train farmers in storing what they already produce in a manner that preserves more of the harvest than it does to invest billions in the modification of crops, especially when the bulk of genetic modification in agriculture these days is defensive – that is, guarding against future yield loss, not enhancing yields in the present.

I’m glad to see that I’m not the only one that sees reducing waste as an area where we should focus our attention. The technology exists for us to significantly reduce waste and get more fresh food to the consumer.  (And, yes, I believe our temperature monitors and ZEST Data Services are a part of this solution.) Yet the industry seems bent on the idea that billions of dollars of waste is an acceptable and unavoidable cost of doing business. It simply isn’t true.

Kevin Payne
Senior Director of Marketing

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

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

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

How Much Does 2,000,000,000 Tons of Food Waste Cost Us?

Food Waste is Just Plain Ugly

Food Waste is Just Plain Ugly

2,000,000,000 is a big number and when applied to tons of food waste it’s a massive problem.  A new report, published by The Institute of Mechanical Engineers,  a U.K.-based engineering society and think tank, states that of the four billion tons of food produced annually worldwide up to half of it goes to waste. Among the causes:

  • Poor harvesting, storage and transportation methods
  • Plain old consumer waste (we buy too much and throw it out)
  • Overly conservative and misunderstood “sell-by” dates, driven mostly by grocers looking to avoid legal actions

I italicize the last part because part of the problem is that grocers don’t know the condition of their food when they receive it. They don’t know how the product’s condition at harvest, how it was handled, if it was shipped properly or if it has a week of shelf life or only a couple of days. Their answer: dump it and factor it into the cost of doing business.

But who pays for that?

(How many guesses do you need?)

Having metrics about the history and condition of perishable products when they are received by the retailer can help. But, as mentioned in this report, the problem starts far before the food ever gets to the retailer.  You have to start managing the product at harvest to ensure it is properly stored, processed and handled. Growers, packers, shippers and retailers need actionable data at every step along the supply chain to reduce or eliminate waste before product gets to the stores and ensuring better quality, fresher products for consumers.

Wasting less food has numerous benefits:

  • Costs are reduced (and revenues increase)
  • Quality can be improved
  • Less water, fuel and fertilizer is wasted
  • More people can be fed with the same amount of production

The tools exist to deal with the problem.  We just have to use them and consumers and retailers need to take the lead.

Kevin Payne

Senior Director of Marketing – Intelleflex

 

FSMA Makes the Front Page

We’ve been waiting and wondering if the Food Safety Modernization Act was ever going to make it out of the gates.  Now, two years to the day after President Obama signed the FSMA into law, the FDA has announced the release of the proposed rules for the law.  Heck, it even made the front page of our local paper over the weekend!  Those of us in the industry have certainly been aware of the implications of the law but, by and large, the public hasn’t heard much about it. The fact that this is front page news is significant as increased public awareness will also put pressure in the industry to take action.

Front Page News for the FSMA

Front Page News for the FSMA

According to United Fresh, two proposed rules will be released:

The Preventive Controls for Human Food rule would require food companies—whether they manufacture, process, pack or store food—to put in place better controls to minimize and reduce the risk of contamination.

The Produce Safety rule would require farms that grow, harvest, pack or hold fruits and vegetables to follow standards that are aimed at preventing contamination.

FDA Commissioner Margaret A. Hamburg said that “The FDA knows that food safety, from farm to fork, requires partnership with industry, consumers, local, state and tribal governments, and our international trading partners. Our proposed rules reflect the input we have received from these stakeholders and we look forward to working with the public as they review the proposed rules.”

The FSMA should motivate the food industry to fundamentally rethink their cold chains.  It’s not a simple feat to move from a reactive methodology that’s been in place for decades to a proactive one but the benefits to consumers – and to the industry – can be immense. It’s important to note that Hamburg specifically mentioned “farm to fork” and “international trading partners”.

Also interesting is commentary (Fresh Plaza and elsewhere) that the expected cost to large farms is estimated by the FDA to be roughly $30,000, and the cost for small farms is expected to reach $13,000. But, when traceability is done in conjunction with temperature monitoring to reduce waste, enough savings can be found to more than pay for the cost of traceability. In effect, the additional revenues by being able to sell more of the produce cover the cost of implementing traceability and then some!

Much has changed in the industry over the years due to globalized and elongated cold chains.  I expect retailer grocers will take the lead on this and begin to mandate electronic temperature and traceability solutions for their suppliers starting in the field, whether that field is in California or Chile.

(You can learn how Intelleflex can help address FSMA requirements here.)

It’s a nice way to start what should be a very interesting – and busy – year.

Kevin Payne

Senior Director of Marketing