Is Your Supply Chain Broken? 5 Questions CEOs Should Ask

Is your supply chain broken or about to break?

Is your supply chain broken or about to break?

A recent story in Industry Week reiterates the importance that C-level executives need to monitor and manage their supply chains.  The story, written by two supply chain experts at Wipro Consulting, details five questions that CEOs should be asking about the condition and status of their supply chains – especially in light of recent news items such as the “horsegate” problem in Europe relating to horsemeat being included in beef products. The authors raise the question of whether or not the scale of the supply chain might in and of itself have been a contributing factor in quality control failures.

One key point they make: if you think quality in a supply chain is just having the right materials in the right place at the right time, you’re not thinking broadly enough. Supply chain management must also focus on the quality of the materials, the accuracy and content value in the information shared between supplier and customer, and the accuracy and timeliness in the financial transactions.

They suggest that it makes financial sense to proactively manage your supply chain to make sure it is designed to be successful and propose five questions that every CEO should ask:

1. Is quality built into your supply chain, or do inspection and correction occur after the fact?

2. Is supply chain management a strategic senior level position in your organization or is it a part of an operations activity?

3. Is the movement of information and money as critical in your supply chain as the movement of materials? In other words, does it take longer to create paperwork and process payments than it takes to deliver the goods?

4. Do you have a built-in change management process that constantly reviews the elements of your supply chain and looks for opportunities to improve quality and operational efficiency—or do your systems, policies and procedures block improvement?

5. Does your supply chain minimize the amount of touches and the touch time in supply chain transactions, so as to reduce the number of potential failure points?

All too often, we at Intelleflex see supply chains (especially cold chains) that are primarily reactive. Information about the condition of a product that has spoiled or been exposed to adverse conditions is available only after-the-fact when it is too late to take corrective action. Additionally, information is not typically easily shared between supply chain partners and too much of the record keeping is paper-based which slows down supply chain operations and can introduce costly errors.

The article proposes some answers to these questions stating that the issues relate to culture, capability, flexibility, capacity and technology, systems and processes, repeatability and reliability, and collaboration.

Solutions that provide the ability to automatically capture and collect information electronically about products as they move through the supply chain is essential.  But, equally important is the ability to access, share and act upon that data. RFID and cloud-based data services (such as ZEST Data Services) can help make this happen and not only improve supply chain operations but provide valuable information to supply chain executives that provides the ability to proactively manage an intelligent supply chain.

The article concludes with some wise advice: It shouldn’t take a high-profile quality control failure for CEOs to take a fresh look at what’s happening in their own organization since a supply chain failure of any kind could devastate or destroy profitability. Start being proactive by asking the five key questions and ensuring that your supply chain organization has a culture of collaboration, responsiveness and constant improvement.

You can read the entire Industry Week article here.

Kevin Payne
Senior Director of Marketing

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

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

 

FORBES: Interested in Food + Technology? Five Opportunities You Shouldn’t Miss

I devote a log of our blog ink to issues relating to food safety, quality and reducing the amount of food wasted. A recent article in Forbes talks about five areas where technology can make a difference including temperature monitoring to enable First Expired, First Out inventory to help ensure that more food is delivered fresh.  It’s nice when the business press starts to pick up on ideas that are too often stuck within the food industry.

We All Need to Get on the Bus to Improve Food Safety and Quality

We All Need to Get on the Bus to Improve Food Safety and Quality

For us to make improvements in the food cold chain, everyone’s going to have to get on the bus: producers, packers, shippers, retailers, consumers and government.  I’m hopeful that the attention currently being given to the FSMA in the mainstream media will translate into more attention about what we can collectively do to improve the cold chain.

Kevin Payne
Senior Director of Marketing

The Need for Intelligent RTIs

Supply chain optimization has become a way of improving and differentiating your business. It’s no longer just a cost of doing business but a source of competitive advantage as demonstrated by companies like WalMart. Bar coding has been widely employed for this purpose but bar codes have limitations and can only help so much:

  • You have to be able to see the barcodes to read them.
  • Bar codes can’t store actionable data about the condition of the contents such as it’s temperature or transport history.

The critical benefits of actionable data about the condition and location of products are being increasingly recognized across the food and pharmaceutical industries, as well as for asset tracking. Actionable data enables the intelligent supply chain and delivers the ability to improve operational efficiencies and drive out waste. Research indicates that this data is best captured at the pallet, bin or tote level – the domain of the reusable transport item, or RTI.

An intelligent RTI, or iRTI, is a reusable transport item that is embedded with an RFID tag to collect and capture information about the RTI itself as well as its contents. When integrated into a software system, the iRTI provides important actionable data to help address some of the key challenges in today’s supply chains and provide a rapid ROI. And, by employing RFID, you don’t have to actually see the tag to read it and capture the information on the tag. This simplifies operations and can reduce labor costs.

Download the Packaging Revolution iRTI White Paper

Download the Packaging Revolution iRTI White Paper

Rick LeBlanc, editor of Packaging Revolution’s authored this new white paper on the value of Intelligent RTIs.  It’s a great explanation of the benefits of this new solution.  You can download it here.

 

Kevin Payne
Senior Director of Marketing

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

Your Shipment Has Been Delayed

The tragic effects of Superstorm Sandy will be with many people for a long time.  I’m fortunate that all of my friends on the east coast are ok, although many remain without power. There are so many difficult issues relating to this storm and the cold supply chain is one that may slip under the radar of most people…but not under the radar of supply chain professionals.

Andrea Charles of Pharma-IQ (part of IQPC) recently wrote an article that asked about supply chains being ready for natural disasters.  She raises the impact of tsunamis, hurricanes and earthquakes (not to mention blizzards, power outages, or other issues) on the pharmaceutical cold chain. She also speaks to the need to ensure that important medications are available to those affected by a disaster. I won’t debate here about whether climate change is real or not because, whether it is or isn’t, if you’re shipping high value, temperature-sensitive pharmaceutical or food items and your shipment is delayed due to an unpredictable storm or disaster, you’re at risk.

Now What Do You Do?

Andrea quotes Dave Alberts, Director at Crimson & Co. who says: Unfortunately, there is no way in which to fully prepare for such natural disasters as they are unexpected. However, the frequency at which these occur validate that contingency plans must be put in place wherever possible and organizations must attempt to protect product supply through efficient, planned out strategies and best practices. Research into the affects is a good start and companies participating in this are clearly at the forefront of successful and adaptive supply chains.”

Alberts talks about the need for adaptive supply chains.  I agree.  But what makes a supply chain adaptable is intelligence – knowing the condition of your product on-demand as it travels from the manufacturer to its destination.  If your product is stuck at an airport due to cancelled or delayed flights or if a ship can’t dock or a truck can’t get through, you need to know if its temperature is still in range so that you can rechill or reroute as necessary.  You want to be able to do this autonomously and without searching out and opening individual packages.  With so much unpredictability, you can’t account for every conceivable variable but you can build in the ability to proactively manage your supply chain so you can respond in a timely manner when a disaster strikes and help minimize losses.  Wireless temperature monitors that provide actionable data on-demand can help.

Kevin Payne

Senior Director of Marketing

This Chardonnay Has an Elegant Bouquet and Bright, Crisp RFID Tag

I worked at a winery during my college years.  Talking about wine with visitors is a lot of fun and the winery had visitors from all over the world.  Often, when they wanted to buy wine they’d ask how it well it ships.  Can it get too hot?  Too Cold?  Does it spoil?

RFID complements wine nicely!

Recently I came across two articles relating to wine shipments and quality.  An article in RFID Journal discusses a GS1 study done last year (with results published this year) involving wine being shipped from Italy to Hong Kong.  The purpose of this test was primarily to improve supply chain operations and determine how well imported products could be monitored using an RFID solution to track the bottles from when they were shipped from the wine producer until they left the local importer, en route to the wine shops in Hong Kong.  As a fringe benefit though, the GS1 study also included Intelleflex temperature monitoring tags to see if the wines were exposed to extreme temperatures on their voyage from Europe to Asia.  (Freezing or baking wine during shipment, um, not so good.)

According to the article: GS1 Italy determined that the accuracy of supply chain data could be increased from 80 percent (when orders were filled according to a purchase order) to 100 percent, and that logistics management could be improved based on having better knowledge of products’ locations….the technology proved that retailers in Hong Kong can “achieve full visibility of the whole movement of the wine products, from oversea vineyard to their storage destination, which eventually improved their inventory management and quality assurance. In the future, the technology could help retailers predict overstock or out-of-stock events, and provide consumers with quality assurance in stores, by reading a label’s tag in order to access data regarding when and where wine was bottled, as well as the temperature at which it was stored.

Another story discusses a company called Vinfolio that is using temperature monitors (the article doesn’t say if they’re RFID-based) to test temperatures of wine as it is being shipped around the country in trucks and airplanes.  Their conclusion thus far is that, using proper packaging, your wine is probably safe.  Phew.  That’s a relief but, if you’re shipping high value temperature sensitive products, you’ll want to be sure about their condition in transit and take care to identify problems before they occur.  RFID is now a part of that solution for temperature sensitive goods from produce to florals to pharmaceuticals and even to things like wine or chocolate.

Cheers!
Kevin Payne

Senior Director of Marketing

Bonus Question: Where is the worst place in your home to store your wine?  (Clue: it’s often the place that most people store their wine!)  Email me with your answers!