Food Logistics September 2017 by Supply+Demand Chain/Food Logistics

Food Logistics

FOOD & BEVERAGE ADDS MORE COMPLEXITY

WITH INCREASED CONSUMER DEMAND BUT HEAVY INVESTMENT AND TALENT SHORTAGES, 3PLS FACE CHALLENGES IN REFRIGERATED LOGISTICS

Global Supply Chain Solutions for the Food and Beverage Industry

 ALAN:

THE LOGISTICS SOURCE DURING NATURAL DISASTERS

MULTICHANNEL

IT’S NOW OR NEVER FOR GROCERS TRADITIONAL GROCERS UNDER MORE PRESSURE THAN EVER TO ENTER THE MULTICHANNEL WORLD FOLLOWING AMAZON’S ACQUISITION OF WHOLE FOODS

Issue No. 190 September 2017

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Three heights. Three lengths. Three engine choices. Transit has the most vehicle configurations in its class.* And among gas powered vans, the high-roof Transit also has best-in-class interior height.** No wonder it’s America’s best-selling full-size commercial van.†

THE 2017 FORD TRANSIT FORD.COM ///

Medium roof shown. Available features and aftermarket equipment shown. *Class is Full-Size Vans based on Ford segmentation. (Based on body type, body length, wheelbase and roof height.) **Class is Full-Size Vans based on Ford segmentation. † Based on total U.S. reported sales (2016 CY).

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ON THE MENU

OCTOBER 2015 ISSUE NO. 171

ON THE MENU

September 2017 ISSUE NO. 190 COLUMNS

FOR STARTERS

A Pitch for ALAN

COVER STORY

Are Grocers Ready for Multichannel Fulfillment?

Following Amazon’s acquisition of Whole Foods, traditional grocers that are not already online, must find a way to enter the multichannel world.

The American Logistics Aid Network works diligently to identify logistics goods and services following Hurricane Harvey. COOL INSIGHTS

T he Importance of Product Quality in the Shipping of Perishables

The transportation of fresh produce will only be considered successful if it arrives well preserved and in optimal quality.

FEATURES

THIRD-PARTY & REFRIGERATED LOGISTICS

FOOD (AND MORE) FOR THOUGHT

he Food & Beverage T Industry Adds More Complexity Cost, consumer demand, regulations and the ‘Amazon Effect’ offer new challenges.

T he Cold Chain Just Got More Efficient

Energy for large-scale refrigeration often is the largest cost line item for food and wine distributors.

DEPARTMENTS

Supply Scan 14 Food on the Move 49 Ad Index 8

SECTOR REPORTS WAREHOUSING

I nnovative Dock Equipment Gets the Green Light

The right lighting and dock equipment can create a safer and more efficient operation. TRANSPORTATION

U rban Sprawl: Solving the Logistical Nightmare

A new fleet of vehicles designed to navigate the urban environment and boost efficiency for deliveries is gaining traction.

SOFTWARE & TECHNOLOGY

L aying the Foundation for Advanced Supply Chain Planning

Robust demand, inventory, replenishment, manufacturing and S&OP capabilities provide the foundation on which to build more advanced supply chain planning. OCEAN PORTS & CARRIERS

B eyond Visibility

Live data from the Internet of Things holds the key to cold chain executive excellence.

WEB EXCLUSIVES • The Revolution of the Foodservice Industry in the Information Age foodlogistics.com/12362958

• Innovation of Today and Tomorrow: Don’t Be Left Behind foodlogistics.com/12359599

• Effective Driver Training Starts with Focus on Process foodlogistics.com/12359622

Published and copyrighted 2017 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media Inc., 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, P.O. Box 3605, Northbrook, IL 60065-3605. Canada Post PM40612608. Return undeliverable Canadian addresses to: Food Logistics, Station A, P. O. Box 25542, London, ON N6C 6B2. Subscriptions: U.S., one year, $45; two years, $85; Canada & Mexico, one year, $65; two years, $120; international, one year, $95; two years, $180. All subscriptions must be paid in U.S. funds, drawn from a U.S. bank. Printed in the USA.

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DELAYS CHANGE EVERYTHING. Thatâ&#x20AC;&#x2122;s why Penske has logistics solutions to help put business problems behind you. Our supply chain services can be tailored to time-sensitive distribution needs. So you can keep moving forward. Visit gopenske.com or call 844-868-0818 to learn more.

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FOR STARTERS

FROM THE EDITOR’S DESK

DETAILS

Published by AC BUSINESS MEDIA INC. 201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

WWW.FOODLOGISTICS.COM

A PITCH FOR ALAN S SOWINSKI

eventeen years ago, Hurricane Katrina ravaged the U.S. Gulf Coast. The storm caused 1,836 deaths and ranks as the costliest natural disaster in American history. It also marked the founding of the American Logistics Aid Network (ALAN), an organization that works with the logistics sector during a disaster to get relief aid to those affected. I thought of Kathy Fulton and her team at ALAN in mid-August when weather forecasters started keeping a closer eye on the tropical storm. As I wrote this column a few weeks later, Hurricane Harvey had already left behind a trail of destruction in Texas and Louisiana, and racked up records of its own. ALAN is continuing to work diligently to identify logistics goods and services, including transportation and warehousing for food, water, clothing, toiletries and everything else people need to get through the immediate crisis. Not surprisingly, donations are usually strongest during and immediately following a disaster. Once the story fades from the headlines, so do donations. Yet, the needs resulting from Hurricane Harvey are expected to be especially long-term and widespread, so please keep

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ALAN and other relief organizations top of mind in the coming months. As for the impact on the logistics community in the affected areas, that’s still largely unknown. The Port of Houston, a major gateway for containerized, breakbulk and project cargo in the region, closed on Aug. 25, and remained closed through Aug. 31. Meanwhile, damage to the rail network and highway system will take a while to fully assess. Passengers and cargo transiting Houston’s Hobby and Intercontinental airports will get back to normal more quickly after days of cancellations. However, warehouses and distribution centers have also sustained damage, some severe. Oil refineries in Corpus Christi and elsewhere in Texas also felt the hurricane’s hit. Many are still offline. For each day they remain idle, anywhere from 2 million to 3 million barrels of U.S. oil-refining capacity is lost. Fuel prices are heading higher, promise analysts, and transportation executives are bracing for it. In the meantime, if you or your organization can help ALAN, please do. They’re at www.alanaid.org. Enjoy the read.

PRINT AND DIGITAL STAFF Group Publisher Jolene Gulley Associate Publisher Judy Welp Editorial Director Lara L. Sowinski lsowinski@ACBusinessMedia.com Editor John Yuva jyuva@ACBusinessMedia.com Assistant Editor Amy Wunderlin awunderlin@ACBusinessMedia.com Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Kelty ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, Chief Supply Chain and Commercial Officer, ScanTech Sciences Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18; Fax: (847) 492-0085 ejackson@meritdirect.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich CFO JoAnn Breuchel Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2017 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission from the publisher.

LARA L. SOWINSKI, EDITORIAL DIRECTOR LSOWINSKI@ACBUSINESSMEDIA.COM

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Be innovative â&#x20AC;˘ Be committed â&#x20AC;˘ Be successful

Successful Fresh Food Distribution: fast, flexible, ergonomic

This is why numerous retailers across the globe rely on logistics systems from WITRON.

The storage and picking of fresh food is a constant challenge for logistics experts. The key: the newly developed OFP (Optimal Fresh Picking) from WITRON, which combines all applications in one system. The store-friendly picking of full totes as well as single piece picking is done within one automated system: cost-efficient, flexible, short throughput times, ergonomic, space saving, scalable, and compact.

General contractor for the design, realization, and the operation of storage and picking systems for retail business and industry.

www.witron.com

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SUPPLY SCAN

NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com

FDA RELEASES ‘PLAN BUILDER’ TO SOOTHE FSMA WORRIES

FOOD DELIVERY BY DRONE TAKES FLIGHT IN ICELAND

You can now get your takeout meals delivered by drone—if you live in Reykjavik, that is. The first drone-based food delivery network to serve a city took flight last month in Iceland’s capital, promising to slash wait times for hungry customers by flying orders directly over an ocean inlet at the town’s center, reports The New York Post. Working in partnership with AHA—an Iceland-based, Grubhub-like online platform for restaurants and retailers—Flytrex expects its drones will cut a full 20 minutes off delivery times for takeout that’s shipped between Reykjavik’s two ports, which are separated by a large bay.

The U.S. Food & Drug Administration (FDA) has launched a Food Safety Plan Builder, software that attempts to help food manufacturers and others adhere to the Food Safety Modernization Act. The software provides a simple question and answer platform to create the legislation’s mandatory food safety plan for businesses. The hope is that this free downloadable application will benefit smaller businesses that may not be able to afford a costly consultant. The application covers an extensive list of sections, including Good Manufacturing Practices (GMP) & Prerequisite Programs, Hazard Analysis & Preventive Controls Determination, Process Preventive Controls, Food Allergen Preventive Controls, Sanitation Preventive Controls, Supply-Chain Preventive Controls and a Recall Plan.

HOUSE VOTES TO EASE CALORIE DISCLOSURE RULES FOR PIZZERIAS, DELIS AND GROCERS

The U.S. House of Representatives voted to gut a proposed Food and Drug Administration (FDA) rule requiring chain pizzerias, delis and convenience stores to list the calorie content of their meals on menus or menu boards prominently displayed on the premises. Instead, takeout restaurants and grocers could choose to disclose calories only on their websites. The White House opposes the Common Sense Nutrition Disclosure Act, saying it will leave Americans— who consume a third of their calories away from home—with less information to make healthy choices. Rep. Fred Upton, R-Mich., speaking in favor of the bill by Reps. Cathy McMorris Rodgers, R-Wash., and Loretta Sanchez, D-Calif., said Michigan-based Domino’s Pizza would have to list the calorie content of hundreds of different combinations of crusts and toppings on a menu board to comply with the FDA’s rule. Domino’s already has an online calorie counter for their customers, most of whom order on their computers or smartphones, Upton said.

CSX OPERATIONAL CHANGES HINDER FOOD COMPANIES

After CSX Transportation made changes to its operations, the company’s rail network has been besieged by unusually slow service and delayed deliveries that have hurt businesses, including food companies, according to The Wall Street Journal. Some food manufacturers have slowed their production to ensure that key ingredients—including oil and sweeteners—don’t run out before their next deliveries arrive. Issues stem from efficiency efforts implemented at CSX under new President and CEO Hunter Harrison, who took the helm in March. Changes include idling excess equipment, closing freight yards, running trains on a tighter schedule and cutting 2,300 jobs. Harrison told The Wall Street Journal that short-term problems will lead to improved service in the long run. For now, businesses are absorbing costs associated with the shipping delays, but unless things improve, some food manufacturers say they may need to pass price increases on to consumers.

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REDUCE COSTS & IMPROVE WAREHOUSE OPERATIONS

Intelligent Automation Makes the Difference Automation solutions from SICK help you meet increasing demands for food and beverage supply chain improvements. Our broad portfolio of sensors, automatic identification systems and safety solutions are flexible, scalable and help make your operations more intelligent. Implementing automation solutions from SICK can reduce supply chain costs, improve transparency, and enhance food and beverage distribution processes. You’ll find SICK transforming logistics operations in all supply chains...from retail, to parcel, and food and beverage - for 70 years and counting. SICK is a global solutions provider located in your corner of the world. From cold storage, sortation, order fulfillment, packaging and palletizing, you’ll improve food distribution through our flexible and cost-effective automation solutions. We think that’s intelligent. www.sickusa.com

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2017 Educational Webinar Series

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November 29

December 12

October 18

Hottest Food Supply Chain Trends in 2018 _________________________________________

Food Supply Chain Risk: "The What, Where and How" ______________________________________

Emerging technologies such as AI, machine learning, drones, and the possibilities for end-to-end connectedness and visibility associated with the IoT are impacting the food and beverage industry. Evolving software capabilities and hardware are collectively opening up new opportunities. Join an expert panel for a discussion about some of the latest offerings.

Join a panel of industry executives for one of our most popular events—a roundtable discussion covering the most important trends, opportunities and challenges facing the food supply chain in 2018.

Risk is inherent in today’s food supply chain, from food safety to regulatory compliance, and cargo security to new and evolving competition. As the food supply chain becomes longer, more complex, and demanding in terms of temperature-monitoring and timeliness, the risk profile is likewise amplified. Meanwhile, the impact of recalls and potentially negative consequences for brand reputation drive the need for a comprehensive risk mitigation program even higher. Join a panel of industry experts in a discussion about food supply chain risk, what it looks like, where it resides, and how to formulate a risk mitigation plan.

Software & Technology II _______________________________________

Sponsored by

Dates are subject to change. We are always looking to address hot topics in our industry. Let us know if there’s one you’d like to see on the schedule.

Visit our on-demand webinars, available 24/7 at: FOODLOGISTICS.COM/WEBINARS • Warehouse

Automation

• 3PLs

• Software & Technology • Cold Chain I & II

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SUPPLY SCAN

NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com

MAERSK TANKERS BOLSTERS DIGITAL SUPPLY CHAIN WITH CARGOMETRICS INVESTMENT

Maersk Tankers, a unit of shipping group A.P. Moller-Maersk, has entered into an equity agreement with U.S. hedge fund CargoMetrics, giving it access to analytical models and algorithms to better manage its tanker operations. The investment, which will give Maersk Tankers exclusive rights to its analytical models, algorithms and capabilities, is in line with the more than 100-year old conglomerate’s push into new technologies, as global trade becomes increasingly more digital. CargoMetrics links satellite signals, historical shipping data and proprietary analytics for trading purposes in its systematic investment platform.

RESEARCH SUGGESTS FOOD, GROCERY SUPPLY CHAINS ARE SET TO FACE AN IOT REVOLUTION

ADDED PERKS AVAILABLE FOR AMAZON PRIME MEMBERS IN WHOLE FOODS ACQUISITION

Investment in smart- or Internet of Things (IoT)-enabled devices is set to rise among food and grocery companies, causing significant change in global supply chains, according to a study from research organization IGD. The company’s Supply Chain Analysis questioned 84 food and grocery businesses and service providers worldwide about the potential opportunity for food and grocery companies to transform their supply chains using IoT. Two findings, in particular, stand out. First, IGD claims that 37 percent of companies in this sector are already trialing or have successfully deployed IoT products or services, such as smart fridges and smart heating systems. Second, its researchers say that a further 58 percent of food and grocery companies are planning to increase their investments by working more closely with technology providers to help them maximize IoT opportunities. The reasons behind this investment in IoT are numerous, with 61 percent of respondents highlighting “improved understanding of customers” in their top three expected business benefits from IoT, 53 percent of companies citing “reduced costs and increased efficiencies,” and 51 percent suggesting that the “development of new business models” are the main potential benefits.

The news that Amazon would be lowering prices on a range of products at Whole Foods Market excited many shoppers—and Amazon Prime members have even more reasons to cheer. As Amazon finalized the purchase of the natural foods grocery chain last month, plans were announced to make Amazon Prime the customer reward program at Whole Foods stores. Prime members will be able to get special savings and in-store benefits that other customers will not be able to get. Whole Food’s private label products—365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch—will be available through Prime Pantry and Prime Now. Ordering through Prime Now will allow members to get free two-hour delivery in select cities and zip codes, with an option for onehour delivery at a cost of $7.99. In addition, Amazon Lockers will be available at certain Whole Foods stores that will allow customers to pick up items ordered online at Amazon.com at their local Whole Foods store or send returns back.

PENSKE LOGISTICS PLANS $100M DISTRIBUTION CENTER IN MICHIGAN Penske Logistics is planning to invest $98.6 million in Romulus, Michigan, for a distribution center that would create 403 qualified new jobs.

www.foodlogistics.com

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The 606,000-square-foot refrigerated and frozen food warehousing distribution center will primarily service the Midwest, says Randy Ryerson, director of corporate communications for Penske.

The warehouse plans point to a diversification of business in Michigan for the logistics company known primarily for its work in the automotive industry.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

MULTIPLE DRIVER CHARACTERISTICS HAVE POTENTIAL TO IDENTIFY SAFE, YOUNGER DRIVERS

PERSONALITY

C O G N IT IO N

The American Transportation Research Institute (ATRI) recently released the phase one findings of research investigating the potential for developing a Younger Driver Assessment Tool—one that would identify younger drivers who exhibit many of the same characteristics as safe, veteran commercial drivers. To assess the feasibility of identifying safe younger drivers, ATRI reviewed existing scientific literature on driver characteristics and the associated safety outcomes. The report summarizes the psychology literature on early adulthood, and how characteristics of this age group relate to driving safety. The research was conducted in conjunction with Dr. Monica Luciana, professor of psychology at the University of Minnesota. Individual traits that can reliably predict driver safety outcomes—perHEALTH sonality, health and cognition—are identified and discussed in this latest ATRI report. The next phase of ATRI’s research will involve assembling the relevant measures of the identified predictive factors and conducting a beta test of the Assessment Tool on a small sample of both veteran and entry-level drivers. Results of the beta test will determine if a larger scale study is warranted.

MORE U.S. STATES EXPLORE TRUCK PLATOONING TECHNOLOGY

Multiple states are working to enable the testing of platooning technology as a way to gain fuel savings due to reduced aerodynamic drag. Agreements such as the I-10 Connected Freight Corridor Coalition, made up of transportation officials from California, Arizona, New Mexico and Texas, was formed by the Arizona Department of Transportation with the goal of connecting ports in Long Beach and Los Angeles, California, to Houston, Texas. Part of that mission includes studying truck-platooning. Officials are working with the Texas A&M Institute of Transportation to develop a “Concept of Operations” report, which is expected in February 2018. Meanwhile, New Mexico officials are working with Peloton Technology, a maker of truck-platooning technology, to study the company’s technology there. In Texas, TTI is working with the Texas Department of Transportation to explore regulations related to truck platooning, as well as the many technical concerns around large freight vehicles closely trailing each other.

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Summer Still Sizzling Mark Montague is an industry rate analyst for DAT Solutions, which operates the DAT network of load boards and RateView rate-analysis tool. For information, visit www.dat.com.

We expect van and refrigerated truckload freight markets to cool off in July and August, and this year was no exception. But considering how June was sizzling— truckload freight availability was at a two-year high—freight markets have remained relatively (and unusually) hot in the weeks that followed. While load availability in July fell 19 percent, compared to June, according to the DAT North American Freight Index, it was 53 percent higher year-over-year, and many lanes set all-time records for loads moved during the month’s final week. A strong spot freight

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By Mark Montague market during the summer months is a good sign for the economy as a whole. Van freight volume has been particularly strong on lanes that connect markets

in the Southeast and Midwest to large population centers in the Northeast. Those lanes are associated with retail freight, indicating consumer confidence. For refrigerated freight, a seasonal transition is underway in produce harvests. More temperature-controlled freight is moving out of the Midwest, as well as import markets along the Mexican border. By mid-August, the national average rate for spot refrigerated truckload freight was at $2.08 per mile. That’s precisely the national average rate in July. Not as hot as June, but still a pretty comfortable place to be if you haul freight for a living.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

PORT OF L.A. TO LAUNCH DIGITAL CARGO TRACKER

The Port of Los Angeles is poised to launch a $13 million, first-of-its-kind program to digitize cargo data at all of its terminals, a move shippers hope will ease bottlenecks at the nation’s busiest seaport. Begun as a pilot program at one terminal earlier this year, the effort will allow the port to do what most Americans already can do— track packages from the minute they leave a distribution center until they get to the front door through a single platform. Currently, shippers rely on a mishmash of networks to track goods at the port complex, where nearly 40 percent of the nation’s imported goods flow through.

TMW INTRODUCES PORTFOLIO OF MOBILE APPS FOR TRANSPORTATION INDUSTRY TMW Systems last month introduced a portfolio of 11 user-friendly mobile apps that empower professionals at every level of a transportation business—from operations to drivers and vehicle maintenance personnel—to complete a wide range of business-critical activities from their Android- or iOS-based devices. “The transportation and logistics industry is undergoing a digital transformation that is being driven by mobile technology,” says Ray West, senior vice president and general manager, TMS solutions, TMW. “Each of our new mobile apps is designed to enhance business efficiency and competitiveness by providing the information and functionality users need to make the right decisions at the

TMW Go Driver

TruckMate DASH Driver

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right time.” Among the new tools are the following mobile apps for operations personnel, freight brokers, logistics managers and other professionals who want to access core TMS applicaTMW Go Dispatch tion data and complete a wide range of activities: • TMW Go Dispatch is for users of the TMWSuite TMS. Key functionality includes adding/viewing check calls, updating stops, assigning resources, running reports, splitting trips and more. • TruckMate DASH Dispatch, for TruckMate TMS users enables users to monitor status changes, manage exceptions, approve advance requests, track resources, visualize and map trips, and more. • IES InMotion Dispatch, for the Innovative IES, IES Access and Access Plus TMS platforms is capable of reviewing and accepting/rejecting EDI shipments, entering call

TruckMate DASH Dispatch

IES InMotion Dispatch

checks, reviewing driver information, issuing advances to drivers, tracking and tracing customer orders, and more. TMW also offers the following new mobile apps that provide drivers with access to key information and related capabilities: • TMW Go Driver enables vehicle operators to review trip, pay and appointment data using their Android or iOS device. • TruckMate DASH Driver offers access to daily trip schedule and detail, pay information, mapping and important notifications. Drivers also can use the app to request fuel advances. • IES InMotion Driver allows users to review trip details, read messages, monitor Hours of Service, view paycheck information, upload photos of receipts and view their current route on a map.

IES InMotion Driver

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COOL INSIGHTS

BY EDUARDO KERBEL

THE IMPORTANCE OF

PRODUCT QUALITY IN THE SHIPPING OF PERISHABLES W KERBEL

Eduardo Kerbel is the postharvest technology business manager of Global Container Refrigeration at Carrier Transicold. He works closely with customers, sharing his knowledge and experience to help them advance their success in transporting perishable goods from farm to consumers everywhere.

hether it is blueberries or bananas, transporting fresh produce to distant destinations is successful only if the produce arrives well preserved and in optimal quality. This requires every stakeholder to perform critical steps along the cold chain. When fresh produce arrives at the departure port, shipping lines trust that it’s been handled by growers and packers in accordance with the best cold chain practices. These are vital to avoid problems in transit. Proper harvesting and handling practices are the first critical step. Fruits and vegetables must be picked at the right moment, factoring in the time required for transport. Also, handling should not injure the produce, as it can set off a chain reaction of premature ripening in transit. Criteria, such as harvest age, diameter, maturity and firmness, are important parameters for harvesting and selecting produce. In order for produce to arrive at retail in top condition, growers need to consider the farm-to-fork timespan, including the holding time at the country of origin, transit time on the vessel, and time to deliver and display at retail.

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Taking Care at the Packing Plant

Nearly all fresh produce is delicate at harvest, needing protection from direct solar radiation and careful handling both in transport to the plant and while there. Any physical injury can diminish transit life potential and lower quality. The more the produce is handled, the greater the chance for physical injury. Critical issues at the packing plant are sanitation, water quality and potability, and the avoidance of low quality or infected product into the packing line. Produce should also be processed, packed and cooled as soon as possible on the same day as harvest. Proper packing and packaging also are critical. Adequate packaging materials should be used to protect perishables from physical injury. It also should have ventilation for proper pre-cooling. Packaging materials should allow for fumigation treatments for insect-control, depending on the receiving country’s requirements.

Avoiding Breaks in the Cold Chain Temperature management is imperative for any product to reach its maximum transit-life potential. Handlers should use the fastest and most effective means of pre-cooling for each specific product, bringing temperatures down to the minimum safety level based on guidelines. Once the desired temperature is achieved, it is important to avoid exposing produce to temperature fluctuations beyond allowable limits. Pre-cooled

produce should never be mixed with warm produce in the same refrigerated container, as the warmer product will reduce transit-life potential of the pre-cooled product.

Ethylene Ethylene is produced by all fresh produce, and its presence should be minimized during transit because it can accelerate ripening, aging, decay, and loss of firmness and texture. Minimizing ethylene starts at the packing plant. A properly refrigerated and tightly-closed cross dock should be maintained when loading produce into a container. However, if complete closure between container and dock cannot be achieved, the refrigeration unit should be shut off during loading to not draw in ethylene, which can be generated by nearby decaying plant material or emitted in the exhaust of vehicle engines. To maximize success in transporting perishables, growers, exporters and shipping lines should work together to clearly define responsibilities and agree upon handling and transport practices. Additionally, desired oxygen and carbon dioxide levels should be communicated if technologies such as Carrier Transicold’s XtendFRESH™ controlled atmosphere system are being used to help extend transit times over longer distances. When all stakeholders have a clear understanding of the importance of initial product quality and condition, the use of proper handling and packaging techniques, and the optimization of shipping conditions for the voyage ahead, the results will be “fruitful” for all.

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COVER STORY

FOOD LOGISTICS | SEPTEMBER 2017

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BY MARY SHACKLETT

www.foodlogistics.com

9/1/17 3:42 PM

ARE GROCERS READY FOR MULTICHANNEL FULFILLMENT? Following Amazon’s acquisition of Whole Foods, traditional grocers that are not already online must find a way to enter the multichannel world.

s the world continues to move online, how we shop for our groceries also is changing. Already two years ago, online grocery shopping studies found that one-third of primary grocery shoppers had bought groceries online within the past year, and that this trend was extending across all age groups. Brick Meets Click, a retail consultancy, surveyed U.S. consumers and reported that 1 in 5 of these shoppers was now an active user of online grocery services, and that these shoppers spend an average of 16 percent of their weekly grocery dollars online. Then in 2017, Amazon bought Whole Foods Market, stepping into the brick and mortar side of the

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grocery business. It was a clear message to traditional grocers that if they were not already in an online, multichannel environment, they had to find a way to enter that world—because that’s where their shoppers were going.

Competing in a Multichannel Grocery Environment “There is now an unprecedented amount of competition in the food industry to where it has become a virtual food fight,” says Jim Tompkins, a supply chain and strategy expert and CEO of Tompkins International and Monarch FX. “You SEPTEMBER 2017

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COVER STORY

GROCERY 4.0: HY-VEE MOVES BEYOND

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THE TRADITIONAL RETAIL EXPERIENCE Retailers are well-positioned to handle the planning aspects.

The biggest hurdles will be around the in-store execution.” Eric Lamphier, senior director of product management, Manhattan Associates

have restaurants and department stores like Target and Walmart getting into the grocery business to the point where the lines are now blurred as to where you can get your groceries. Brand loyalty is not what it used to be. For traditional grocers, they are now in a new business environment. The challenges for them are in knowing how to position themselves to succeed in this environment. Do they lower prices? Or offer higher quality? They have to figure out what it is that will get people in the doors.” One of the ways retailers do get people in the doors is flexibility in options. In other words, if an individual wants to order a grocery item online and then pick it up later at a store, they should be able to do that. If they want home delivery, it is nice to know that the option is there. For others, brick and mortar presence still is a major part of their food shopping experience. Together, these consumer wants add up to a need to address grocery sales and services through multiple channels. “In the way that the smartphone industry took off after a few rough starts, I expect the home grocery delivery and pick up in store market to eventually achieve widespread success,” says Eric Lamphier, senior director of product management at Manhattan Associates. “Retail grocers and food companies are trying to adapt to a world where more and more purchases are completed

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Amazon, Walmart and Target are not the only retail giants determined to develop beyond the traditional grocery capabilities. Hy-Vee Inc., an employee-owned grocery chain with more than 240 retail stores across eight Midwestern states, added 50 jobs to its IT department in April, as part of a corporate restructuring focused on growth in its dedicated health and wellness sections, restaurant operations and information technology. The process also included 20 jobs intended to develop HealthMarkets, HyVee’s dedicated health departments, and the store’s MarAn ket Grille restaurant concept. Currently, Hy-Vee operates e-commerce 179 HealthMarkets and 103 Market Grilles. warehouse This recent restructuring, while not an uncommon occurrence for a retailer, indicates that Hy-Vee intends to will allow the continue this development chain-wide. IT, an area that company to retailers typically have been reluctant to invest in, saw stock more fastthe biggest staff increase, acknowledging the increasmoving products ing role technology plays for retailers, both in-store and and possibly through e-commerce. With its larger staff, Hy-Vee says it speed up home will create more apps, store programs and online content, delivery.” meaning increased personalization and special features that are likely to attract today’s tech-savvy consumers and bring the chain into the digital age. One such feature already available includes its mobile app, where shoppers can access their rewards balance, build a shopping list and refill their prescriptions. Meanwhile, Hy-Vee’s Market Grille concept, which the company promotes as a restaurant and community gathering place, has proven quite popular. Investing in restaurant operations can be a risky business for retailers, but Hy-Vee has been able to attract customers to its brick-and-mortar locations with a slightly upmarket dining experience and trendy offerings like craft beer, breakfast skillets and flatbreads. As the concept evolves, the company hopes to continue driving traffic between the supermarket and the restaurant. The company’s HealthMarkets departments remains something of an outlier in an industry where most retailers have integrated their health and specialized diet offerings throughout stores. It is thought that standalone sections are a turn-off for the average shopper and unnecessarily segregate healthful products that otherwise have broad appeal. It remains unclear how the chain will use the investment to attract more shoppers to the department. Additionally, over the last year, Hy-Vee has opened concept stores that offer clothing, a special beauty and cosmetics department, and a glass-room wine cellar with more than 1,500 bottles on display and has plans to build a 137-squarefoot e-commerce fulfillment center and industrial kitchen in Kansas City, Missouri. The new facility will support the retailer’s Aisles Online e-commerce platform in Kansas City, and will supply the city’s stores with prepared meals. When Hy-Vee launched its Aisles Online ordering and delivery program two years ago, it highlighted the use of “personal shoppers” who would fulfill every order instore. The idea connected the online and store experiences and reassured skeptical customers that someone would carefully select and prepare their orders at the same place they were used to shopping. Most retailers, whether they run their e-commerce platform themselves or use a third-party provider, follow a similar format where their stores serve as the warehouses for online order fulfillment. As e-commerce traffic grows, however, this model begins to wear on the store experience, as workers crowd the aisles and in-demand products become scarce. An e-commerce warehouse will allow the company to stock more fast-moving products and possibly speed up home delivery by optimizing product placement for quick picking and packing.

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COVER STORY

I expect the home grocery delivery and pick up in store market to

eventually achieve widespread success.” Eric Lamphier, senior director of product management, Manhattan Associates

continued

online versus in person. Grocery stores are one of the last retailers to really embrace the e-commerce wave. It’s the remaining shopping necessity that requires people to venture out of their homes.” Lamphier adds that while the technology to enact grocery delivery already exists in terms of integrated order management, warehouse and transportation, and the ability to provide visibility into inventory and distribution channels, the path to profitable execution is not 100 percent guaranteed. “Questions remain about whether stores will have enough online orders to justify the investment into delivery vehicles, temperature maintaining vessels and staffing for delivery,” he says, adding, “The bottom line is that brick and mortar grocery stores will need to transform themselves from strictly in-store strategies to omnichannel locations.”

A Uniformed Multichannel Experience The problem is: grocers aren’t known for having an amazing online and in-app experience, because they haven’t needed it in the past. Instead, they’ve been focused on pristine in-store displays and fully organized and stocked shelves. All of this makes developing infrastructure and strategies to meet the needs of today’s online consumer a challenge. “A major impact will involve labor considerations, as this transformation increases the need for employees to focus on fulfillment, as well as shifting schedule demands that weren’t part of the equation before omnichannel grocery was an option,” says Lamphier. “Once the grocery store also functions as a warehouse, it has to be able to answer questions like: ‘How do you forecast the demand for shoppers who want the best of both worlds— the luxury of delivery sometimes,

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as well as the occasional in-store experience?’” Tompkins agrees that there are challenges ahead for grocers because of the experiential differences between online and in-store shopping for groceries. “Being able to offer everything online that you offer in a physical store is impossible to do in an industry like groceries,” says Tompkins. For example, you have different categories of goods, he notes. There are the restockable types, like paper towels, soap or cereal, that can be treated and sold the same online as they are in-store. But then there are the unique pantry items that are not standard and restockable, like a customized birthday cake or a try-and-buy cheese center, where the salesperson assists customers in matching their cheese with their wine. There also are refrigerated and fresh items. For instance, many customers want to be able to choose their own fresh salmon from the display case; they do not want someone to do it for them. Tompkins believes that grocers are better off if they think of the task ahead as a “unichannel” instead of an omnichannel approach.

“When I think of omnichannel, I’m thinking that omnichannel is something that a retailer does,” he says. “For the grocery industry, I prefer instead to use the term unichannel, because what grocers want to do is make all of their channels perform as one in the eyes of their customers. To do that, customers have to have the same experience, whether they order online or visit a physical store.” Of course, the experience isn’t going to be uniform for the consumer in every respect. It’s likely they will still prefer to pick out their fresh salmon personally—but what Tompkins and Lamphier are referring to is the ability of grocers to align as many common business processes to both the online and the in-store shopping experience as possible, so that shoppers experience consistency across both channels. “When grocers move to an environment where they must address multiple channels of sales, they have to adapt their business processes and systems to support the strategy,” adds Tompkins. “This is why it is important to identify business processes that are common to each channel. The areas that usually are common include www.foodlogistics.com

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COVER STORY

continued

anticipated to be purchased online versus in store, as well as to the timing of those purchases.”

Impact to the Supply Chain

sales, procurement, warehousing and distribution, and the overall workflow of the supply chain.” In many cases, especially for perishable items, e-commerce grocery will likely still mean fulfillment (pick up) at local grocery stores, but grocers will need to adapt their distribution channels to handle both in-store and online consumption without impacting the in-store experience. “Omnichannel grocery affects the buying process and strategy for how to replenish and replace products in both distribution centers and stores,” says Lamphier. “If you’re trying to create a model for online orders, adjustments will need to be made to the quantities of items that are

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Clearly, there is pain involved in getting to this new multichannel approach for traditional grocers, but as online giants like Amazon move into the brick and mortar world, historically brick and mortar operations have to adjust to online sales as well if they are to remain viable. Nowhere are these growth pains likely to be felt more keenly than in the supply chain. “There’s work to do, with plenty of opportunity for development and innovation,” says Lamphier. “Retailers are well-positioned to handle the planning aspects through transportation and warehousing, but the biggest hurdles will be around the in-store execution of the order. For example, how do you know that the inventory is there? How do you route it to the right store? How do you pick it, and do you complete the process via pick-up in store or home delivery? We are at a tipping point for adapting existing inventory and supply chain technology to fully capitalize on these market opportunities.” Although warehouse operations, which already deliver to physical stores, might not change significantly if a grocer decides to use a pick-up in-store model for online orders, there is impact to systems, such as Point of Sale (POS), and other store services. Lamphier explains that one example of this is when the customer comes into the store. How is the store going to handle that? “For instance, do they order online and have the purchase delivered straight to their vehicle in the store parking lot? The grocer has to determine how the process works,” he adds.

The challenges of managing perishable foods must also be addressed. “Because we’re talking about perishable food, we know that home delivery is going to be very difficult,” says Lamphier. “The food delivery vehicle needs to be the size of a parcel delivery truck or smaller and include cleanliness and safety inspection. Retailers will need to create the correct temperature zones for the respective types of foods, and implement software optimization for delivery routes and pickup/drop-off. There’s a lot to the process, and until someone really knocks that out of the park, it’s going to be a hurdle for grocers to overcome.” The catch here is: it may not be as large a challenge for logistics and distribution strongholds like Amazon, which larger grocery chains will find themselves competing against. “In the end, the challenge for the food supply chain in a multichannel environment is all about velocity,” says Tompkins. “In other words, can the goods be sourced from origin to destination and ultimately to the customer to meet the customer’s expectations? And how can you guarantee the freshness of goods, especially if they are perishable?”

Managing Profit Margins Many large grocery chains have profit margins that average between one and two percent, so there is not much room for error, as grocers work to open multichannel shopping environments. “Consumers have grown increasingly fickle by having become empowered by social media, online search and other tools that let them compare companies and products and communicate their experiences and opinions to others,” reports Alix Partners, a corporate turnaround consultancy. “The historical model of one-way mass-market communication is giving way to two-way dialogue and relationship building… Because of all of those forces, CP (consumer products) companies, www.foodlogistics.com

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COVER STORY

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especially the larger ones, have had difficulty in growing their top lines during the past four years. In fact, revenue peaked in 2013.” This likely means that large grocery chains will need to compete against new forces, like Amazon-Whole Foods, by relying on the knowledge and skills of internal staff, which may not include comprehensive knowledge and skills bases for competing in online environments or for adapting business processes to multichannel engagement with consumers. “The real issue here is not ‘bricks and clicks,’ but ‘bricks and cliques,’” says Tompkins. “Amazon, an e-commerce presence, now buys Whole Foods so it can give its clique of buyers ‘bricks.’ But if you’re a traditional grocery store chain and must now compete with a large online presence with for-

midable warehousing and logistics capabilities, you might be asking yourself how you will be able to compete with that mode…In China, Ali Baba grocery stores enable you to choose your fresh lobster, which they will cook for you in the store while you shop. Models like this are what traditional grocers are competing against. Ninety percent of these stores look like they did 35 years ago, and now they find that in addition to adapting to a multichannel approach, they must cut prices as well. It’s a difficult challenge.”

Keys to a Successful Transformation Although the road to multichannel grocery shopping may be difficult, large grocery chains still have their brands, their followings and the good will they have cultivated through the years. It’s a foundation that can be built upon. “The key is to know who you are and to do it really well,” says Tomp-

kins. “Some grocers focus on shiny apples in well-appointed displays. Others want to show a farm-toshelf approach, with the dirt still on the apples. Grocers need to be asking themselves these questions about identity. Do you want a coffee shop in the store? Do you want to have private label goods? Do you want to offer in-store samples of food? What are the demographics of the customers that you are targeting to serve?” At the same time, retail grocers need to assess their own ability to deliver on an e-commerce order, and truthfully evaluate how they can best deliver the goods. “A fundamental question that retail grocers need to be asking themselves is whether they have a website and/or app

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that allows a customer to place an online order,” adds Lamphier. “Success will depend on whether or not they have a convenient, responsive customer experience that is well connected to their in-store inventory positions. Then, they need to determine how online orders will

be routed to the appropriate stores. They also need to assure themselves and their customers with a high level of confidence of in-store inventory levels.” Tompkins adds: “In the outbound side of the supply chain, grocers have to run their supply chains based on demand, whether that demand is from online or in-store sales. For example, if you know that you only sell five items of something daily, why keep 24 items stocked on the shelf?” The Amazon Whole Foods purchase was a wakeup call that shook up traditional grocery chains, because it

transformed having a multichannel grocer consumer experience from an option to an absolute competitive requirement. In pursuing a multichannel strategy, grocers should take away one lesson from Amazon, which filled its brick and mortar “hole” by making the Whole Foods acquisition. Large grocers with an established brick and mortar presence must do the reverse; they must fill the online shopping gap in their own consumer fulfillment strategies. “Companies will have to reconfigure their business models in innovative ways, such as by deploying direct-to-consumer distribution and making savvier use of digital channels in their marketing and product distribution strategies,” says Alix Partners. “And, they’ll have to make their supply chains more efficient than ever while also becoming nimble enough to satisfy consumers more swiftly and effectively than ever.”

Grocers have to run their supply chains based on demand,

whether that demand is from online or in-store sales.” Jim Tompkins, CEO, Tompkins International and Monarch FX

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3PL/REFRIGERATED LOGISTICS

BY BARRY HOCHFELDER

FOR 3PLS, THE FOOD AND BEVERAGE INDUSTRY ADDS MORE COMPLEXITY Cost, consumer demand, regulations and the ‘Amazon Effect’ offer new challenges that must be met.

ogistics, warehousing and transportation are difficult enough, but as third-party logistic providers (3PL) begin to move further into the food supply chain, the complexities increase, especially when time and temperature are added into the mix. The pain points they feel range from a variety of areas, including seasonal pricing shifts, transportation times, availability and efficiency of trailers, driver shortages, increasing regulatory issues, and a more global market, to name a few. In addition, consumers are demanding fresher, locally sourced products, adding another layer of complexity. With all of this stacked against them, why would 3PLs want to transition into the food and beverage sector or expand their operations? After all, it’s expensive and risky, says Mark Smith, area vice president of Penske Logistics in Corona, California. The cost of equipment can be enormous. “A multi-temperature reefer trailer with a lift chain is going to be about as much as a tractor now, so over $100,000…whereas a dry trailer is under $20,000. The

FOOD LOGISTICS | SEPTEMBER 2017

 Operating a cold storage facility is costly, given the investment and maintenance required for freezers, coolers, and related pipes and mechanics.

inhibiting factors on the transportation side are the start-up costs and maintenance that you have to spread out over the life of the trailer and the contract.” On the warehouse side, the cost also can be prohibitive compared to a dry building, Smith explains. Because of the freezers, coolers, and related pipes and mechanics, it takes a larger crew who understands how to keep them working and do repairs quickly if necessary. Making that investment carries risk along with it. But, if done right, the

risk will pay off. “All that is more expensive, and you have to plan for it at the startup. [But it can be] lucrative because firms and consumers are paying for your expertise. They’re paying you to take the risk in all of this, whether it’s maintaining operating conditions of the trailer or ensuring product arrives within the correct temperatures. You’re taking all that risk, so they’ll pay more for it.” A cold chain warehouse is approximately four times the capital investment of an ambient facility, www.foodlogistics.com

according to Doug Harrison, president and CEO of VersaCold in Vancouver, British Columbia. He points out that a refrigerated trailer-tractor combination is about 60 percent greater than a dry trailer and tractor. “Certainly, you’re dealing with a much higher level of claims potential because of the sensitivity of the product.”

Going Global VersaCold focuses exclusively on temperature-sensitive food and beverage products and has seen the landscape change in its 71-year history. “The industry is far more global than its ever been,” says Harrison. “We’re seeing products manufactured around the world and being brought into local markets. This creates a number of supply chain challenges and border-point issues that we have to work through. And we’re seeing far more regulations in terms of food safety…and much more rigidity around what exactly food safety means.” Harrison also cites a consolidation of the customer base in food manufacturing, as well as a shift in products. “Where you used to see a lot of canned [products] or products that had longer shelf lives, we’re now seeing much more high-quality prepared foods—fresh foods that all have a far greater sensitivity to temperature and shelf life.” Smith, who has been in the industry for 30 years, adds that he’s “amazed” at how the world has become so much smaller. “Products that you thought wouldn’t cross borders, or are [going to] Europe from the U.S., [is something] you didn’t see years ago. There’s a blending of borders where you can find product nearly anywhere. People are looking for the best quality at the lowest prices.” The issue of regulations has also blended across imports and exports. The United States exports a www.foodlogistics.com

lot of pork and poultry and imports a large variety of food and beverage product. The impact of that, though, has been the regulations required to ensure that contaminated products don’t go in either direction. The regulations help reduce or eliminate the spread of food-borne illnesses from such events as mad cow disease or avian flu. Smith urges constant vigilance to assure that regulations are met. “We’ve had to

learn and understand what these [regulatory] changes are. Ignorance of the laws is not going to excuse a regulatory offense.” VersaCold’s Harrison adds that other investments will be necessary to meet the regulations, including technology to monitor temperature shifts, as well as changes to product dates and codes. Having the capability to analyze the customer supply chain will only add greater efficiencies.

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3PL

continued

OUTSOURCING VERSUS INSOURCING: DRIVING CUSTOMER VALUE WITH NEW SERVICES To insource or to outsource? That is the question manufacturers, retailers and foodservice operators alike consider when evaluating their supply chain operations. Increasingly, the dynamics associated with fast-moving consumer demands, relentless competition, SKU proliferation and regulatory compliance all lead to outsourcing as the answer. Tim Smith, executive vice president, sales and business development at Lineage Logistics, says that serving as an integrated extension of customers’ cold chains allows them to concentrate on what they do best—make and sell food. “By applying best practices for internal activities like freight optimization and transport lane performance to outsourced logistics, cold chain providers can help customers optimize their operations and achieve significant cost savings,” he says. “The value we can deliver is undeniable, and the services we provide address multiple customer hot-button issues, including real-time visibility in the supply chain, transportation management solutions, inventory control efficiencies, network lane optimization among multiple customers, sustainability, food safety, labor availability and security. Perhaps most impactful, our solutions can drive revenue growth by getting fresher products to the shopper faster and dramatically reduce food waste.” Over the past few years, Lineage Logistics has expanded its portfolio with other value-added services, among them high-pressure processing, manufacturing, import/export and customs brokerage, with the intention of providing customers the most cost effective outsourcing solution. According to Smith, the inherent connectivity offers strong visibility into the data customers need to maximize their supply chain spend, which is especially evident in Lineage’s Managed Transportation Services (MTS) solution. “Our MTS combines Lineage’s extensive network of facilities spanning more that 100 locations across North America and Europe with highly scalable TMS technology from BluJay Solutions to provide systems, data and operating capabilities. The strategic partnership, announced in March, also leverages $25 billion of spend data, an unprecedented opportunity for customers in the food and beverage space to maximize performance and realize dramatic cost savings,” he says. Smith adds, “Our greatest opportunity in providing an outsourced solution is establishing meaningful partnerships with customers, which can lead to true transformation in their supply chain. For example, by helping a manufacturer enter a new market or developing a staging area within a facility to bypass a retailer’s DC (distribution center) en route to its stores, the collaboration can solidify the role of cold chain providers as true extensions of their customers’ supply chains.”

“We’ve invested just north of $1 million in a supply chain solutions team, which is a group of engineers who use advanced software to drive capability into our operating efficiencies, but mainly into our customers’ networks. We’ve invested heavily in a team of food scientists because all of our business is food related. We have a team of food scientists and food safety professionals who work closely training our people and our customers on how to handle fresh product to get it through to market fast, but in a safe way.”

The Summertime Blues The summer months add another layer of complexity to the food and beverage supply chain. “You always see higher rates in the summer time, and that’s due to a lot of the

FOOD LOGISTICS | SEPTEMBER 2017

vegetables and produce and food-grade items that are being harvested and shipped out,” says Jeff Mosqueda, vice president of sales, Temperature-Controlled Division, Johanson Transportation Service in Fresno, California. “When you’re moving food and beverage, the majority of it travels on reefers. There’s also heavier demand for trailers due to capacity spikes during peak markets around the holidays and summer months. You start to see a demand for capacity and with that goes the pricing.” That creates additional pain points as it affects transit times and communication deadlines, which will be complicated even more as electronic logging devices (ELD) become mandatory. The phase-in compliance begins on Dec. 17 of this year. The full-compliance phase begins on Dec. 16, 2018. “That’s going to have a huge effect on transit

times,” Mosqueda says. “A lot of the food and beverage industry will now start demanding team runs, or go to a more regional-based distribution strategy, because drivers can only legally travel solo 550 miles on the ELDs. It could add a day-and-a half to transit times.” Work-arounds will be necessary to meet the ELD rules. Mosqueda advises dialogue with shippers, receivers and customers to consolidate loads and work with drop trailer programs. He also advises shippers have their products prestaged, so that trucks and drivers aren’t waiting and spending live hours and drive time at the dock. Meanwhile, there’s also the issue of driver shortages and finding talent who will work in very cold conditions, Harrison says. “In our warehouses, we’re looking for people that are willing to work at -25 degrees Celsius (-13 Fahrenheit) for 8 or 10 hours a day. And we’re looking for drivers that are going to be handling more dense products and deliver them to food retailers, directly into restaurants and into other franchise environments.” The lack of available talent, whether it’s drivers or warehouse workers, is occurring “at an alarming pace,” Smith adds. “Just fulfilling those roles are becoming more and more difficult in today’s world because it’s hard, physical work with many hours. That’s probably the biggest issue we run into, and not just in food and beverage. “On the food and beverage side, it’s not so much the regulations,” he adds. “It’s the customer’s expectations and our internal expectations to meet food handling performance indicators. We’re always seeking the right temperature consistently, making sure that there’s no gaps within the entire temperature of the cold chain process. Product must get manufactured, moved into a truck, transported to a distribution center and onto its final destination.”

I Want It Now We’ve all heard about the “Amazon Effect” and how the company www.foodlogistics.com

has changed the way supply chains operate. Johanson Transportation Service’s Mosqueda calls it “the elephant in the room.” “They’ve created the supply chain juggernaut,” he says. “This includes the food and beverage [industry] and warehousing, as well as the demand for food and beverage. It was only five to seven years ago when you ordered a package and expected it to arrive in a week at best. That was the normal expectation when ordering online or through a catalog.” In those days, Mosqueda adds, people would only order online if the local retail store didn’t stock what you wanted. And then you knew it would be a week or two before the item arrived. Which brings us to the Amazon Effect and the company’s recently approved purchase of Whole Foods—an internet company buying a brick-and-mortar company. What does that mean for 3PLs? Even more complexity caused by

managing instantaneous demand, says Harrison. “You’re moving away from typical stock orders to a retailer and into more long-term cycles around replenishment. Today’s consumer expectations may mean that I have only hours to fulfill an order within a local market. “It’s now about how we leverage technology, analysis and local resources to make sure that we can fulfill that instantaneous demand,” he adds. “Of course, the complexity with food is short shelf life, the need to maintain product at a greater temperature requirement—all at instantaneous speed.” Penske’s Smith sees a trend toward fewer brick-and-mortar operations, changing the way 3PLs operate. “You’ll see more small packages, small deliveries going out, so that’s going to change our mode of transportation. We’re going to have to learn how to deliver to a home instead of a distribution center. We’re going to have to learn how to deliver

to a small pod for a whole apartment complex instead of a grocery store. It’s going to change what that final mile looks like somewhat.”

A Final Bit of Advice Even with 3PLs serving the food and beverage industry, efficiency remains key. That means maximizing trailer space, consolidating orders, and maximizing cost per box, advises Mosqueda. “You have to be on time, you have to be loading when you said you’re going to be loading, and delivering when [you said you would be] delivering. The days of the five-hour load or unload times really need to become extinct.” Why? For your customers to compete effectively, they have to know exactly where their shipment is at all times—and exactly the cost. “The analytics behind that,” Mosqueda says, “are second to none. You’re seeing MIT grads and Ivy League grads enter the logistics and supply chain industry because it has become a science.”

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SEPTEMBER 2017 | FOOD LOGISTICS

SECTOR REPORTS WAREHOUSE

BY AMY WUNDERLIN

INNOVATIVE DOCK EQUIPMENT GETS THE

The right lighting and dock equipment can create a safer and more efficient operation.

hen you think about safety at the loading dock, lighting may not be your first thought. But innovative lighting solutions are some of your greatest tools in maintaining not only a safe environment, but a more efficient operation overall. Food Logistics recently caught up with Walt Swietlik, director of customer relations and sales support at Rite-Hite, a leading manufacturer of material handling systems designed for maximum safety and productivity. Swietlik shared five of the newest and most effective lighting solutions on the market today.

LED Lighting Illuminating the inside of the trailer for proper loading and unloading is not a new concept. However, traditionally that was done with different types of incandescent bulbs and flood lights. Today, Swietlik says, the food

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industry has for the most part all converted to LED lighting, with more robust mounting fixtures to building walls and arms to angle lighting into the trailer. “Fortunately, we’ve been involved in illuminating the inside of trailers with LED lights for close to 10 years now, and if you studied anything about lights, you know that LED is certainly the wave of the future,” he says. Some of the benefits to adopting LED lighting include its brightness, efficiency and durability. It’s only downfall may be that sometimes it is too bright. “One challenge dock attendants complain about is that when backing out against the LED lights, the brightness makes it difficult to see,” Swietlik explains. Rite-Hite offers the Rite-Vu Light Communications Systems family, which includes the Approach-Vu with built-in motion sensors that automatically dim LED fixtures

Using motion sensors, Approach-Vu, shown above, automatically dims LED fixtures when a lift truck approaches.

when a lift truck or other material handling equipment approaches the light. “The dock attendants have shown a very strong preference toward that type of equipment,” Swietlik adds.

Blue Light Special Pedestrian safety is a top priority on the loading dock. But collisions between forklifts and people are still a major problem. According to the National Institute for Occupawww.foodlogistics.com

9/1/17 4:32 PM

tional Safety and Health (NIOSH), close to 20 percent of all forklift accidents involve a pedestrian being struck by the forklift, translating to nearly 19,000 people per year. Rite-Hite’s Rite-Vu Light Communications System also includes a tool to address this safety hazard— the Pedestrian-Vu. “Often the pedestrian is distracted or unaware of what’s going on inside the trailer, and they walk by the dock door just as a forklift is backing out,” explains Swietlik. “We’ve had some rather serious injuries and some scary near-misses between lift trucks and pedestrians.” The Pedestrian-Vu is an enhancement to its dock lock product that illuminates a blue light on the dock leveler any time there is equipment or people inside of trailers. Pedestrian-Vu also works in conjunction with Dok-Lok products to alert any dock worker or forklift that enters an unsecured trailer. The blue light flickers as an audible alarm alerts the unsuspecting dock worker that they’ve entered an unsecured trailer, while the external light system simultaneously changes to red, warning the truck driver that there is activity inside the trailer. “The feedback from the market has been very strong and very positive on this enhancement, since the introduction in April,” Swietlik adds. “We’ve been talking about this pedestrian versus forklift scenario for probably the last six or seven years. We offer a number of different guard-railing products, but this lighting really seems to hit a note with the customers right now.”

Dock Locks With a traditional dock lock, there is a control box inside the building. In that control box is a red and a green light, and then there is a red and green light on the outside of the building. When the trailer backs in, the green light is illuminated on the outside of the building, and the red light is illuminated on the inside of the building. When the trailer is hooked up, the light on the www.foodlogistics.com

FLOG0917_32-25_WAREHOUSEsect.indd 33

A light and horn system, embedded in the Dok-Lok vehicle restraint, like the one shown at left, presents a clear visual and audible warning to pedestrians in the drive approach when a backing vehicle is detected.

outside of the building changes to red, indicating to the truck driver not to pull the trailer away. And on the inside of the building, the light changes to green. In some cases, Swietlik explains, the control box that controls the

dock lock on the inside of the building can be blocked by product loads that are being staged on the dock, thus blocking the green light, and the communication to the dock attendant that the dock is safe. “We’ve added lighting around

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SR: WAREHOUSE

The Safe-T signal, shown above, is suspended above a busy warehouse intersection. Much like a traffic light, the safety light alerts both forklift operators and pedestrians of activity up ahead.

continued

the dock door and dock leveler that Outdoor Lighting replicates the light sequence on Rite-Hite also recommends the inside control box, so when the lighting on the outside of the inside light goes to green, we show building. Its innovative solution, that green light, not only on the called Approach-Vu, uses sensors to control box, but around the overdetect the motion of a tractor-trailhead door, as well as at the base of er loading into a dock position. the dock leveler,” he adds. On the outside of the building, The same holds true when the traditionally there is a red and a dock lock is unlocked, and the light green light for the truck driver to changes to red inside. That red light help him back into the dock and is on the control box, it’s around the know when the trailer is locked and overhead door, and it’s at the base when it’s unlocked. But, Sweitof the dock leveler. lik says, a significant number of “This enhancement catastrophic is very common sense, Close to 20 percent of all injuries are documented but they’re intuitive to forklift accidents involve as a result of the client and to the opa pedestrian trailers backing erator. They don’t take a being struck by into people lot of training, but they the forklift.” standing in the go a long way in letting The National Institute drive approach. people know what’s for Occupational Safety and Health (NIOSH) Using the going on,” he adds.

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dock lock enhancement, a visual and audible alarm located on the vehicle restraint alerts both dock workers and pedestrians in the drive approach of the impending danger. This multisensory alert system is particularly important because ambient noise often masks the sound of a cab’s noisy engine, which can be 70 feet or more from the back of the trailer. “As we’ve investigated these accidents, what appears to happen is that the dock attendant is doing maintenance or paperwork at the dock face, and with all the other noises and distractions, they’re oblivious to the trailer backing in,” he explains. “By adding these lights and alarms right at the dock face, where the dock locks, we significantly increase the awareness for the dock attendant when the trailer backs in, hopefully avoiding this problem of people getting crushed by backing trailers.”

Intersections Not specifically addressing loading dock safety, but important in many food and beverage operations, Rite-Hite released a traffic light for warehouse intersections at ProMat in April, called the Safe-TSignal. The product alerts material handling personnel of dangerous www.foodlogistics.com

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intersections, much like a traffic light does for motor vehicles. The Safe-T-Signal is suspended from the ceiling, about 16 feet off the ground, at the center of an

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intersection. It has motion sensors (up to four motion sensors for a four-way intersection), and as a pedestrian or a lift-truck driver approaches, the device activates

to send a yellow signal to the other three aisles that make up the intersection, indicating that there’s something going on there and to slow down. If someone is approaching the Safe-T-Signal from the aisle on the right, and another person happens to be approaching it from the aisle on the left, the light will give both people a red signal, indicating they both should stop and figure out who’s going to proceed first. It also will show yellow signals to the other two aisles, indicating they should slow down and see what is going on up ahead. When a red stop alert is illuminated, a blue light also is shown on the floor as a redundant warning that something is occurring, and all parties should slow down. “It’s simple, it’s intuitive, and all it requires is the client to plug it into a 110 outlet, and they’re up and running,” explains Sweitlik.

These enhancements

are very common sense, but they go a long way in letting people know what’s going on.” Walt Swietlik, director of customer relations and sales support at Rite-Hite

SEPTEMBER 2017 | FOOD LOGISTICS

9/1/17 4:33 PM

SECTOR REPORTS TRANSPORTATION

A new fleet of vehicles designed to navigate the urban environment and boost efficiency for deliveries is gaining traction.

BY AMY WUNDERLIN

URBAN SPRAWL:

SOLVING THE LOGISTICAL NIGHTMARE

he urban population is changing. And unlike the post-war sprawl to the suburbs in decades past, people are now moving back to the city—creating logistical challenges throughout the supply chain. In addition to substantial urban growth, changing consumer habits over the last 20 years have created increased pressure on the food and beverage industry, as it copes with the challenges presented in delivering anything from meal kits to groceries quickly and safely in a tight urban environment. According to the National Highway Traffic Safety Administration (NHTSA), 47 percent of vehicle crashes occur in an urban environment. “That’s kind of a surprising stat

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for drivers to learn,” says Laura McMillan, vice president of training development at Instructional Technologies Inc. (ITI). “They may not realize that there’s just as many hazards and dangers (in an urban environment as on the freeway). Traveling at a slower speed doesn’t mean they are at a lower risk of getting in a crash with others.” ITI, which provides a variety of training solutions for the transportation industry, recently released a series of courses designed to address the specific challenges and distractions that professional drivers face in an urban environment. What they learned while designing the online course is that although there are definitely collisions and crashes associated with freeway traffic, compared to urban envi-

ronments, the freeway is relatively safe. The reasoning? While people are traveling at a higher rate of speed on freeways, the traffic is generally moving in one direction—unlike cities where traffic is stop and go, vehicles are turning in different directions at busy  Kenworth offers two models, shown at right, that are ideal for the challenges of city driving: the T270 and the K270.

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 Isuzu’s Low Cab Forward (LCF) design is the perfect medium duty truck for urban areas thanks to its maneuveratbility and narrow turning radius.

The congestion in city areas is “Maneuvering the trucks significantly greater in terms of not around congested city streets is only increased traffic but navigastill the most difficult part of a tional challenges and distractions, driver’s job. This is why Kenworth as roads are narrower, and there puts such a large emphasis on often is less or smaller signage. visibility and maneuverability “When you’re out on the freeway, when designing our medium duty you have the great big green signs, trucks,” says Kurt Swihart, Kenand you usually have signs that give worth marketing director. you a mile or more to let you know Kenworth offers two model where certain exit points are,” exconfigurations that are perfect for plains McMillan. “That isn’t the case urban applications. The T270 is a in the cities. You’ve got restrictions non-CDL conventional truck rated in terms of signage and information at 26,000 pounds Gross Vehicle about where you should be or where you need to turn. That can be a complication for drivers, especially if it’s a city or urban environment that they’re not familiar with.” Unfamiliar territory in the urban environment tends to cause decreased situational awareness, Specializing in Insulated meaning the driver may Bulkheads, Center become confused and not Partition Systems & notice restrictions such as COOL-R Kits, FG makes bridge heights or weight sure that everything restrictions. is designed to fit your

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SR: TRANSPORTATION continued

On a normal delivery route, a driver can make 50+ stops per day.

This means climbing in and out of the truck 100 times each day.”

Kurt Swihart, marketing director at Kenworth

500

POPULATION (MILLIONS)

250

Weight Rating (GVWR). The T270 offers a 20-inch sloped hood, DayLite doors and optional corner windows to provide maximum visibility. For the ultimate in maneuverability, Kenworth also offers a cab-over-engine K270. The K270 is 45 inches shorter than a typical conventional model, and features a massive 2,500 square-inch windshield combined with a 55-degree wheel cut to make even the tightest routes seem manageable. Brian Tabel, executive director of marketing at Isuzu Commercial Truck of America, agrees, noting that Isuzu sees no slowing in the large amount of growth it is seeing in customers buying Isuzu to better handle the urban environment. “Our Low Cab Forward (LCF) design is the perfect medium duty truck for the urban environment,” Tabel says. “The Isuzu LCF has great maneuverability to give drivers a narrow turning radius to make the tight turns they encounter while maneuvering through city alleyways or tighter docks you find in the urban environment. Another big advantage of the Isuzu is the visibility for the driver to see pylons, docks, cars, other trucks, and all the other items you will see in an urban environment.” Outside of the challenges drivers

URBAN POPULATION

face while actually in motion, another aspect that can cause strain on drivers is getting in and out of the vehicle, says Swihart. “On a normal delivery route, a driver can make 50+ stops per day. This means climbing in or out of the truck 100 times each day. Because of this, Kenworth has designed many features into their medium duty trucks that maximize the ease of ingress and egress. “Grab handles and steps are strategically placed on our truck models to make sure that getting in and out of the trucks is as easy as possible,” adds Swihart.

Added Challenges Though specialty urban delivery vehicles do help drivers combat many of the challenges associated with city driving, most specifically maneuverability, ITI believes a little driver training could further reduce the risks. ITI’s course focuses on tips and techniques for drivers to follow when they get into urban traffic situations, but a lot of it comes down to route planning. “If they plan out their route, they’ll be able to look for the navigation signs and be prepared for those well ahead,” says McMillan. “In a city environment, drivers need to be familiar with that environment and check a map ahead of time, so that they can plan when they need to change lanes and set up for turns properly to

>10,000,000

BY CITY SIZE CLASS

5,000,000 — 10,000,000

200 100

1,000,000 — 5,000,000

150

750,000 — 1,000,000

<750,000

1950

1960

1980

FOOD LOGISTICS | SEPTEMBER 2017

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2000

avoid a problem when they reach an intersection.” The training session also focuses on helping drivers understand how to navigate small parking spaces and tight areas around a building or loading dock at supermarkets, liquor stores, shopping areas and the like. Special attention is given to the idea of managing the six sides of space around a vehicle. “Many people think there’s four sides; there’s actually six,” explains McMillan. “You’ve got the front, the sides, the back, and above and below. We consistently train drivers to maintain and manage space on all six sides, with the space in front of the vehicle being the most important.” Distraction—on the part of both the driver and pedestrians—is another major challenge associated with urban delivery. The American Automobile Association (AAA) estimates 60 percent of pedestrians that are killed in an urban environment are killed in a motor accident due to distractions, such as texting while walking or driving. “There’s a lot of attention in the lesson on drivers specifically making eye contact with pedestrians to ensure they see you and know you’re there so they don’t walk out in front of you,” says McMillan. “From a driver perspective, you can’t control whether people are texting and have their head down, but you can hover your foot over the break, and be ready to stop. Basically, expect the unexpected; just know that people do that, especially in congested urban areas. Be prepared for it, and be ready to stop when you need to.” And a big part of being able to stop is slowing down. “The difference that one mile per hour can make between a driver being able to stop the vehicle in time and potentially striking a pedestrian is critical. Everyone gets mad at the truck driver who is slow, but it’s a much safer position,” McMillan adds.

2025 www.foodlogistics.com

9/5/17 11:32 AM

Driver Shortage The challenges of urban delivery can be overwhelming, but there is good news. The urban delivery vehicles now entering the marketplace may actually help relieve an even bigger challenge puzzling the transportation industry, as most do not require a commercial driver’s license or CDL. This means they can be driven by anyone with a state-issued driver’s license. According to the American Trucking Association’s (ATA) most recent industry report, the trucking industry was short 38,000 drivers in 2014, with an estimated shortage of almost 175,000 by 2024 if current trends hold. Kenworth is seeing an increased interest in vehicles that are well suited for tight environments. While part of this is due to the increasing population density of large cities, which makes it more difficult to maneuver trucks in inner-city operations, another factor contributing to this is the shortage

of drivers with their commercial driver’s license. “The majority of trucks in local pickup and delivery operations are expected to be operated by anyone with a driver’s license,” Swihart adds. FG Products, which provides a variety of refrigerated transportation solutions, is helping to solve this dilemma with its COOL-R Kits, which they manufacture and ship to distributors for installation and delivery. The kit is a cargo van insulation package, which can be installed in most van makes and models, including Mercedes Sprinter, RAM Promaster and Ford Transit high roof cargo vans. All three of these brands offer models below 10,000 pounds, no CDL required, excellent fuel mileage and a long service life. A payload capacity of up to two tons is possible with select models after kit and refrigeration installation. “The COOL-R Kit is a fuel efficient vehicle platform, rather than a 20-foot trailer or a straight truck. You don’t have the need for

a commercial driver’s license or a CDL. It’s much more nimble in traffic. It has a much tighter turning radius. And as long as you don’t have a complicated skew model or a lot of different products to deliver, you can really focus on your core business and distribute to the inner cities, where the model fits best,” says Matthew Nelson, vice president and co-owner, FG Products.

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SECTOR REPORTS SOFTWARE & TECHNOLOGY

BY HENRY CANITZ

LAYING THE FOUNDATION

FOR ADVANCED SUPPLY CHAIN PLANNING IN THE F&B INDUSTRY

Robust demand, inventory, replenishment, manufacturing and S&OP capabilities provide the foundation on which to build more advanced supply chain planning.

Henry Canitz is the director of product marketing and business development at Logility, a provider of supply chain management software. He is the former director of supply chain management for a multi-national, multi-channel food manufacturer.

s Glinda the Good Witch says in The Wizard of Oz, “It’s always best to start at the beginning.” In supply chain planning, that equates to developing robust demand planning capabilities. The accuracy of your forecast has a direct impact on the amount of inventory you carry, the number of unplanned production changeovers, and the amount of expedited material shipments. A highly accurate forecast of demand makes all supply chain planning and execution more efficient and effective. Luckily, today’s advanced demand planning solutions provide the tools needed to improve forecast accuracy automatically without having to have a Ph.D. in statistics. With new products making up an increasing portion of revenues and profits in the food and beverage industry, the successful introduction of new products is key to survival. Lack of data demand for new products makes it difficult to forecast using time series or qualitative techniques. However, attribute-based modeling techniques that use Chi-

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squared analysis to develop demand profiles based on attributes, such as package size, flavor or geographic distribution, can significantly improve new product forecasting accuracy. As a product’s actual demand starts coming in, its demand profile can be automatically adjusted or a new demand profile to maximize forecast accuracy can be generated.

Product Demand Profiles Listed in the balance sheet, inventory tends to attract a high level of attention from senior management. So even though supply chain professionals understand that inventory levels are a byproduct of other business decisions—like level of customer service, supply chain design, product quality and the ability to predict customer demand—they also understand that minimizing total inventory while supporting business objectives is a career sustain-

ing imperative. Advanced inventory planning solutions like multi-echelon inventory optimization (MEIO) provide the power to automatically determine the best inventory positions based on forecasted customer requirements and business objectives. Optimal inventory control parameters can then be used to drive manufacturing, purchasing and distribution to ensure the right products are available at the right place and time through demand-centric and time-phased replenishment and manufacturing planning.

The Inventory Efficient Frontier Replenishment planning allows you to resolve potential availability issues before they happen by projecting detailed demand, supply and www.foodlogistics.com

9/1/17 2:23 PM

Segmentation can be used with stochastic planning to group items by acceptable out of stock percentage. The result is a series of replenishment orders for items with intermittent demand optimized by product importance.

Slow and Lumpy Demand

inventory levels into the future. Advanced replenishment solutions provide the ability to run “what-if” scenarios to develop optimal strategies to overcome future potential shortages or surpluses. Product portfolios also continue to grow to meet increasing customer product demands and the channels of distribution in which customers want to buy products. As portfolios increase, so do the number of items with slow and intermittent demand. Statistical methods have a hard time creating accurate forecasts for slow-move items and just don’t work when forecast time periods have zero demand. Luckily, stochastic replenishment planning can be used to tackle the long-tail of inventory items. Stochastic replenishment planning anticipates the timing of intermittent demand by determining the lead-time probability distribution of demand and the probability distribution of demand periodicity. Stochastic replenishment planning creates the appropriate replenishment orders based on the probability of demand happening inside the lead time, and balances the risk of overstock versus the risk of understock. www.foodlogistics.com

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Manufacturing planning should use inputs from demand, inventory and replenishment planning to determine how much of what products to produce to minimize total supply chain costs, while meeting customer requirements. Food and beverage manufacturers that have more than one manufacturing facility need two different levels of manufacturing planning. First, aggregated levels of production quantities need to be assigned to production sites based on expected demand and known capacities. Second, detailed batch processes need to be planned at each plant to meet customer orders. These two planning levels need to be synchronized and aligned. Advanced manufacturing planning solutions will develop optimal aggregate and detailed production plans to minimize total supply chain costs, while considering all supply chain constraints and objectives.

End-to-End Supply Chain Optimization Sales and operations planning (S&OP) rounds out a robust food and beverage supply chain planning foundation. Helping to align and synchronize expected demand to available capacity, S&OP has been a critical supply chain planning process for close to 30 years. Although the focus of S&OP hasn’t always been clear, it should be squarely focused on identifying misalignments and risks far enough into the future to provide time to make significant changes. Instead of examining detailed manufacturing or distribution schedules, S&OP

should be focused on the aggregate to analyze long-term staffing, equipment, facility, partnership, product and market scenarios. S&OP provides that longer-term focus to determine optimal tactical and strategic supply chain decisions that is often missing from supply chain planning operations. Robust demand, inventory, replenishment, manufacturing and S&OP capabilities provide the foundation on which to build more advanced supply chain planning capabilities. If you haven’t built out this foundation, now is a good time to start. Computing power is less expensive and more powerful than ever, allowing for complete end-to-end supply chain optimization using advanced algorithms. Today’s modern supply chain solutions have been built to take advantage of this increased computing power, while incorporating user-friendly interfaces and powerful data analysis and display capabilities. Big data is here and is providing competitive advantages to those companies that have figured out how to use it. Machine learning and artificial intelligence capabilities that help automate planning tasks and free up planners to tackle more value added activities are Without a solid available today. foundation, trying However, without a solid to adopt algorithmic foundation, trying to adopt planning, big data and algorithmic planning, big artifical intelligence data and artificial intellican be an gence can be an exercise in exercise in futility. The war for supply chain planning talent is futility.” fiercer than ever. The millennial workforce will migrate to those companies that provide advanced tools with powerful user interfaces that help them maximize value-added contributions. Think of an investment in supply chain planning capabilities as a way to attract and retain the best talent. Are you considering improving your supply chain planning capabilities? If so, what steps are you taking to build a stronger foundation? SEPTEMBER 2017 | FOOD LOGISTICS

9/1/17 2:23 PM

SECTOR REPORTS OCEAN CARRIERS & PORTS

BY SUE RUTHERFORD

BEYOND

VISIBILITY

Live data from the Internet of Things (IoT) holds the key to boosting cold chain integration and performance.

e are entering an exciting phase in the deployment of Internet of Things (IoT) technology and solutions in supply chain management and operations. Worldwide, we are witnessing an explosion of smart, connected things, exploiting technological advances and reduced costs in telematics devices, sensors, applications, software and communications networks. Analyst IHS Markit predicts that the IoT market will grow from 15.4 billion devices in 2015 to 30.7 billion devices in 2020 and 75.4 billion in 2025. By incorporating IoT technologies and solutions into supply chain networks, we can seamlessly connect business processes, such as shipping and receiving, with peo-

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ple, data and things, such as pallets, containers, trailers, warehouses, distribution centers (DC), terminals and yards, to run these networks at maximum efficiency. The coming IoT generation will be driven by products and solutions that are much more software centric, with robust cloud technology and an open architecture that enables connectivity of fixed and mobile telematics devices, sensors and actuators. This next generation technology will provide for “multi-tenancy,” or the ability to easily encompass different ecosystem participants, such as shippers, third-party logistics providers (3PLs), carriers, ports, DCs and haulers, in a single IoT network—and the flexibility to work with different IoT devices and technologies. With these kinds of platforms in place, and the choice of technologies multiplying rapidly, IoT can become integral to supply chain communities, helping beneficial cargo owners (BCO) and their logistics and transport providers to safeguard shipments, manage timelines, proactively mitigate delays

and breakdowns, comply with regulations, increase operational efficiency across the network, break down silos, and launch new data-driven business services. As supply chains become more complex and regulated, managers everywhere need to know what is going on across their entire network, communicating with suppliers, customers and, often, government agencies at the same time. Any weak points in the chain can cause problems—and where temperature-sensitive food is involved, these problems can escalate all too quickly.

Getting a Handle on Hand-offs Supply chains, especially cold chains, are particularly vulnerable at hand-off points, where different lines of business meet, or where a supplier’s process meets a customer’s process. In a typical international refrigerated container shipment, such hand-offs typically occur at the ship-port interface, during transfer www.foodlogistics.com

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nial challenges of equipment malfunction and human error, leading to cold chain deviations and breakdowns.

Making the Invisible Visible

of containers to/from port by truck, ing good temperature control, the rail or inland waterway, and when reefer’s door could be open for too devanning goods from containers long, affecting the quality of the for cross-docking or storage prior product loaded closer to the door. to onward delivery by Or the case truck—or vice versa of a reefer ANALYST IHS from origin to outcontainer bound port. arriving at MARKIT PREDICTS Processes at these a seaport THAT THE IOT hand-off points are or other MARKET WILL still often manual. supply What data exists chain node generally lives in silos and not beand often is “after ing put on the fact.” As a result, power. Or hand-offs frequently pallets of TELEMATICS DEVICES lack visibility and fresh procontrol, resulting in duce being 2020 errors that can have loaded too serious negative hot into a TELEMATICS DEVICES downstream effects. reefer box 2015 Take a typical or trailer, 15.4 BILLION cold chain process, ultimately TELEMATICS DEVICES when chilled or resulting frozen goods are unloaded from a in shortened shelf life, deep-sea reefer container into reduced revenue and a cold store and then onto a possible cargo loss. reefer truck for landside Then there are delivery. Despite havthe peren-

GROW 2025

75.4 BILLIION 30.7 BILLION

www.foodlogistics.com

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Improved IoT technology makes locating, monitoring and addressing these errors far simpler. What was previously invisible becomes visible, allowing informed, data-driven decisions to be made, versus a historic “blame and claim” culture that is ultimately very costly for all involved and does nothing to actively tackle what the Food and Agriculture Organization of the United Nations estimates as more than a 30 percent worldwide wastage of food from farm to fork at an annual cost of $890 billion. Maersk Line, currently the largest adopter of IoT technology among reefer container carriers, says that in the first six months of 2017 alone, its remote container management (RCM) system alerted the company “to more than 4,500 incorrect temperature settings on customers’ reefers.” It added that in 200 of those cases, “the setting inaccuracy was severe enough that had RCM not notified Maersk Line personnel [who] then made the necessary changes, the cargo—collectively worth several million dollars to our customers—would have been lost.” IoT also can help break down information silos, making it easier to comply with regulations, such as the Food Safety Modernization Act (FSMA), which require visibility and traceability throughout the food supply chain. It also can help build a better relationship with customers at the end of the supply chain, for example, making it easier and quicker to recall product in the event of contamination or compromise, ship perishables out of the DC earlier than scheduled, or re-route to a closer destination to maximize shelf life. Ultimately, it is supply chain execution that can really determine customer satisfaction and loyalty.

In the first

six months of 2017, Maersk Line’s remote container management system alerted the company to

more than 4,500 incorrect temperature settings on customers’ reefers.

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SR: OCEAN CARRIERS & PORTS

continued

has similarly equipped its whole vessel fleet, and further investments are anticipated in the future as vessels become generally more connected for diagnostics, schedule management, crew welfare and cargo care.

So, What Does the Future Hold?

Data from IoT-connected containers, chassis, gensets, trucks and vessels are

reliable, real and in real-time.

Announcing recently that it will share IoT data with its clients—a long-awaited moment for BCOs that have been calling for visibility into the reefer “black box” for many years now—Maersk Line argued that “with more reliable data available, the customer can work more strategically on developing products and optimize processes along the entire supply chain. With full history of the conditions during transport, it also becomes possible to make agile decisions as to how products can be optimally treated after transportation.” Of course, the food supply chain is already awash with data—commercial, legal, regulatory and operational. All this latent data potentially can deliver operational and business value when properly mined on a massive, automated scale, as various start-ups are now aiming to do. But all too often, the information on which today’s supply chains run is fragmented and unreliable—not surprising, given how much manual keying and rekeying still is involved and how many parties are involved along the complex journey from producer to end consumer.

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Today, the big drivers for much IoT investment by cold chain asset Reliable, Real and owners revolve around better fleet Real-time Data utilization; reduced maintenance, By contrast, data from IoT-conrepair (M&R) and claims costs; regnected containers, chassis, ulatory compliance; and security. gensets, trucks and vessels are However, a growing number of opreliable, real and in erators are starting to real-time. It reveals think about how they what is, versus can deliver extra value what was planned beyond transporting or anticipated, or storing goods by shining a light helping their clients not just on asset achieve new levels of operations—crucial shipment visibility, though they are— velocity and more but on the funproactive cold chain is now fitted with damental supply management. Indeed, IoT telematics chain processes, end-to-end real-time and sensors flows and handvisibility may in due offs that make or course simply become break a shipment. an accepted cost of Announcing its doing business. investment in 350 But before we get new smart refrigahead of ourselves, erated containers it’s worth rememberearlier this year, ing that we are in the U.S. carrier TOTE early stages of the Maritime says that a journey. Though an core value is in “proestimated 80 percent viding clients [with] of the U.S. OTR reefer crucial real-time, trailer fleet is now fitend-to-end visibility ted with IoT telematof their shipments ics and sensors, only in TOTE Maritime’s around 13 percent of cold chain.” Expeditthe 2.7 million TEU is likewise equipped ing cargo distriglobal reefer conbution and providing the “precise tainer fleet is likewise equipped. monitoring and record-keeping” Most container ships similarly needed for FSMA compliance were are not GSM-enabled for wireless also cited as key benefits. reefer box monitoring. Meantime, Having deployed smart reefers shippers and 3PLs focused on the since 2011, TOTE recently invested shipment, rather than the means in new on-ship cellular GSM of transport, are not sitting idly by, technology to provide on-board but deploying a growing range of and shore-side monitoring of reefer cargo-level devices and sensors shipments, closing the real-time for live monitoring of in-transit traceability gap at sea. Maersk Line condition and location.

eliminated

80% U.S. OTR

reefer trailer fleet

only

13% of the 2.7

million TEU global reefer container fleet

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UNIFORM DATA

IMPROVES END-TO-END SUPPLY CHAIN VISIBILITY ANALYTICS

To take advantage of the new opportunities presented by the Internet of Things (IoT), operations and IT executives need to find a comprehensive platform that is open, standards-based and agnostic; can incorAPPLICATION porate various technologies and devices; is ENABLEMENT scalable across users, business units and enterprises; and is flexible enough to enable new use cases. This can be done by investing in a comprehenDEVICE sive IoT solution stack. Starting at the bottom MANAGEMENT of the stack are the devices. This is followed by connectivity, including local and wide area networks, cellular GSM and satellite to prevent any “dark spots.” The next layer is device manageCONNECTIVITY ment, or the ability to provision and manage the (LOCAL & WIDE AREA NETWORKS, lifecycle of an IoT device. CELLULAR GSM AND SATELLITE) The following layers cover application enablement, making it easy to take the information generated by the devices to enable use cases. These can take the form of purpose DEVICES built software as a service (SaaS) applications that can be integrated with existing enterprise systems, or cloud solutions that can be opened THE IoT SOLUTION STACK to selected partners, clients and suppliers. Finally comes analytics, which can be descriptive, predictive or prescriptive, drawing on the big data generated by IoT telematics and sensors. Picking the right vendor is crucial to ensuring return on investment (ROI) and cost of ownership benefits. Future proofing also is a key consideration. The key to this is execution. Think big, but start small with a point of care (PoC) or pilot; then, scale fast with the infrastructure, platforms and tools.

As IoT technology continues to advance and industry practices evolve, we may expect to see more convergence of asset-level and cargo-level monitoring in the future. Indeed, some traditionally asset centric IoT providers in the cold chain space already are starting to add more cargo level and trip-based monitoring capabilities

via acquisition or organic research and development. Current reality may not yet match up to the aspirations, but the technology genie is well and truly out of the bottle. Change is coming, and the current and next generation of IoT technology will be central to cold chain transformation—in ways we probably don’t yet even grasp.

Sue Rutherford has more than two decades of global marketing and business development expertise in the technology sector. As the vice president of marketing for ORBCOMM, Rutherford is responsible for advancing the strategic direction of ORBCOMM marketing and its leading M2M/IoT solutions. www.foodlogistics.com

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ADVERTISER INDEX ADVERTISER......................................... PAGE

CAMS Software.............................................. 25 Cubic Designs, Inc......................................... 43 Daimler Trucks North America LLC..............................................38-41 FG Products Inc.............................................. 37 Ford Motor Co............................................... 2,3 Great Dane Trailers Inc............................... 52 Isuzu Truck........................................................ 21 KINEXO.............................................................. 33 Load Express.................................................... 29 MSC Mediterranean Shipping Company........................................ 15 Penske Truck Leasing...................................... 5 Port Tampa Bay............................................... 13 Randall Manufacturing Co.................26-27 REB Storage Systems International...... 35 SICK Inc................................................................. 9 SWISSLOG........................................................ 17 TODCO.............................................................. 31 TranSolutions Inc........................................... 49 Utility Trailers.................................................. 23 Witron.................................................................... 7

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SEPTEMBER 2017 | FOOD LOGISTICS

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FOOD (AND MORE) FOR THOUGHT

BY BRIAN CURTIS

THE COLD CHAIN JUST GOT MORE EFFICIENT

I CURTIS

Brian Curtis is CEO and founder of Concentric Power. He founded the company in 2011 to create sustainable infrastructure and energy independence for companies in critical industries, including food and pharmaceuticals.

n an age of Amazon and Whole Foods mergers, it is not hard to imagine fresh foods being delivered closer and closer to home, wherever that may be. And while the “local” food moniker is getting as much or more attention than “organic” in terms of consumer affinity, the reality is that much of our food supply is necessarily quite far afield. So, how do we satisfy the competing requirements of high quality, low cost and sustainability of what we eat? One area of increasing focus is energy efficiency in the cold chain. Energy for large-scale refrigeration is often the largest cost line item for food and wine that needs to be shipped all over the world. Fresh vegetables, for example, are picked in the field and moved to processing plants, where cooling from field temperature to 34 degrees is the first order of business. It’s a very energy intensive process. The “cutto-cool time,” to which it’s referred, is ideally two hours or less from harvest to handling. Processing plants are where the cold chain starts, with fresh produce extremely sensitive to timing. From an energy perspective, cutto-cool time presents a particularly arduous situation given that fields often are several hours away from the processing facility and the product must be cooled almost immediately after it arrives. The result is a spiky electric power load that varies daily, weekly and seasonally. Salinas, California-based Taylor Farms is addressing the problem with an onsite power plant that provides both electricity and low temperature refrigeration, known as cogeneration or cogen. But this is not your father’s cogen plant. The system was designed and installed

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by Concentric Power as part of their modular product system. Modern controls and engine performance allow sites to get nearly entirely off the grid. Taylor Farm’s Gonzales, Califronia, facility employs wind, solar and cogen to optimize for economics and sustainability. Wind produces 16 percent of the load, solar 10 percent and cogen 64 percent. “At times, we are producing 100 percent of the power we are using at the plant,” explains Nicole Flewell, director of sustainability at Taylor Farms. “Our average is going to be 90 percent energy offset.” As the largest vegetable processor and marketer in North America with 13 processing and distribution facilities, Taylor Farms has ambitious plans. At a ribbon cutting ceremony in April 2017, founder and CEO Bruce Taylor stated, “As we perfect the system, we think we’ll roll that out across the country.” Concentric Power is a leading player in the space having developed advanced control algorithms specifically for cold chain applications. Concentric modules are able to load, follow and optimize in real time. The software platform also lends itself to rolling out networks of units throughout a supply chain.

Cold storage facilities further down the cold chain with flatter energy curves also are a good fit. Individual plants are able to take advantage of the greater network. In a way, it is the Internet of Things on an infrastructure scale. From a mechanical engineering perspective, Concentric takes advantage of the engine heat to drive a low temperature aqueous ammonia absorption process. The modular system ties directly into existing ammonia refrigeration systems with two simple piping tie-ins to provide base load refrigeration while the engine load follows. The end result is a greater than 25 percent reduction in both greenhouse gas emissions and up to 50 percent reduction in energy costs, all while supporting the key metric cut-tocool time. Despite the higher visibility of the last mile of the cold chain as seen by the general public at the grocery store, restaurant or online retailer, it often is the first mile way back at the farm that can have the biggest impact.  Concentric Power’s cogen plant provides onsite electricity and low temperature refrigeration at True Leaf Farms in San Juan Bautista, Calif.

www.foodlogistics.com

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Global Supply Chain Solutions for the Food and Beverage Industry

GET THE RECOGNITION YOU DESERVE! Each year, Food Logistics recognizes individual and corporate leaders in the food and beverage industry. Plan now to enter your company — or a cutting-edge client or vendor — in one of these industry-leading recognition programs:

2018

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Recognizing individuals whose vision is shaping the future of the global food supply chain

In recognition of companies demonstrating leadership in sustainability in the food and beverage supply chain

Honoring the leading 3PL and Cold Storage Providers that support the food and beverage supply chain

Nomination deadline: Jan. 5, 2018 Winners announced in March 2018 issue

Nomination deadline: March 30, 2018 Winners announced in June 2018 issue

Nomination deadline: May 25, 2018 Winners announced in August 2018 issue

FL100+ TOP SOFTWARE & TECHNOLOGY PROVIDERS Recognizing top software and technology providers supporting the global food and beverage supply chain Nomination deadline: Sept. 21, 2018 Winners announced in Nov/Dec 2018 issue

Ma r k yo u r c a l e n d a r s t o s u b m it a n a p p li c a t i o n ! O nline nom in at ions open appr ox im a t e l y e i g h t w e e k s b e fo re t h e d e a d l i n e s l i s t e d a b o v e . Awar d r esult s, inf orm a t i o n a n d n o m i n a t i o n s p o s t e d o n :

FoodLogistics.com/Awards Nomination dates and issues may change. Consult the call-for-entries email and nomination survey for confirmation

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