November 2, 2018

Managing Shrink: Inventory Control of Temperature Sensitive Cargo

Written by Garret Weigel | Pharmacy Safety, Food Safety, Supply Chain

In 2017, Baxter International shipped INTRALIPID 20% IV Fat Emulsion, 100 mL, to hospitals and healthcare providers in the United States. The shipment never made it.


The product had been exposed to subfreezing temperatures, outside of the acceptable storage range listed on the product labeling during transit to a distribution facility. It was then recalled, resulting in major losses for the company and disappointed customers who never received their anticipated delivery of an important pharmaceutical.


When cargo requires delicate environmental conditions, it is at risk. That’s often the case for commodities such as pharmaceuticals, produce, frozen foods, and other perishable cargo that rely on adequate temperature control. When cargo is damaged, spoiled or lost, such inventory “shrinks.” Managing shrink calls on many strategies, however, an important and common one entails the management of temperature-controlled cargo.


Perishable cargo is precarious. If one thing goes wrong – a door is left ajar, a mechanical component fails, or refrigeration equipment is subtly underperforming – temperature control can fail. Such supply chain risk leaves little room for error. Inventory and revenue loss are at stake.


For such situations, data logging, temperature sensors, and equipment monitoring that leverage IoT technology are critical to prevent spoilage, foodborne illness, and other maladies. Such tools and technology are crucial in an age where cold transport is on the rise. The FDA, via the Food Safety Management Act (FSMA), has tightened compliance requirements, consumer expectations, as dependency on fresh and imported produce has grown, and the need for life-saving vaccines and temperature-controlled pharmaceuticals has increased.


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The Problem of Spoilage

Food spoilage is a widespread problem. ReFed, a nonprofit representing a consortium of interests says there’s some $218 billion of food waste in the United States. Some of this spoilage results from flaws in product transport. Companies struggle with ways to curb the problem.


Pharmaceuticals also have spoilage problems. According to 2014 research conducted by the firm CargoSense, 25% of vaccines reached their destination in a degraded state because of improper shipping. 30% of scrapped pharmaceuticals can be attributed to just logistics issues alone. 20% of temperature sensitive products – not just pharmaceuticals – are damaged during transport due to a broken cold chain.


Both pharmaceuticals and perishable products are often vulnerable to the risk of loss due to temperature anomalies at various points along its extended supply chain. This could be explained by higher demand, higher volumes, and a struggle for fleet managers to keep up with preventive maintenance of their underlying refrigerated technology – on vehicles as well as within storage facilities.


Leadership in foodservice, retailing, and other commercial venues that utilize the cold chain of food storage and transport are becoming aware of the problem and anxiously seek solutions to reduce such loss. More cold chain facilities with better control systems is a smart start to a solution.


The problem is worldwide. Global supply of temperature-controlled transport and cold storage facilities are scarce and in demand. For example, the situation in China is even worse. Researcher Market Research Reports Store (MRRS) reported that a mere 20% of perishables transported within China are refrigerated, compared to 80-100% in the US. They report that China’s estimated spoilage rate is between 20% and 30%.


The Beauty of Temperature-Controlled Automation

Automated temperature management and data logging help alleviate the problem of spoilage throughout the transportation process. Such technology provides alerts in real-time, enabling prompt corrective action. In addition, remote monitoring provides accurate real-time visibility of inventory temperature to ensure product quality and safety.


This is more than a best practice. FMSA requires it. Proof of inventory temperature throughout the supply chain mandates, via a complex set of regulations that such temperature control not only is implemented but also documented. Companies are taking heed and implementing proactive measures to improve their cold chain transport and storage with automation and technology.


Walmart, for example, recently embarked on an enterprise-wide program to digitally transform the company with a cloud-based IoT platform that their CIO told the Wall Street Journal intends to “help [them] accelerate the progress on our cloud projects by leveraging IoT, machine learning, artificial intelligence, and data platform solutions.”


Part of that platform specifically addresses temperature control as they describe: “from connected HVAC and refrigeration units to reduce energy usage in thousands of U.S. stores or applying machine learning when routing thousands of trucks in the supply chain.”


Smart Engineering and Shrinkage Control

Managing shrink in the cargo supply chain for products such as a perishable food, refrigerated foods, pharmaceuticals, and other temperature-controlled cargo will rely heavily on smart engineering with connected and wireless IoT sensors, smart devices, robust technology, and data logging afforded by the beauty of automation in a digital age. It will require more attention to not just be aware of the benefits of the digital cloud, but to work within such a cloud and employ technology to compete globally and deliver goods to market safely.


The world is a big place. As consumers around the globe demand better medicine, fresher foods, and produce from another continent in a seemingly more-connected world, the supply chain managers, IT leaders, and others within the industry, worldwide, will embrace technology as a way to reduce shrink.


If they do not, their competition will.


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