Supply chain visibility is a key part of delivering proof of product integrity

Attend any major conference on the cold chain logistics industry, and you’ll see similar emerging topics for debate, for example around supply chain visibility, temperature monitoring and delivering proof of product integrity.

This is very apparent as we attend this year’s annual Cool Chain & Controlled Room Temperature Logistics Europe conference at the LuxExpo in Luxembourg. Session titles include, “Analysis of global logistics processes to reduce temperature excursions”, “Using temperature data improves supply chain performance”, “Effectively setting up and rolling out a standardised global temperature monitoring and data collection system” and “Supply chain visibility and continuous process improvement.

The importance of supply chain visibility has particularly grown, and in the broader debate in confidence in ERP systems to provide appropriate supply chain visibility, it is probably not being addressed that well – according to this article in Forbes magazine, “Building The Extended Supply Chain: If Only It was Like Legos”. This suggests that most companies are pouring money into ERP architectures believing that it can be as easy as connecting one ERP to their own ERP, but it is not as easy as that; today, only one out of four companies are confident that the ERP logic is equal to the task of delivering supply chain visibility to third-party logistics providers, contract manufacturers and first and second tier suppliers.

The debate is also around big data – and why it is important in the movement of temperature-sensitive products both in terms of visibility as well as the ability to take remedial action.  For example, the data can tell you instantly if something is wrong in the supply chain, if a temperature excursion has occurred. With relevant experience of knowing what to do with that data and how to interpret it, the supply chain manager is better informed. In addition to making available instantaneous real-time data, the data recording and analytics also enables the generation of relevant data for GDP and HACCP compliance reporting.

The other big trend for 2014 is the internet of things, or the connections of all kinds of devices and objects using radio connections. This is enabling machine to machine, or M2M, communications and allowing suppliers to the pharmaceutical and food industries to provide more data and monitoring and supply chain visibility, often in real time. Hence the announcement at the conference of the collaboration between KPN, the leading telecommunications and ICT service provider in the Netherlands, and Dyzle, which measures and analyzes business process data for the cold chain in real-time.

The two companies will offer an integrated platform for monitoring, tracking, and providing real-time data analytics and visualization for the food and pharmaceutical industries. They combine the M2M and RFID asset tracking solutions of one with the monitoring and analytics platform of the other to track the location of a product in a logistic chain and collect the environmental conditions data during its shipment.

The combination of these various trends indicates a growing need for one-stop shop application enablement platforms, which ease data extraction and normalization activities so that M2M applications and enterprise systems can easily consume machine data. In other words, not many firms want reams and reams of data, but they want a way in which this ‘big data’ can be interpreted to provide the key information relevant to their business processes. This could be in the form of flags, alerts or indicators that give them appropriate warnings or assurances within the supply chain. The tools and technology to enable this supply chain visibility in a turnkey way are now increasingly available, which then makes it possible to deliver customers and end-users proof that their products are safe.

How real time monitoring can improve food safety

Food is an essence of life and it is no surprise therefore that food safety and security are of major concern globally. In some countries, food wastage is commonplace because of issues in the supply chain. Even the World Bank has a Global Food Safety Partnership (GFSP) division, which holds an annual conference supported by over 70 countries, private companies, international organizations, trade associations, academic institutions, and non-governmental groups.

According to the GFSP, there is an ongoing world food safety problem that threatens every economy and food company, challenging governmental regulatory authorities, sickening millions of people each year, introducing barriers to trade, and hurting corporate bottom lines. According to the US Food and Drug Administration (FDA), “We live in a world where confidence is a key pillar of the global food system – and consumer expectations for food safety are high.” Hence it is keen to see a global supply chain operate to ensure that food products are safe for consumption.

This is where technology can certainly help enhance food safety. In the USA, the Food Marketing Institute (FMI) is encouraging its membership of 40,000 food retailers and 25,000 pharmacies to embrace traceability technology, since safeguarding the nation’s food safety is its number one priority. According to the institute’s vice president, “At FMI, we are working to help our members protect their customers and employees, meet all federal and state regulatory mandates, safeguard their brands, and reduce financial risk. Traceability is increasingly important to everyone in the food industry, and retail is no exception.”

One aspect of enabling confidence in the food supply chain that technology can help with is in temperature monitoring. By using wireless temperature sensors in cold chain transport and storage, it is possible using communications technology to obtain temperature data in real time. Dyzle has been providing the technology and the cloud based platform to the food industry for a while, to help monitor real-time data on the food and also enable energy saving.

An example of this is at Kruidenier Foodservices in the Netherlands, whose refrigeration units and cold storage trucks are fitted with remote sensors from Dyzle. These monitor the storage areas as well as core temperature of the products themselves. The temperature readings and precise locations of the cold storage trucks are transmitted via remote GPRS communication to a central point – the online personal dashboard – where they are all registered.

This ensures full traceability and customers can see whether the temperature of, say, dairy products has fallen under seven degrees during storage at the premises or during transport. The system provides perfect substantiation when it comes to the quality assurance that is so important to certification.

In this example, a by-product for the food company was in enabling energy savings. The remote monitoring allows them to keep a close eye on the energy consumption of all their cold stores. This parameter is also shown in the personal dashboard available via the cloud, indicating if the unit is working optimally, and allowing them to take corrective action if required.

The key to real-time monitoring of variables such as temperature and energy consumption is not just to gather data – that is probably the easy part as technology today is available to provide this. The more important part is in interpreting the data and providing real-time alerts in case excursions occur. This is where solutions like online personal dashboards with some ‘intelligence’ or expertise to analyze the data and present relevant information is really important.

This is an important benefit of Dyzle’s online platform – it is the result of customers’ inputs and the development team’s expertise built up over a decade, in understanding what data customers need from their cold chain and what that data means. While it is complex and fully scalable at the back-end, it is made extremely simple to use as far as the customer is concerned.

In the food industry, the ability to provide to use technology such as remote real-time temperature monitoring with some ‘intelligence’ to enable complete end-to-end visibility of the cold chain can go a long way towards meeting the agenda of ensuring confidence in food safety and security.

What’s the impact of big data in the cold chain?

Anywhere you look these days, people talk about big data. Whether you are in the technology industry, the retail industry, the supply chain and logistics industry, or any other industry, there is no doubt that big data plays a part. But what does big data actually mean for the cold chain industry? And how can we make sense of it, and can it be profitable?

Let’s put it into perspective first.  There are two global trends that feed into this specific trend in the supply chain and cold chain sector. First we have the ubiquity of mobile connections. And second, we have the ability to put all the data gathered from these mobile connections into the ‘cloud’ (in other words, in web based storage).

According to the global mobile industry association GSMA’s data, there were almost seven billion mobile SIM-enabled connections in 2012, of which three percent were classified as ‘M2M’ or machine to machine communications.  The number of SIM-enabled connections is expected to grow to around 9.8 billion connections in 2017, of which 13 percent would be M2M connections.

The M2M connection is the key part of the data gathering process in the supply chain industry.  This helps generate data on any parameter of a supply chain process – for example temperature, humidity, CO2 level, energy consumption and even whether a door is open or closed. The fact that this data can be transmitted via mobile means key processes can even be monitored in real time. And all the time it is doing this, it is generating more data – both current and historical as a shipment moves through the supply chain.

So in what ways is this data useful? The GSMA has given a good macro-economic perspective on one aspect of this.  For example it says that in developing countries, the use of fleet telematics to track trucks and monitor storage could save enough food to feed 40 million people annually!  This is equivalent to the entire population of Kenya.

Taking this down to company level, most executives in supply chain and logistics already think big data will have a significant impact on their company’s performance, according to the Executive Insight into Supply Chain Big Data in 2013 report (see infographic). These executives are looking at big data analytics because it will not only improve supply chain efficiency, but also reduce supply chain costs. They also believe it’s important to move towards real-time decision making as opposed to basing decisions on historical data. The greatest return on investment on using big data in the supply chain will be in visibility of the supply chain.

In Dyzle’s experience, the data is really important in the movement of temperature-sensitive products both in terms of visibility as well as the ability to take remedial action.  For example, the data can tell you instantly if something is wrong in the supply chain, if a temperature excursion has occurred. The data is analyzed, and experience of many such situations allows personal dashboards to be generated with relevant information for the supply chain manager, accessible in the cloud via mobile or internet, in order to provide real time visibility of what’s going on in the supply chain.

In addition to the instantaneous real-time data, the data recording and analytics also enables the generation of relevant data for GDP and HACCP compliance reporting. This allows supply chain managers to assure their customers that a product travelled within a specified temperature range and that the product integrity is therefore guaranteed. This is important in both the food and pharmaceutical industries.

These issues will be discussed at the roundtable entitled, “How to collect and still make sense of cold chain temperature data from multiple sources”, chaired by Rene Tjong Tjin Tai, CTO of Dyzle, at 13:25 hours on 3rd October 2013 at the 11th Annual Cold Chain GDP & Temperature Management Logistics Global Forum in Chicago.

The reputational risk of poor cold chain visibility

A reflection on the recent participation in India’s Cold Chain conference

In India, the cold chain logistics sector is getting ready for the growing number of large multinational corporations providing their global brand products in India. Several new state-of-the art cold storage warehouses and logistics operations are emerging, to help these international food and pharmaceutical companies to maintain product quality, and ultimately, their global reputation.

The reputational risk is what renowned Indian entrepreneur Kiran Mazumdar Shaw, chairman and managing director of Biocon, referred to in an article in the Indian daily business newspaper, the Economic Times recently. She referred to the damage to the reputation of a major Indian drugs manufacturer due to questions about the product quality.

Speaking in the newspaper, she said, “Companies shouldn’t compromise on quality, compliance and IP.” She also added, “We also need to see better harmonisation of the Indian regulatory system with those in the US and Europe”.

This indeed was a debate at the recent Cold Chain India conference in Mumbai. Attendees were conscious of the fact that companies needed better guarantees of product compliance, and that good distribution practice (GDP) needed to be considered more widely in India.

It was also clear that only the large companies that could control their own cold chain were able to guarantee the temperature of a product through the entire product lifecycle. Several instances were cited of companies that relied on multiple transport companies or third party logistics providers, and were unable to assure that product temperature was maintained within required temperature ranges.  According to Indian farmers quoted in an article in The Hindu newspaper, in the food sector, 30 percent of food wastage is due to issues related to transportation, and this includes issues related to cold storage.

At the conference, several speakers spoke about the need for technology to support companies with ensuring compliance. By ensuring compliance, they could ensure product quality and safety.

In a country like India, where social media and mobile connectivity is widespread, it only takes one incident where a product doesn’t meet consumer expectations, for the news to spread rapidly and damage the reputation of a company, product or brand. This is what Kiram Mazumdar Shaw was referring to in her article – the reputational risk for a company is high if product quality is compromised.

Evidence and confidence needed

In order to enable this assurance of product quality and safety, there was a healthy debate about the need for both evidence of product integrity and confidence in product integrity/quality (a summary of some of this debate can be found in this article in FnBnews).

This requires technology solutions that could provide real-time end-to-end visibility in the entire cold chain. Several speakers referred to the need for such solutions, and there were references to Dyzle’s real-time monitoring and analytics solution, that both provided the evidence of temperature (or other parameter) integrity, as well as providing real-time alerts for corrective action if a digression occurred.

In summary, India’s product and brand owners recognize the need to enhance all aspects of their cold chain so that product safety and compliance can be assured. The major multinationals and major retailers are already aware of this (major local brand Amul was quoted as a good example of having a sophisticated cold chain).

While cultural attitudes of the labour workforce in the industry need to be addressed (eg. with truck drivers understanding of the importance of maintaining power for the trucks they are driving), there is work being done by third party logistics companies and warehouses to install state-of-the-art cold chain storage and logistics.  Once this infrastructure is available and cultural issues are addressed, India does have the chance of addressing a significant portion of the wastage that happens in the cold chain, but more importantly, to ensure that company and brand reputations are maintained more consistently.

What’s the business case for real-time temperature monitoring and analytics?

Whatever industry you are in, modern business requires strong justification for any investments in solutions or technologies that enhance the main business. Often the question is about ‘return on investment’, or ROI.  Typical questions asked by senior management are, ‘What benefit would we get in monetary value from this technology?’ and if they are convinced of the benefit, then ‘How much does it cost?’

So is there a case for investing in real-time temperature monitoring and analytics? The answer is almost certainly yes, and we’ll explain why. We’ll also explain why the cost becomes insignificant compared to the losses that might be incurred from not doing it.

The business case

Containers regularly ship products that are temperature sensitive. These products can be anything – it could be food, medicines, vaccines, active pharmaceutical ingredients, retail products or even high value products like semiconductors. There is also a recent report about the global healthcare logistics market, which talks about increasing trends in clinical trials outsourcing which adds additional steps in the overall supply chain for shipping materials like drugs, blood samples and tissue samples between different countries, as the contract research organization and the sponsor are often in different regions.

The value of the products in these containers could range from a few thousand dollars to 10s of millions of dollars. In one example we have seen, the value of products in one container was just under US$10m.  In this latter example, if the shipment is not properly tracked or monitored, and the temperature deviates for extended periods, the whole shipment could be written off. Obviously they won’t let this happen, but there is a risk that temperature or humidity is not monitored for a short period of time, and the product may not be useable – depending on the customer specifications or the regulatory requirements.

In the case of foods, as is seen in some countries, the wastage is quite high. In India for example, one recent report on the cold chain industry in that country highlights how 30-40 percent of horticultural produce is wasted annually in India.  A large proportion of this wastage could be avoided with the appropriate low cost monitoring and business analytics and intelligence systems.

 

Often, the cost of implementing a monitoring and analytics solution for the containers or the cold chain is a tiny fraction of the actual value of the products in the container.  Typically you might install wireless sensors to measure temperature, relative humidity, CO2, power consumption or even door open/closed sensors.  This is the easy part – the hardware is a one-off cost and almost a commodity. In fact Dyzle’s solutions actually integrate any hardware from any vendor, including Dyzle’s, making it what is called an ‘open platform’ solution.

The really significant part of the solution is in the software to monitor the temperature and the business intelligence and analytics. The latter is important as it’s not just about gathering data (which there is a lot of nowadays), but also to understand what the information means very simply – for example a chief financial officer of a company might just want to know from their logistics manager or quality manager only the value of the goods that have been wasted as a result of a temperature digression beyond what’s expected by their customer.

The monitoring solution needs to be able to report in real-time at any point when there has been a deviation from the accepted range of temperature or other variable – which it can do by email, phone or text message alert. This can be simple cloud (internet) based software which can be used on a subscription basis to provide business process monitoring and analytics (such as that provided by Dyzle).

This type of web-based solution is typically very low cost compared to implementing your own software solutions, because like many software products today, it is available as ‘software-as-a-service’ or ‘platform-as-a-service’.  This often provides only the solution you need, where you need it, and without the significant investment required in software that might have been expected in the past.

The combination of cloud-based subscription service, together with relevant analytics (dashboards) make a very good business case for implementing real time monitoring and analytics, without huge investment, and ultimately providing a good return on investment by providing the ability to significantly reduce wastage.

Why monitoring cold chain data is not enough

In the cold chain logistics industry there’s a huge change happening. Lots of data is being gathered by wirelessly connected data loggers, sensors and monitoring equipment.  This is sometimes referred to as real-time monitoring or ‘near real-time’ monitoring.  Having all this information is great, and this may contribute to GDP and GMP guidelines for food and pharmaceutical industries, but having too much data may also pose challenges if not managed properly.

For temperature-sensitive products, it is important to have complete detailed history of the products as they travel through the logistics supply chain and in storage. With the continuous monitoring that is enabled by the technology available today, for large fleets and distribution networks, this potentially generates huge sets of data (often called ‘big data’ in today’s software industry).

What’s important therefore is that the data is analyzed according to key performance indicators (KPIs) for that particular product. But you shouldn’t have to worry about spending time sifting through all of that data. It needs to simply answer questions like “Was the correct temperature maintained at all times?”  or,  “What is the financial value of the loss resulting from a temperature excursion that happened?” Management doesn’t need to see all the data – dashboards related to the KPIs should be quickly accessible. All the management needs to know is whether their delivered product is safe, and to be assured that the detailed data is available as required for reporting purposes.

This is particularly important as the new EU guidelines on GDP provide more guidance on temperature control.  In chapter 9 of the guidelines, it is noted that required storage conditions for medicinal products should be maintained during transportation, and a responsible person must be contactable at all times, to provide assurance of product integrity.

Ultimately, the monitoring is carried out to ensure patient safety and food safety. But for organizations like pharmaceutical, food and third party logistics companies, it’s how you read and interpret that data that matters.  It is also important that this data links into the business intelligence systems overall to provide the assurances required by regulators and end-customers.

That data needs to be presented in a way that assures companies that their products meet GDP and GMP guidelines as well as meet health and safety requirements. It also needs to assure patients of the quality of medicines and food, and to be able to trust that it is has reached them in a condition which is safe to consume.

Personal dashboards can display important KPI metrics

Personal dashboards can display important KPI metrics

Data monitoring therefore involves more than just collecting the data. Ideally manufacturers and logistics companies should be thinking about data integration – how data is collected, monitored, annalyzed and presented; and how it integrates into the overall business intelligence system or ERP (enterprise resource planning) system.

If easy to read dashboards with important KPIs or metrics are displayed rather than just raw data, management is able to focus on their core expertise and not worry about the data collection and reporting aspect. The data can be gathered and analyzed using the appropriate technology, with relevant visual representations to give a clear view of their cold chain performance – without having to delve into large sets of figures. In more simple words, the dashboards should provide you with answers to the questions that are important to your business, instead of just showing the data.

How cold chain monitoring assures product safety

A few global trends are affecting and likely to continue to affect many business processes in the near future. One is the growing expectation of consumers for quality and safety in everything they consume or use or need in the world – like food, medicines, healthcare and retail goods. The second is increasing regulations – including foods standards and healthcare standards. The third is the increasing effects of global economic depression – consumers and businesses looking to cut costs, improve efficiencies, and get more value for their money.

For temperature-sensitive products such as food and food ingredients, medicines, healthcare products and active pharmaceutical ingredients, the factors above put even more pressure on businesses and management delivering to those sectors. For example, a fast-food chain must ensure that meat and vegetables transported to its outlets arrive in good condition. Or some medicines must be maintained at a certain temperature within a hospital or in transport to ensure their effectiveness when treating patients.

Both scenarios require the food or medicines to be maintained within a certain temperature range to keep them safe. In both situations, there is an expectation that standards are met, and food safety and patient safety is guaranteed. In other words, quality and safety must be assured, and regulatory requirements must be met.

How do businesses prove that their products are safe?
Effective cold chain monitoring and management allows businesses to monitor and interpret what’s going on in their cold chain logistics and storage supply chain so that these requirements can be addressed. By measuring key parameters in the business process – such as temperature, humidity, GPS location, energy consumption, food and pharmaceutical companies can guarantee food and patient safety.

In pharmaceuticals, patient safety and regulatory compliance are key considerations for the cold chain and temperature controlled logistics supply chain. In order to be compliant, there are regulations such as Good Automated Manufacturing Practice (GAMP) and Good Distribution Practice (GDP).

In food, relatively small variations in temperature can significantly affect shelf life of fresh products and their value – as much as 33% of perishable items are lost due to the nature of temperature critical transportation. A Hazard Analysis Critical Control Point (HACCP) approach is demanded by many regulatory bodies to assure food safety and demonstrate ‘due diligence’ in accordance with food safety legislation

The logistics supply chain for temperature-sensitive products is a crucial part of a company’s business process. In a survey carried out last year by Cold Chain IQ, 69 percent of respondents in the temperature assured supply chain said that reducing or preventing product deviations and excursions was one of their top three priorities.

This is particularly necessary as regulatory scrutiny increases, and companies look to reduce costs with improvements in efficiency.

Summary – the role of cold chain monitoring in the logistics supply chain
In summary more regulatory burdens and more reporting requirements to deliver proof of product integrity mean that it is essential for businesses to consider how effective their cold chain logistics supply chain is being monitored and how the data is being interpreted. But it’s not just about the technology solution. The key criteria should be how such a solution fits into existing enterprise resource systems or business intelligence systems that a company uses overall within the organizations, so that reporting becomes an automated activity and not a focus of attention valuable business resources.

Follow

Get every new post delivered to your Inbox.