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

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.