supply chain management solutions

Cold Chain – the next big thing in India?

Cold Chain – the next big thing in India? 870 500 TagBox Solutions

The government approved 101 cold chain projects across India last year, three of them to be managed by Amul, Haldirams and Big Basket. This isn’t new or surprising to those who have followed this space for the last few years. With 40 mega food parks, 135 cold chain projects, INR 7000 crores+ annual grants, subsidies and tax exemptions, the government is doing its part to propel the cold chain industry into a new orbit. Add to this macro trends like increasing per capita consumption of food in urban areas, growing customer demand for processed food & better healthcare and significant exports impetus, it doesn’t take a rocket scientist to conclude that the cold chain market is here to stay. With a CAGR of 25-30%, this industry carries the potential to be the next big thing in India – creating jobs, innovation opportunities, empowering the rural unorganized sector and most importantly making the India brand stronger in global exports of vaccines, drugs and food products.

  1. Improved quality consciousness

Fruits and vegetables have always travelled in open trucks. Ice cream boxes filled with dry ice have worked for many years. Modern cold chains, unfortunately, suffer from such historical baggage. However, a lot of supply chain and quality managers across industries are now becoming more stringent about the cold chain quality that they demand from 3PL partners. Industry bodies like FSSAI and FDA are also imposing stringent temperature regulations, especially on food and pharma cold chains. Enforcement of these regulations, along with technology to monitor cold chain quality real-time can help improve quality consciousness across the industry.

2.Better cold chain technology infrastructure

Given shortage of rentable infrastructure, limited personnel knowledge of cold chain logistics and lenient quality SLAs, product manufacturers and 3PL players alike have employed various methods to somehow move cold chain shipments from point A to B, while maintaining desired temperatures. Fortunately this trend is changing and a new breed of Cold Chain 3PL players are setting up infrastructure and processes using the most advanced technologies. We believe that in the next 3-5 years such players will move from being ‘Third Party’ to ‘True Partners’ and command the market because of customer trust in the quality that they provide throughout the entire cold chain. There is also better and cost-effective passive cooling technology available now with cold boxes and PCM pads that can hold temperatures for a long time and ensure temperature compliance. More awareness of these solutions will help shippers and LSPs manage temperature compliance.

3.From people to process to data

Availability of cheap labor makes businesses more often than not opt for the human, when in reality technology can be more efficient and effective. We have met at least 30 cold chain businesses and 3PL players in the last one year and almost everywhere there is a person assigned to look at the cold room thermostat and make a record in a notebook every hour. In other places warehouse workers pack cold product boxes using dry ice or gel pads completely based on common knowledge. In some cases, even with an ERP in place, most inward/outward transactions happen on paper. Don’t get me wrong, I am not saying that this manual workflow doesn’t get the job done. I am only trying to imagine the possibilities where automated processes and data driven insights can augment the human and make them more productive and informed. What if the warehouse personnel get an input as to how much dry ice to pack based on history of spoilage, potential transit temperatures, travel distance, pit stop availability etc. What if there is an automated temperature recording and alerting system that changes the role of staff from plain vanilla monitoring to identifying root causes and enabling immediate actions. It is not a pipe dream for sure!

4.From Cost to Value

Frugality is absolutely key to running any business. But unfortunately, cost is only one side of the cold chain coin and most businesses fail to see the other side. For example, we were able to alert one of our customer about a future temperature breach based on predicted trends. The savings on products salvaged was 10X more than our solution cost. Same goes for a meats manufacturer for whom we reduced product drip (and hence weight loss) using closed loop temperature control. If both these businesses hadn’t chosen to adopt a technology enabled solution, they would have had to bear spoilage or shrinkage costs. Just like Indian cold chain businesses are investing a ton of money buying or building infrastructure, I feel it is time for them to start investing in technology and data science solutions so that they can withstand the 30% annual growth and the scale & complexity that comes with it.

I am confident that the modern cold chain businesses will be able to face these issues head on and set a foundation for an industry that creates a strategic global advantage for India. Technology enablers like us are there to help.