Moore On Pricing: Join the cold chain revolution or be left our in the cold

It was just a generation ago that we went from trucks loaded with ice to refrigerated trucks enabled by power-take-off (PTO) units. We then welcomed self-contained refrigeration units (reefers) in various sizes featuring precise temperature control for carrying everything from frozen foods to moderate temperature pharmaceuticals. And even more recently we’ve seen externally powered domestic vans that can morph into international containers, while some of the newer ships can provide power to as many as 1,000 reefers.

A similar revolution has taken place at the package level. In the recent past, temperature sensitive medicines required you to go to a doctor’s office to get a treatment to avoid spoilage. When products shipped, they were in wooden crates that often leaked water or carbon dioxide as they moved. From dry ice and wooden crates, we’ve evolved to effective e-commerce packages for drug doses including sealed cold packs that, with a mixture of chemicals, are very effective at preserving temperatures.

A member of my family receives an express package of refrigerated medicine with an injection pen every two weeks. The packaging has a “telltale” that discloses if the medicine has had a temperature violation. The fact that very expensive doses, some worth over $1,000, are distributed in this method means that the companies making and distributing these products trust both the packaging and the transporters.

In similar fashion, the monitoring and tracking of temperature data has gone from non-existent to a constant stream of updates, even on our mobile devices. When we could not track or monitor a temperature, we were forced to avoid transporting those items or assume a significant level of inspection, spoilage or loss.

For organizations with a need for visibility in their supply chain, the challenge to get connected to service providers can be daunting. Many third parties are specializing in not only general location, but also temperature and even vibration data. But for many shippers, the problem may be resources. More often we see the logistics buyers aspiring to get data but lacking in the systems to receive and store the large amounts of information coming from outside of their own systems.

Recently, a major pharmaceutical company I consulted with identified 58 fields of data they wanted on each shipment, only to find that their IT systems architecture could not receive and index the complex files from multiple sources. The solution was a third-party selected to be a data warehouse for the company. The project yielded savings in spoilage, shrinkage and safety stocks.

This revolution has made an impact on how we source and distribute foods, chemicals, drugs and special materials—but we’re far from being done. When we’re concerned about the integrity of a product as it changes hands, we need to be able to assign responsibility and to have confirmations at each step. This has been particularly difficult in global supply chains, and many believe that the emerging solution is to marry cold chain with blockchain.

Blockchain is a continuous digital ledger that can record status in addition to transactions, and with automatic status updates from the Internet of Things (IoT), each step of the supply chain can be illuminated. The financial and physical transactions are then immediately visible to blockchain participants.

The technology available to the cold chain networks is changing what’s possible. With spoilage rates reduced and fraud eliminated, the innovations have a compelling business case. Shippers and their service providers need to take notice—or be left out in the cold.