March 9, 2015

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Cold Chain Logistics

Cold chain transportation in the pharmaceutical, food and perishables industry is both a challenge and an opportunity for the logistics industry.

The handling of such cargo requires an infrastructure with a controlled environment and real time monitoring of the key parameters such as the temperature, environmental conditions, hygiene, etc.

According to WHO, the global pharmaceutical market is valued at USD 300 billion and is expected to grow to USD 400 billion within 3 years. India, a leading player in the global healthcare industry earns around 60% of its pharmaceutical revenues through exports, which grew by 19% between 2008 and 2012.With such a high growth and demand, the healthcare logistics market is also likely to grow to meet the global demand. Rise in biopharmaceuticals in the country with companies such as Biocon and Serum Institute have also led to an increased demand for cold chain logistics.*

Moving a shipment across the supply chain without suffering any setbacks or temperature anomalies requires the establishment of a comprehensive logistical process to maintain shipment integrity.

The Cold Chain Operation process includes several phases ranging from the preparation of the shipment to final verification of the integrity of the shipment at the delivery point:

  • Shipment preparation. When a temperature-sensitive product is being moved, it is vital to first assess its characteristics. A key issue concerns the temperature conditioning of the shipment, which should already be at the desired temperature. Cold chain monitoring devices are commonly designed to read temperatures consistently. Other concerns include the destination of the shipment and the weather conditions for those regions, such as if the shipment will be exposed to extreme cold or heat along the transport route. Using a reefer with its own power unit usually mitigates such concerns.
  • Modal choice. Several key factors play into how the shipment will be moved. Distance between the origin and the final destination (which often includes a set of intermediary locations), the size and weight of the shipment, the required exterior temperature environment and any time restrictions (perishability) of the product, all effect the available transportation options. Short distances can be handled with a van or a truck, while a longer trip may require an airplane or a container ship. In this case, the cost / perishability ratio becomes a factor in modal choice.
  • Custom procedures. If the freight crosses boundaries, custom procedures can become very important, since cold chain products tend to be time sensitive and more subject to inspection than regular freight (e.g. produce pharmaceuticals and biological samples). The difficulty of this task differs depending on the nation (or economic bloc) and the gateways since there are variations in procedures and delays. Customs issues are commonly identified as the most crucial in establishing reliable international cold chains.
  • The "Last Mile". The last stage is the actual delivery of the shipment to its destination, which in logistics is often known as the "last mile". Key considerations when arranging a final delivery concern not only the destination, but the timing of the delivery so the critical labor and warehousing space is available. Trucks and vans, the primary modes of transportation for this stage, must meet the specifications necessary to transfer the cold chain shipment. Since many deliveries of cold chain products, particularly groceries, are taking place in an urban setting, there are congestion and parking difficulties to contend with. Also important is the final transfer of the shipment into the cold storage facilities as there is potential for a breach of integrity.
  •  Integrity and quality assurance. After the shipment has been delivered, any temperature recording devices or known temperature anomalies must be recorded and made known. This is the step of the logistical process that creates trust and accountability, particularly if liability for a perished shipment is incurred. If problems or anomalies that compromise a shipment do occur, efforts must be made to identify the source and find corrective actions.

The ongoing rise in the standards of living and economic specialization will remain important drivers for years to come, in the growing demand for perishable goods and the cold chain logistics that support their transport.

HCL is currently involved in developing innovative solutions to cater to this need for the Logistics industry.  Using the concept of Internet of Things (IoT), smart devices that enable real time shipment monitoring across a wide range of data points including temperature and providing alerts when an issue is detected can help create or solidify new products and markets for Logistics providers.  Having visibility across the supply chain can also improve it through the sharing of this data across the supply chains of suppliers and retailers.

References:

* - Referred from Transparency market research