The article is a snapshot from the Interview given by our CEO, Mr. Alvis Lazarus to ASMAG International Magazine on Cold Chain Logistics and Supply Chain. The insights shared by Alvis is related to Indian Cold Chain Industry.
With the current outlook, cold chain industry could easily be a winner, but it isn’t yet. Though the demand is so promising the means to cope up with that demand is still very fragile. Current industry size is around 3.8B$ grown at a CAGR of 10-13% past 5 years and expected to grow at CAGR of 13-16% till 2022.
The root of this growth is fueled by the rising per capita income and the changing consumer buying behavior. The per capita income is growing at a CAGR of 7-9%.
There is a drastic shift towards packaged food due to the convenience factor. Packaged food industry expected to reach 65B$ by 2020. No surprise, the food processing market accounts for around 34-35% of the total food market in India.
Drivers of demand are –
This is a misconception that the technologies are so different, and the truth is the technologies are not so different. If you consider the overall supply chain, the cold chain fits in majorly on the distribution (warehousing and transportation) as well as the raw material storage and transportation. Thereby all the key supply chain concepts, methods and tools make perfect sense for the cold chain as well. For example, procurement & sourcing tool kit (AB Costing, Replenishment strategies, make or buy, etc), transportation tool kit (network modelling, scheduling, routing, etc), warehouse management tool kit (barcode / RFID, FIFO, Lot control, safety, audits) and standards (GDP Good distribution best practices, OSHA, etc) all these apply to cold chain operations as well. Even on Cold chain set up, all the existing tools and techniques like space planning, layout designing, storage systems, material flow and handling are used.
Now the differentiation is the technology in maintaining the product at the right specifications like temperature, packing, handling etc., throughout the supply chain. We really struggle to achieve this due to lack of design norms, operational inefficiencies, discipline issues and lack of process controls.
As a Cold Chain Supply Chain Consultant, I have worked on multiple projects fixing these gaps and most cases we are not inventing anything new, we just fix the missing basics. There were instances, we have used IoT based supply chain solutions to bridge these gaps.
Recently we have worked on an IoT solution to bridge multiple upstream and downstream issues within the dairy supply chain and the solution was effective and irons out all issues in the supply chain. So, the point is
“New tools and technologies keep coming but the tech / tools we already have are not obsolete for this industry and they make perfect sense even today”
Experts may say technology, but I humbly deny that. Cold chain tech is with us for decades and it is time we put them to use at the right nodes of the cold supply chain.
So, to me there are 3 core issues which is hindering the explosive growth of cold chain –
As said before, all providers are happy with sales; just ask any Business Development person he/she would say that all is well in the market. But, only from a bird’s eye view of cold chain industry, it would be evident, that we are eating just a peanut when there is a field of opportunities there. So the service providers and distributors should re-visit their offerings by considering the overall supply chain and fix the two issues I have said – Shooting in the dark, working in Silos and missing cold chain nuances.
“Indian Cold Chain Industry is an Untapped Gold Mine and it is high time we reap the benefits through Efficient Operations and Customer Service Excellence”
About Alvis Lazarus: Supply Chain Consultant at Hesol Consulting, an Award Wining Supply Chain & Management Consulting firm from India. Senior Leader in Supply Chain & Logistics with almost two decades of SCM hands-on experience in devising Country Level and Global Supply chain strategies, Solutions design and spear heading Supply chain Implementation across 10+ Countries. He holds the distinction of driving Supply Chain Solution Design & Implementation across various industries such as Automotive, FMCG, Pharma, Health Care, F&B, Agriculture and E-Commerce. Global Exposure on handling Operations and leading Supply chain, Warehousing & Logistics Projects across EMEA, APAC & AMERICAS Regions.