• January 12, 2023
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4 Ways to Limit Costs in Cold Supply Chain Logistics

4 Ways to Limit Costs in Cold Supply Chain Logistics

Presented by Vertical Lift Machines

When we talk about cold supply chain logistics, we mean a temperature-controlled supply chain that includes the following systems:

  • Production
  • Storage
  • Distribution

Each of these systems must be supported by equipment suited to keep a constant temperature within the required range so the materials or products processed and distributed do not undergo contamination or deterioration.

The cold chain is, therefore, one of the most complex – and expensive – logistics management processes and is used in sectors dealing with products that are sensitive to heat, such as the food, pharmaceuticals, electronics, floriculture, and leather sectors.

Due to the nature of the products, the specific criticalities in managing cold chain logistics make it different from the traditional supply chain.

One example is vaccines, which often require a very narrow temperature range throughout the supply chain, from production to the final user. Failure to maintain the temperature within these narrow ranges, even for a short time along the chain, can affect safety and efficiency, making the vaccines unusable.


High Costs for Temperature Control

Some sectors in which cold supply chain logistics are used directly impact public health (for example, the agri-food and pharmaceutical sectors). For this reason, temperature control requirements are stringent and regulated for all phases of the cold chain.

The reference framework in Europe is EC Regulation 37/2005, which requires temperatures to be measured and recorded at regular intervals on means of transport and storage sites. This means that both the method of transportation and the warehouses must have suitable instruments and equipment to guarantee the required temperature and measure it over time.

Examples of the specific equipment and significant investments needed for cold logistics are cold rooms, building insulation, temperature control sensors, and reefer transport. These costs can be five times higher than those required for transporting and storing dry products, and the energy costs related to refrigeration systems are also a consideration.


Risk of Contamination and Deterioration

The contamination or deterioration of products that require a controlled temperature can pose enormous economic implications for a company. For example, the food sector, where the cold chain is increasingly adopted due to the massive presence of large-scale retailing and e-commerce. Food items are highly perishable, and fungi, bacteria, and microbial growth can quickly develop if they are not properly managed and handled. Logistics must also comply with the Hazard Analysis and Critical Control Points (HACCP) rules.

The costs related to the deterioration of materials are both direct and indirect and can be generated throughout the supply chain logistics. These costs are higher in the storage phase, where the temperature is reduced.

When products are contaminated or perish, the consequences are:

  • Waste management costs
  • Higher quality control costs
  • Replenishment costs

Indirect costs, instead, are related to the following:

  • Loss of reputation and trust
  • Loss of market share
  • Possible disputes due to claims for damages

To reduce the risk of contamination and degradation of products – and thus avoid the associated costs mentioned above – it is critical to implement all temperature control measures and use suitable technological solutions to maintain the cold chain.


Picking Times

Strictly related to the safety risks illustrated above, picking times in cold logistics must be reduced to a minimum to ensure the products’ integrity. Picking is crucial, as the products or goods are left out of the temperature-controlled environment. This lapse of time must be minimised to ensure safety and integrity.

When designing a warehouse management system for the storage of perishable products, it is essential to implement picking strategies and use automation tools to keep the products outside the refrigerated environment for the shortest possible time.


Solutions to Limit the Costs of the Cold Chain Logistics

Suppose the costs related to cold logistics and improper management are very high. In that case, it is also true that it is possible to adopt processes and technological solutions suited to limit them significantly, as well as all related risks, while simultaneously optimising the organisation.

These solutions can be used in the following phases of the supply chain:

  • Production
  • Storage
  • Loading of goods
  • Transport
  • Unloading at distribution hubs or Points of Sale

The last phase — picking, storage, and transport to the final consumer — remains outside the company’s control unless it is e-commerce.


1. Automated Picking

In addition to being a critical phase for safety, picking is also a process in which operators cannot always be involved. This is the case, for example, of frozen product storage, with temperatures as low as -30 degrees Celsius.

Modern cold logistics centers use anthropomorphic robots to automate picking to prevent thermal shocks and degradation. The goods-to-person method is therefore adopted, also taking advantage of the more recent voice-picking technology, which allows operators to communicate with the supply chain equipment and systems using a headset.

Faster picking and the ability of anthropomorphic robots to automatically detect product conditions translate into significant economic savings.

Modern cold logistics centres use anthropomorphic robots to automate picking. Source: Supplied.


2. Automated Vertical Temperature-Controlled Storage Systems

Cooling a warehouse is expensive, even in terms of energy. For this reason, it is good practice to take advantage of the available surface area as much as possible to reduce energy costs.

The solution to this problem is vertical storage systems, which can save up to 90% of the available warehouse space. Modula Lift Climate Control automated storage systems also ensure temperature control in a range of +2 to +25 degrees Celsius, combining the benefits of a vertical storage system with engineering that guarantees the temperatures and humidity levels necessary for the safe storage of products.

An automatic storage system also reduces the costs associated with temperature dispersion, thanks to the automation of picking and placing operations.

Modula Lift Climate Control automated storage systems. Source: Supplied.


3. Automatic Handling of Solutions in Deep Freezer Cells

In temperature-controlled storage systems, where storage temperatures are low, it is common to use automatic handling systems to reduce the time spent by operators in these areas.

Examples include pallet stacker cranes and pallet shuttles, which are automatically and remotely controlled. The result is improved operational efficiency and speed.

AMR vehicles, robots, and all handling systems operating in temperature-controlled warehouses or deep freezers have different characteristics. The particular temperature and humidity conditions can affect the operation and combine so that it can become dangerous.

The lower costs, in this case, are always due to reduced dispersion of energy, decreased exposure of stored products to possible contaminants, and protection of the health of operators.


4. Cold Supply Chain Monitoring with Sensors and IoT Solutions

All the solutions mentioned above are based on the most modern sensor systems for determining temperature, position, and size, and IoT solutions for analysing and assessing the collected data. Therefore, the Internet of Things and the sensors help to ensure a constant temperature along the cold chain and to prevent energy waste.

Thus, with the demand for this kind of service currently growing on the market, it is possible to take full advantage of these technological opportunities to maintain the cold chain and improve its management. Think of e-grocery or the pharmaceutical sector, where the demand for products that need controlled temperatures increases yearly.

The companies operating in these sectors must therefore reorganise their warehouses, both to meet the new requirements for the proper management of goods and to reduce costs while at the same time improving the efficiency of their logistics system.

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