Food Logistics April 2019

COLD CHAIN MEETS E-COMMERCE

YARD MANAGEMENT OPTIMIZATION

VIDEO-BASED SAFETY

Food Logistics

OCEAN SHIPPING GOES DIGITAL ®

Global Supply Chain Solutions for the Food and Beverage Industry



FORWARD THINKING COMPANIES HAVE OPENED THEIR EYES TO DIGITIZED PROCESSES AND NEW RISK-DETECTION TECHNOLOGY

FOOD SAFETY

ADVANCES Issue No. 205 April 2019

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180° SWINGING REAR CARGO DOORS AND CITY-FRIENDLY DUAL SIDE ACCESS.

CURB APPEAL. The 2019 Ford Transit Connect is street smart and work smart.

See how it can help your business at ford.com/transitconnect.

THE SMART MONEY’S ON TRANSIT CONNECT.

Optional features shown.

Aftermarket equipment shown.

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ON THE MENU

OCTOBER 2015 ISSUE NO. 171

ON THE MENU

April 2019 ISSUE NO. 205

vusta / iStock / Getty Images Plus

COLUMNS FOR STARTERS

T he Legacy of Eric Prieur

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Prieur’s work and dedication toward creating a sustainable global food supply chain will live on.

COOL INSIGHTS

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COVER STORY

Forward Thinking Companies Open Eyes on Food Safety New regulations alone can’t stop recalls from happening, but advances in science, risk-detection technologies and digitized processes can make a big impact.

FEATURES

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With restaurants competing for every consumer dollar, delivery logistics platforms like Bringg offer control over visibility, data analytics and customer experience.

FOOD (AND MORE) FOR THOUGHT

THIRD-PARTY & REFRIGERATED LOGISTICS

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efrigerated Logistics Delivers More Online Groceries R to Consumers’ Doorsteps

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Cold chain management expertise is critical as the food chain expands.

SPECIAL REPORT

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Do Food Companies Need to Go on a Truck Mile Diet?

The food industry continues to add more trucks to manage consumer demands when technology could be the answer.

T he Internet of Things Isn’t Science Fiction for Retail Success

Leaders in the grocery and retail industry must explore how IoT is part of their near- and long-term digital transformation strategy.

DEPARTMENTS

SECTOR REPORTS

Supply Scan 10 Food on the Move 41 Ad Index 8

WAREHOUSING

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A Holistic Delivery Approach Keeps Restaurants in Control

O pportunities Arise in Yard Management

Executives are paying more attention to yard management solutions to optimize operations across the supply chain.

TRANSPORTATION

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G oing Beyond Exoneration: Video Can Lower Liability and Insurance Premiums

Video-based safety systems help fleets settle claims quickly, consistently and efficiently.

P lanting the Seeds for Blockchain

• Starbucks Fully Embraced the Middleman and Bloomed

Few companies have moved past the pilot stage with blockchain, leaving many to wonder if it’s worth the hype.

foodlogistics.com/21060287

OCEAN PORTS & CARRIERS

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T he Ocean Shipping Sector Goes Digital

Technology innovations are delivering on BCOs’ demands for improved supply chain performance.

• Are You Ready for the Future of Trucking? foodlogistics.com/21061706

SOFTWARE & TECHNOLOGY

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WEB EXCLUSIVES

uatp2 / iStock / Getty Images Plus

• 5 Ways Tastes Are Changing in Food Packaging foodlogistics.com/21050561

Published and copyrighted 2019 by AC Business Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published 10 times per year in January/February, March, April, May, June, July, August, September, October and November/December by AC Business Media, 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices.

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THERMAL ENERGY STORAGE

INTELLIGENT THERMAL MASS Harness the natural processes of convection and latent heat to reduce freezer energy up to 35%.

Intelligent controls + more heat absorbent

• CUTS REFRIGERATION RUN TIME UP TO 25%

thermal mass attracts and consolidates heat

• CAPTURES 300X MORE HEAT THAN FOOD

near the ceiling for more efficient removal

• STORES HEAT DIRECTLY IN THE AIRFLOW

while releasing cold to protect food.

• MORE COLD AIR FALLS OVER THE FOOD

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FOR STARTERS

FROM THE EDITOR’S DESK

DETAILS

THE LEGACY OF

ERIC PRIEUR S

SOWINSKI

6

everal years ago, I was invited to participate in Carrier’s World Cold Chain Summit in Singapore. The summit was launched in 2014 as a way to address challenges related to food waste and cold chain logistics in developing countries.

Eric Prieur, director of Carrier’s cold chain sustainability, was one of the people I met at the summit. He was truly passionate about promoting cold chain best practices and technology to reduce food waste, not only to improve people’s access to fresh and nutritious food, but to mitigate the environmental impacts of food waste, which range from contributing to greenhouse gas emissions to increasing ocean acidification.

Following the summit, Eric invited a few of us to start working together on a global cold chain certification program as a way to improve cold chain knowledge and application throughout our industry. It was an ambitious idea, but he was able to assemble the right mix of people and talent to move his vision forward.

As editorial director of Food Logistics, I am exposed to many smart and inspiring people whose

interests and careers are focused on the global food supply chain.

However, Eric was one of the most influential people I have crossed paths with at the publication, and his work changed the way I view food waste—both in developing countries and the industrialized world—and how our industry can address it.

Sadly, I found out from one of Eric’s colleagues at Carrier that he was aboard Ethiopian Airlines Flight 302 that crashed on March 10. He was traveling to Nairobi to speak at the UN Environment Assembly.

Eric’s work and dedication toward creating a sustainable global food supply chain was remarkable.

Food Logistics will honor his legacy by continuing to incorporate what he taught us about the interconnected relationship between environmental stewardship and a food supply chain that can support and nourish the world’s growing population.

Enjoy the read.

LARA L. SOWINSKI, EDITORIAL DIRECTOR LSOWINSKI@ACBUSINESSMEDIA.COM

Published by AC BUSINESS MEDIA 201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com

WWW.FOODLOGISTICS.COM PRINT AND DIGITAL STAFF Group Publisher Jolene Gulley Associate Publisher Judy Welp Editorial Director Lara L. Sowinski lsowinski@ACBusinessMedia.com Editor John R. Yuva jyuva@ACBusinessMedia.com Assistant Editor Amy Wunderlin awunderlin@ACBusinessMedia.com Web & Copy Editor Mackenna Moralez mmoralez@ACBusinessMedia.com Contributing Editor Barry Hochfelder Senior Production Manager Cindy Rusch crusch@ACBusinessMedia.com Creative Director Kirsten Wiskus Audience Development Director Wendy Chady Audience Development Manager Angela Franks ADVERTISING SALES (800) 538-5544 Associate Publisher (East Coast) Judy Welp (480) 821-1093 jwelp@ACBusinessMedia.com Sales Manager (Midwest and West Coast) Carrie Konopacki (920) 542-1236 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040, tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Jaymie Forrest, Chief Supply Chain and Commercial Officer, ScanTech Sciences Inc. John Haggerty, Vice President of Business Development, Burris Logistics Robert A. Norton, Ph.D., Professor of Veterinary Microbiology, Public Health and Biosecurity, Auburn University; Coordinator of National Security Initiatives, The Futures Laboratory Jon Shaw, Director of Sustainability and Global Marketing Communications, UTC Climate, Controls & Security Smitha G. Stansbury, Partner, FDA & Life Sciences Practice, King & Spalding CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847)-291-4816 circ.FoodLogistics@omeda.com LIST RENTAL Jeff Moriarty, InfoGroup (518) 339-4511 jeff.moriarty@infogroup.com REPRINT SERVICES Carrie Konopacki (920) 542-1236 Fax: (920) 542-1133 ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA CEO Barry Lovette CFO JoAnn Breuchel Vice President, Sale & Marketing Amy Schwandt Editorial Director Greg Udelhofen Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas

Published and copyrighted 2019 by AC Business Media.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission from the publisher.

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SUPPLY SCAN

NEWS FROM ACROSS THE FOOD SUPPLY CHAIN Daily Updates at FoodLogistics.com

BUMBLE BEE FOODS AND SAP TRACK FISH SUPPLY CHAIN WITH BLOCKCHAIN TECHNOLOGY

SAP and Bumble Bee Foods are partnering together to trace the journey of yellowfin tuna from the Indonesian ocean to the dinner table using SAP’s Cloud Platform Blockchain service.

Bumble Bee With the technology, consumers and customers will have the ability to easily access the complete origin and history of the fish by using their smartphones to scan a QR code on the product package.

“This solution is an example of how blockchains can be used to revolutionize the future of food,” says Oliver Betz, global head and senior vice president of SAP Innovative Business Solutions, part of SAP Digital Business Services. “It creates transparency and traceability across the food supply chain, from the ocean, across the cold chain, to the warehouse, store and our table. When we help enterprises like Bumble Bee to make innovation real, we support the consumer’s need to know and reinforce their faith in the brands they trust.”

AMAZON TO OPEN L.A. GROCERY STORE

BY YEAR’S END

Nissin Noodles

Amazon is reportedly planning to open dozens of grocery stores across the country as it expands its footprint in the food business, according to The Wall Street Journal, citing people familiar with the matter.

The company’s first store is slated for Los Angeles by the end of the year, and it has already signed leases for at least two other grocery locations with openings planned for early 2020, the Journal reports.

This expansion into the grocery sector follows Amazon’s 2017 acquisition of the health foods chain Whole Foods.

NISSIN CUP NOODLES VENDING MACHINES USE INSTAGRAM AS CURRENCY

Pexels

FOODBEAST, a digital media house known for creating visceral food experiences, has debuted a social media-powered vending machine with instant noodle company Nissin Foods USA. The machines will be housed within the Del Amo Fashion Center in Los Angeles and Las Vegas Premium Outlets South.

The so-called FOODBEAST #DreamMachines will accept Instagram posts as currency and will distribute free prizes in real time after consumers post with a specific hashtag on their public feed. Prizes range from Cup Noodles, video games, gift vouches, Cup Noodles Merchandise and more.

“What started as a joke in a campaign ideation session turned into a project combining web development, machine fabrication, wiring and networking,” says Rudy Chaney, CTO and co-founder of FOODBEAST. “We’re hoping this machine allows for the democratization of the Instagram influencer experience.”

The vending machine runs on an internet connected “Raspberry Pi” computer that controls all aspects of the machine. The vending machine’s motor API maintains the vending process and has a web server running multiple sets of signals between Instagram API, vending machine API and the cloud. The machine also has a hashtag session authentication system to verify posting and the active user.

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SUPPLY SCAN

NEWS FROM ACROSS THE FOOD SUPPLY CHAIN

McLane Company

Daily Updates at FoodLogistics.com

MCLANE OPENS NEW GROCERY DISTRIBUTION CENTER IN OCALA, FL

McLane Company has opened a new grocery distribution center in Ocala, Florida. The 400,000-square-foot facility will house 165,000 square feet of dry grocery, 200,000 square feet of perishables, and 35,000 square feet of office and support space.

The Ocala location will be the sixth distribution center in Florida and will service the quickly-expanding customer base in the North Florida region.

Construction Management Technology (CMT), the general contractor for the project, oversaw the renovations and development.

“We are thrilled to open our new facility in Ocala where the business community is welcoming and open to growth,” says Michelle Chesnutt, division president of McLane Ocala. “The values and work ethic of the prospective workforce is an ideal fit with McLane’s culture. McLane Ocala continues our company’s core initiative to drive customer results.”

Getty Images

JAXPORT AND SSA MARINE REACH LONG-TERM AGREEMENT ON $238.7 MILLION INTERNATIONAL CONTAINER TERMINAL AT BLOUNT ISLAND

ITRADENETWORK CREATES THE FOOD SUPPLY CHAIN’S FIRST HOMEGROWN BLOCKCHAIN

iTradeNetwork has unveiled its iTrade Blockchain, the food and beverage industry’s first homegrown blockchain designed for perishables.

The iTrade Blockchain uses hyperledger fabric and GS1 standards as foundational elements and is also designed around interoperability.

“Hyperledger Fabric has emerged as the backbone of blockchain implementations for the supply chain,” notes Guy Hopkins, head of development and enterprise architecture.

“Its ability to secure and control access to data, combined with its high transactional throughput, make it an excellent choice for our initiative. Enhancing the rich feature set of the existing iTrade platform to share food supply chain data across blockchains is another important consideration that opens up a lot of possibilities, and leveraging GS1 standards with our blockchain allows participants to do just that.”

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The Jacksonville Port Authority (JAXPORT) Board of Directors unanimously approved a long-term agreement with experienced terminal operator SSA Marine for the development and operation of a $238.7 million international container terminal at JAXPORT’s Blount Island Marine Terminal. The facility is an expansion of SSA marine’s current leasehold at Blount Island and will offer deepwater berthing space to accommodate the larger container ships from Asia.

The agreement is for 25 years, with two five-year renewal options, and includes a number of improvements to the Blount Island terminal. SSA Marine will contribute up to $129.7 million for the use of the terminal and facility upgrades, including the addition of three new 100-gauge container cranes.

“SSA Marine has a longstanding commitment to Jacksonville, and we are proud to invest in this community in such a meaningful way,” says SSA Conventional President Mark Knudsen. “The port’s strong leadership team and strategic location in the growing southeast U.S. market—combined with the efficiencies created by a deeper harbor— give us the tools we need to operate a world-class container terminal and further position Jacksonville as a gateway for global trade.”

HOUSE VOTES TO EASE CALORIE DISCLOSURE RULES FOR PIZZERIAS, DELIS AND GROCERS

The U.S. House of Representatives voted to gut a proposed Food and Drug Administration (FDA) rule requiring chain pizzerias, delis and convenience stores to list the calorie content of their meals on menus or menu boards prominently displayed on the premises. Instead, takeout restaurants and grocers could choose to disclose calories only on their websites. The White House opposes the Common Sense Nutrition Disclosure Act, saying it will leave Americans—who consume a third of their calories away from home—with less information to make healthy choices.

Rep. Fred Upton, R-Mich., speaking in favor of the bill by Reps. Cathy McMorris Rodgers, R-Wash., and Loretta Sanchez, D-Calif., said Michigan-based Domino’s Pizza would have to list the calorie content of hundreds of different combinations of crusts and toppings on a menu board to comply with the FDA’s rule. Domino’s already has an online calorie counter for their customers, most of whom order on their computers or smart phones, Upton says.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

PORT OF VIRGINIA COMPLETES USDA COLD TREATMENT PILOT PROGRAM

Following the completion of the U.S. Department of Agriculture’s Southeast In-Transit Cold Treatment Pilot program, importers of perishables from South American countries can now move their cargo across the Port of Virginia.

The approval coincides with the port’s effort to expand its capacity to handle refrigerated cargo, investing $700 million to expand capacity at its two primary container terminals.

“We’re expanding the stack-yard at VIG and reconfiguring the yard at NIT, and both of these projects include new reefer racks for each stack,” says John F. Reinhart, CEO and executive director of the Virginia Port Authority. “When construction is finished, we’ll have nearly 900 reefer spaces at each terminal, which is a 66 percent increase in total reefer capacity. We have the necessary federal approval and capacity to help develop Virginia into an export and import center for refrigerated cargo.”

The program enables containerized imports to enter the port directly after completing a two-week cold treatment process as a safeguard against fruit flies and other pests, as well as acquiring all the required unloading clearances prior to the shipment’s arrival in port.

Holt Logistics and PhilaPort joined the Argentine Embassy in welcoming the first shipment of Argentine beef into the U.S. in more than 17 years.

The shipment included several tons of Argentine lean beef, primarily used for higher end cuts and hamburgers. The shipment marks the first time Argentine beef was allowed import into the country since 2001. The vessel departed from Buenos Aires before heading north for the U.S. Argentina expects to export about 20,000 tons of beef products into the U.S. every year.

Pexels

Virginia Port Authority

PHILADELPHIA WELCOMES FIRST U.S. IMPORT OF ARGENTINE BEEF IN MORE THAN 17 YEARS

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Emerging from Drought, California Spot Freight Looks to Blossom Mark Montague is senior industry pricing analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool.

He has applied his expertise to logistics, rates and routing for more than 30 years.

Montague is based in Portland, Oregon.

Unusual weather this spring has created short-term but significant supply chain disruptions—with a significant affect on truckload rates.

For instance, when snow hit the Rockies in mid-March, the challenge of getting freight into Denver led to a sharp increase in rates on the van lane from Seattle to Salt Lake City. Then, the surge of West Coast trucks in SLC caused rates on the lane from there to Stockton to decline.

One market is expecting a cumulative, long-term benefit to the stormy, snowy weather: California.

California produce harvests are a huge driver of demand for refrigerated vehicles.

In fact, four of the top five markets for reefer freight last year

were in California: Fresno, San Francisco, Los Angeles and Ontario. Harvests affect capacity in the van and flatbed segments as well, as power units may be diverted to cover higherpaying reefer loads out West.

California experienced three years of drought from 2014 to 2016,

CALIFORNIA DROUGHT CONDITIONS

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By Mark Montague

which led to loss of crops, reduced yields, shorter growing seasons, and slack demand for trucks. But today, the snowpack in the Sierra Nevada mountains is the fifth largest in the past 40 years, and many of the state’s reservoirs are at above-a verage levels.

If growers produce more than they planned for this year, they’ll turn to the spot market for capacity.

Until then, reefer rates and volumes continue to feel the chill of a slack freight market. Here’s hoping for more predicable weather in the coming months.

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FOOD ON THE MOVE

LOGISTICS TRENDS IN OUR INDUSTRY

Bipartisan lawmakers in the Senate and House have introduced legislation to address the urgent shortage of truck drivers affecting the movement and cost of goods throughout the United States. The DRIVE-Safe Act modernizes federal law to empower the trucking industry to fill these gaps with a qualified, highly trained emerging workforce.

According to a news release from the International Foodservice Distributors Association (IFDA), current law “bars the trucking industry from fully utilizing their complete workforce at a time when the country is facing a massive driver shortage and growing demand for freight transportation.” IFDA estimates that trucking companies will need nearly 900,000 additional drivers over the next decade.

Under the proposed legislation, once a driver qualifies for a commercial driver’s license, they begin a two-step additional training program with rigorous performance benchmarks.

Drivers must complete at least 400 hours of on-duty time and 240 hours of driving time in the cab with an experienced driver. Every driver will train on trucks equipped with new safety technology, including active braking collision mitigation systems, video event capture, and a speed governor of 65 miles per hour or below.

“The current driver shortage puts our dynamic economy at risk and closes off high-paying trucking careers to young Americans. The DRIVE-Safe Act is an opportunity to improve the lives of many young Americans, give them opportunities for advancement, increase safety and skills training, and enhance the economy by eliminating the obstacles currently preventing the trucking industry from alleviating its workforce shortage,” says Rep. Trey Hollingsworth, R-Ind.

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Coldtainer

CONGRESS INTRODUCES BIPARTISAN PLAN TO ADDRESS DRIVER SHORTAGE

COLDTAINER PROVIDES COST SAVINGS ACROSS MULTIPLE INDUSTRIES

From LTL to business and residential delivery providers, a wide range of customers are reporting significant savings in capital and operating costs utilizing Coldtainer units.

At a lower initial cost than $25,000 for a frozen food truck, a 32-cubic-foot front opening Coldtainer model designed for transporting frozen products down to -6°F and a cargo van are providing Kool Beans, the operator of five Italian ice franchises and the provider of catering services for corporate events, with frozen carrying capacity during transit and for storage.

“We’re seeing interest from companies that need temperature control for some portion of their loads,” says Terry Koerner, general manager of Coldtainer USA. “Those businesses rely on trucks for deliveries of fresh grocery, prepared meal, vending machine, pharmaceutical and other products, and their loads also often include a mix of dry goods and perishable items that need to be maintained at precise temperatures.”

KROGER LAUNCHES AUTONOMOUS DELIVERY IN HOUSTON WITH NURO

Kroger has teamed up with robotics company Nuro to launch autonomous grocery delivery in Houston. The service will be available through two Houston Kroger stores, reaching customers in four local zip codes.

Kroger The companies first partnered in August 2018 for an autonomous service pilot in Scottsdale, Arizona. The pilot proved to the companies that their combined technology and digital expertise could transform the grocery delivery experience.

“Our Arizona pilot program confirmed the flexibility and benefits provided by autonomous vehicles and how much customers are open to more innovative solutions,” says Yael Cosset, Kroger’s chief digital officer. “It’s always been our shared vision to scale this initiative to new markets, using world-changing technology to enable a new type of delivery service for our customers. We operate 102 stores in Houston—an energetic market that embraces digital and technology advancement.

The launch is one more way we are committed to sustainably providing our customers with anything, anytime and anywhere, the way they want it.”

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COOL INSIGHTS

BY JOHN R. YUVA

A HOLISTIC DELIVERY APPROACH KEEPS RESTAURANTS IN CONTROL

W

hen it comes to the exposure. And each choice comes specific needs via an open API platconsumer experience, with tradeoffs. form with a translation layer. The few companies set the “A small segment of restaurants platform allows for the system to bar like Amazon and Uber. When is choosing the path of simply not be up and running within weeks and either company jumps, it signals the reacting to industry scaled to additional market to do the same. Their enchanges. Often, owners locations quickly trance into the food delivery sector are either older and and easily,” explains with services such as Uber Eats has don’t plan to continue Bloch. “Features TOTAL changed the game for restaurants in the industry, or can include RESTAURANT management tools in their quest to remain competithey feel making the SALES tive and meet customer demands. technological jump for headquarter Customers now want the conveis too complex,” says and restaurant WILL BE nience of transparency and control Bloch. “That jump can locations, driver over how their food is prepared and include building an intools (i.e., route delivered. house system, but the optimization, auWith today’s full-service food associated time, costs tomated drop-off delivery aggregators, order and and issues that are part and parcel reminders, driver app, and the like) delivery preference can be easily of scaling are only realistic for the and transparency and UX features achieved. And it shows in the statis- very largest chains.” for consumers (e.g., real-time tracktics. According to Morgan Stanley, “Thus, a popular option is to ing and notifications).”

40 percent of total restaurant sales deploy a point solution, such as Most recently, Bringg announced will be delivery, and 58 percent of Postmates, DoorDash and the like,” a strategic partnership with total restaurant adds Bloch.

DoorDash, the on-demand delivery delivery will be “However, service. Now, restaurants can rely online by 2020. margins are on their existing in-house delivery Guy Bloch, low and surren- fleet while integrating DoorDash as TOTAL dering a large part of their last-mile customer exCEO of Bringg, RESTAURANT provides his percentage of perience for peak times and specific insights into the DELIVERY WILL BE revenue might geographies. The Bringg platform current environallow you to operates in the background collectment and how compete, but ing vital data that restaurants can restaurants can it won’t allow later analyze for greater customer gain exposure you to profit. engagement. in a crowded A further “Restaurants need to build their market while maintaining margins dampening of profit occurs when brand. They may want to ensure and brand control. the restaurant no longer owns the they’re visible on full-service The major players are leveragcustomer relationship and the point aggregator platforms, but it’s also ing delivery service technology to solution providers gain full control.“ essential to have their own app for connect and optimize the customer What is the answer? Bloch says customers to download and place experience. Regardless of cusa sophisticated holistic approach orders,” says Bloch. “While building tomer location—a home, business with a solution like Bringg. Restaudirect customer relationships or street corner—technology can rants, for example, work with the begins once customers engage with bridge restaurant and consumer, platform to streamline, manage and the app, it doesn’t end once an orsays Bloch. However, because such automate the entire food delivery der is placed. That last-mile delivery services are becoming commodsystem, while keeping control of brings the customer experience itized, current business models pro- their customer data, he says. full circle and is often the only vide few choices for restaurants to “A variety of services are touchpoint with the restaurant for protect margins and sustain brand integrated based on each chain’s customers who order online.”

40%

DELIVERED

BY 2020

58%

ONLINE

BY 2020

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COVER STORY

BY JOHN R. YUVA, AMY WUNDERLIN

FORWARD THINK COMPANI

OPEN EYES O

FOOD SAF 14

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D NKING NIES

S ON

AFETY NEW REGULATIONS ALONE CAN’T STOP RECALLS FROM HAPPENING, BUT ADVANCES IN SCIENCE, RISK-DETECTION TECHNOLOGIES AND DIGITIZED PROCESSES CAN MAKE A BIG IMPACT.

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W

hen following the path of how our food travels from farm to processor to ultimately the kitchen table, it’s a wonderment that food recalls are not more frequent. But according to the U.S. Food and Drug Administration (FDA), the number of food/cosmetic recalls are declining (1,935 in 2018 compared to 3,609 in 2017 and 2,567 in 2016).

Liz Palmer, Ph.D., a quality and food safety manager for Morton Salt and PreScouter subject matter expert, says in the last decade we have seen an increase in the number of recalls because of the Food Safety Modernization Act (FSMA) and because of science. The FDA’s new food safety oversight (which includes mandatory recall authority) under FSMA in conjunction with scientific advancements in risk-detection technologies has helped the FDA identify tainted food quickly. It has also made companies more aware of the repercussions of not identifying the risk first.

“Although FSMA is about prevention, its regulations may not substantially reduce recalls any time soon. Recalls will happen because mistakes happen. Ultimately, if a company acts swiftly with its supply chain and consumers in mind, a company can save the brand’s reputation its top and bottom lines,” explains Palmer.

“One key benefit of acknowledging and taking responsibility for a food safety failure early is that focus on consumer safety can generate positive buzz for a company and foster brand dedication,” she adds.

A Compliance Ripple Effect While technology accelerated innovation in food production practices, company recordkeeping was slow to keep pace.

FSMA changed that disparity. Julie McGill, director, implementation and strategic account management for FoodLogiQ, says FSMA involves intensive supplier verification standards and documentation.

“It’s a big shift for the smallest of the small and largest of the large to now document every step of the process and maintain those records,” says McGill. “When FSMA rolled out, companies needed to decipher the larger picture of the regulations and determine how various rules

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COVER STORY

Food and beverage leaders drive

compliance outwards in the supply chain.”

Liz Palmer, Ph.D., quality and food safety manager, Morton Salt

continued

applied to their company. It quickly became a top-down initiative where these regulations were not a nice to have but a must have.”

One of the last seven FSMA rules is the Intentional Adulteration (or the IA) rule, says Palmer. It comes into effect in July 2019 for large facilities. However, the industry and FDA are still in the steepest part of the learning curve for many of the earlier rules.

The largest companies with the resources to tackle FSMA compliance can be thanked for a ripple effect in compliance seen in the industry, Palmer explains. Large companies or companies of highest risk are typically targeted first by the FDA inspectors and therefore must be prepared in advance of a compliance deadline.

“These food and beverage leaders drive compliance outwards in the supply chain. They drive upstream suppliers, third-party manufacturers, logistics, packaging and warehousing companies into compliance,” says Palmer. “Those secondary companies then put pressure for compliance on all tertiary companies. Over time, the rest of the industry is brought into compliance as part of the interconnected web.”

Palmer says in practicality, it may take many years for FSMA to touch

RECALLS OF FOOD/COSMETICS

(FISCAL YEARS 2012-2018)

1,935

2018

3,609

2017 2016

2,567

3,265

2015

2014

2,545 1,961

2013 2012 Source: FDA

0

1,066 1000

all the companies that are registered under the FDA Bioterrorism Act. Until they are inspected, many companies won’t know if they have implemented programs appropriately and this may not happen until after the deadlines of implementation.

“The mission of the FDA is to protect consumers and to walk handin-hand with the industry. However, a large percentage of the industry

2000

3000

fears this won’t be the case,” she adds. “Despite this fear, the ripple effect emanating from the large companies driving compliance with their business partners means that FSMA has already begun improving food safety.”

Communication Is Key Improvement is occurring McGill agrees, and says the FDA and the

RECALLS BY CLASSIFICATION (FISCAL YEARS 2016-2018)

Class I 1,627

Class II 5,836

Class III 848

Class I 1,447

Class II 6,925

Class III 817

Class I 832

Class II 5,764

Class III 828 0

1000

2000

3000

4000

5000

6000

7000 Source: FDA

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COVER STORY

continued

entire industry are communicating more effectively. During the last year, several recalls involved upstream ingredients. Without communication among supply partners, it would have been difficult to control such complex recalls.

“A number of upstream ingredients exponentially impacted thousands of products. Consider an ingredient such as onions that are used in breakfast burritos, salads and soup mix,” says McGill. “Suddenly a recall is not about a simple

ingredient but rather all the finished product it was used for. You immediately need to know where your documentation resides, where the ingredient originated, and all the touchpoints prior to it appearing in your facility and processed

CONTINUING SECURITY CONCERNS AND THE COMING STORM WITH NATION STATES:

IS THERE A THREAT TO FOOD SAFETY? Terrorism is the long fight that will never truly go away, just perhaps be better controlled. We need to adjust to that reality. As we try to discern possibilities for the future, good or bad, two important caveats must be considered. First, trained jihadists are coming home from the battlefields in Syria and Iraq, and their support structure remains largely intact. Second, nation states are starting to come dramatically back into play. Russia, China, Iran and North Korea have been problems for the U.S. in the past.

They will become even more so in the future.

Most food defense managers probably missed an article that appeared in Washington’s Top News a couple of years ago. The title (US official: ISIS has ‘people in place’ to conduct ‘steady’ attacks) was somewhat sensational, but the idea deserves attention. In the article, an unnamed “U.S. defense official” is quoted as saying that transnational terrorist attacks will likely remain steady, because the group has built a robust, redundant apparatus for conducting attacks. What’s more, the group has sympathizers around the world who will be able to continue producing the propaganda that underpins the ideology in Europe and elsewhere.

A lot of people would like to believe ISIS is dead and gone. In my line of work, however, I transcend several domains within the larger national context. I see data from many sources inside and outside the government.

My conclusion is that the opinions that were expressed in the article are still accurate. Although terrorist groups are being hard pressed by police and militaries around the world, it is premature to assume our terrorist problems are over.

TRAINED FIGHTERS COMING HOME The massive tide of fighters into the contested areas of Syria, Iraq and perhaps even Yemen abated when the tide turned, causing many former fighters to return to their countries of origin. The threat from the Islamic State caliphate may have largely diminished, but make no mistake—the terror group remains a threat.

Overall, there appear to be multiple categories of ISIS members, the most familiar being those considered to be hard core, who have passed to the “dark side,” as well as the less strident, who can perhaps be more easily re-assimilated. The hard core ISIS members will likely remain largely irretrievable. Those on the fringe probably remained at the edges of jihadist violence and are far less likely to cross over and become violent.

Often living far from the battlefield, these more amateur, unaffiliated sympathizers, sometimes described as “jihobbyists” or “eHadis,” nevertheless have helped “crowdsource” jihad in the past.

There is, however, a third category of sympathizer who participated in

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crowdsourcing propaganda activities but were also on their way to the “battlefield,” which in recent history has proven to be anywhere, from the streets of western Europe to a U.S. nightclub. These are perhaps the most dangerous of all of the categories of terrorist sympathizer, because they could be embedded in our society, in our critical infrastructures and schools, waiting for the right time to act to cause maximum effect. Remember the San Bernardino killers Rizwan Farook and Tashfeen Malik?

NATION STATES The trend over the last decade has been for the press to ignore many of the indicators of threats posed by adversarial nation states. The successful 2017 assassination of Korean leader Kim Jong-un’s brother Kim Jong-nam in the Kuala Lumpur airport, although relatively simple in its execution, showed a level of sophistication and pre-planning usually indicative of a nation state. The way in which the assassination was accomplished and the fact that others in the airport did not fall prey to the chemical provide indirect evidence that the chemical agent, whether VX or some analog, was likely stabilized with a carrier that prevented volatilization. That alone speaks volumes about the possibility of nation state involvement.

The larger issue with the assassination is that adversarial nation states have “reach-out” capability that less-sophisticated adversaries lack.

Nation states have used such intimidation for hundreds of years, but the ease of international travel has dramatically expanded their range and speed. Expect more such assassination events in the future as adversarial nations attempt to tamp down political opposition. A nation state could also use such reach-out capability to intimidate other nation states by attacking critical infrastructures such as food and water.

The future will bring altogether new and continually evolving threats; the new reality is that the U.S. is in a permanent state of war, a new Cold War if you will, that under the right conditions could become hot. We must prepare and be constantly vigilant if we are to ultimately triumph.

Robert A. Norton, Ph.D., is chair of the Auburn University Food System Institute’s Food and Water Defense Working Group. He is a long-time consultant to the U.S. military, federal and state law enforcement agencies. His blog, Bob Norton’s Food Defense Blog, can be found at aufsi.auburn.edu/fooddefense/blog/.

He can be reached at nortora@auburn.edu or by phone at 334-844-7562.

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into a finished good.” suppliers accordingly helps prioriinvesting in food safety ensures you McGill adds that the baseline for tize resources,” she says. “This may have consumers who will invest in being organized is understanding elicit a need for an on-site audit. Or you,” Palmer says. your internal capabilities, assemit may mean increased visibility to bling your internal experts and temperature control using sensors Manual Practices teams, and ensuring you have the or product movement in the supply Hinder Progress right staff on projects. Technology chain using blockchain. An additionA lot of time is spent discussing and organization of data compleal recommendation for all compahow technology can aid producers, ments those efforts. nies that do not have sufficient food retailers and food manufacturers in Companies must also run recall safety expertise, is to reach out for preventing food-related mistakes, simulations and audits regardless guidance to support a prepared but the fact remains that outdated, of whether they’re fully or partially food-safe culture. manual processes are still impeding automated or completely manual.

“To be a successful company the food industry from better recall After investments in technology with longevity in the food space, prevention. and extensive processes, do they produce the results and lead to the outcomes that mitigate or contain food recalls?

“What I’m hearing more In the end, the from companies question is are you is simplification being more and standardefficient and ization. Simplimore effective fication to more in what you’re doing?” easily manage Julie McGill, director, FoodLogiQ processes that were previously Minimize food degradation inside storage freezers. cumbersome and standardization to convey information in a way that promotes partner collaboration and participaALL FROZEN FOOD HAS SOME Thermal Energy Storage absorbs • PROTECT FOOD QUALITY tion,” says UNFROZEN WATER EVEN AT up to 85% of heat infiltration, • INCREASE TEMPERATURE STABILITY -40° C. EVERY TEMPERATURE slows temperature increases, McGill. “Companies aspire to CHANGE CAUSES WATER TO • EXTEND THERMAL BACKUP: 3X improves temperature stability, THAW OR FREEZE CREATING achieve end-to-end traceability. and saves up to 35% or more on • REDUCE ENERGY COSTS LARGER CRYSTAL STRUCTURES energy costs.

UP TO 35% THAT REDUCE FOOD QUALITY. This could involve using blockchain, leveraging new technologies to automate processes, and using standards to enumerate facilities across the supply chain so that all partners can exchange data seamlessly. In the end, the question is are you being more efficient and more effective in what you’re doing?”

The primary way to mitigate against trends that result in recalls is simply doing business with suppliers you have verified, advises Palmer. Rigorous review built into a supply chain preventive control program helps mitigate against some of the top causes for recalls, such as undeclared allergens or the presence of pathogens.

“Categorizing ingredients and materials by risk and managing

PROTECTING FOOD QUALITY.

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7 STEPS TO PREPARE FOR AND EXECUTE A SUCCESSFUL FOOD-RELATED RECALL

By Carol C. Lumpkin, Jonathan Cohen and Robert Shawn Hogue, K&L Gates LLP We all know that accidents happen, and most of us govern our lives to minimize them. Food and beverage companies are not immune from these inevitabilities, and they too generally do their best to plan for unexpected accidents. Even with the best planning and preventative efforts, though, they are vulnerable to accidental contaminations or other problems that lead to product recalls.

Food companies typically plan for recall events by establishing sophisticated contingency and crisis management strategies, which include focusing on contractual and insurance protections. A well-crafted policy can help the company to act quickly

ance elements of the recall; • Provide information for notifying all potentially responsible insurance companies, including identifying the person and address to which notice must be given; • Utilize key consultants, including a public relations firm, to assist in the conduct of the recall; • Prepare for customer reactions, including by establishing a call-in center if needed; • Craft a draft public relations statement with input from counsel, which then can be modified for quick release when a recall arises; • Contain plans to mitigate any business interruption or sup-

and effectively at every stage of the recall.

Below we have identified seven key (often overlooked) steps food and beverage companies should consider in preparing for and implementing a product recall. By following these steps, food and beverage companies may significantly reduce the disruption and costs that a recall might cause.

ply chain disruption (including identifying alternative suppliers and production facilities if feasible).

STEP 1: IMMEDIATELY

IMPLEMENT YOUR RECALL PLAN Even before a crisis arises, food companies should engage with counsel to craft a detailed recall plan that lays out the critical early steps necessary to conduct the recall and mitigate economic loss. Every recall plan should: • Identify a team member responsible for undertaking each critical task, including that person’s contact information; • Involve counsel for all relevant aspects of the recall, including regulatory, defense, and insur-

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• What caused the product defect to occur in the first place?

• Where are the unsafe products?

• How many unsafe products are there?

• Did the product fail to comply with any safety regulations? If so, how?

• Can company databases help to identify potential product owners and retailers?

STEP 3: CONTACT THE

PROPER GOVERNMENT AGENCY The law generally requires that if a company obtains information that a product fails to comply with safety standards or creates unreasonable risk of serious injury or death, the company must immediately report—within 24 hours—that the product (1) violates a safety standard or (2) could be harmful to consumers.

STEP 2: CORRECTLY AND STEP 4: ALLOW ACCESS PRECISELY IDENTIFY THE PRODUCT TO BE RECALLED Often, a company’s immediate reaction upon learning of a contamination event is to recall all products associated with a foodborne illness. While it is only human to react this way, a sophisticated business should resist this type of knee-jerk response. Instead, where time permits, food companies should first localize the problem and address its sources.

Pulling the wrong products from the shelves not only results in unnecessary losses for the company, but it can create a sense of panic that could tarnish the brand.

In evaluating the scope of a recall, a company should focus on the following: • What is the element that causes the product hazard?

TO RELEVANT STATE AND FEDERAL AUTHORITIES AS NECESSARY

Federal and some state laws require that during a recall, or prior to the issuance of a recall, a facility must be made available for inspection. During the inspection, the inspector may be entitled to review all records and third-party audits relating to the product, as well as cleaning schedules and other documentation pertinent to the product and its production, transportation, storage and handling.

STEP 5: IDENTIFY,

NOTIFY & WORK WITH INSURERS TO MITIGATE LOSSES Many food companies have insurance coverage to pay the losses from a recall. Early actions and strong coordination may be

critical to obtaining recoveries from these policies.

Most insurance policies contain notice provisions, and companies should provide notice to every insurer that potentially provides coverage. Some of these provisions require notice be provided during the relevant policy period or shortly thereafter, and insurers may try to deny coverage where a company provided notice outside of the time when a policy specifies a claim must be reported. As such, you should contact or retain insurance counsel immediately. Your insurance counsel will be able to assist you with communicating effectively with the insurer, which is a critical component to successfully navigating any recall.

STEP 6: COORDINATE WITH POTENTIALLY AFFECTED SUPPLY CHAIN PARTNERS

Many recalls result from contaminations or other defects in ingredients that a company may purchase. Recalls by food manufacturers often times implicate their retail customers or other manufacturers that use their products as ingredients. Before an incident arises, companies should consider coordinating recall plans with key suppliers and manufacturer customers.

Then, during a recall, companies should coordinate with their suppliers and manufacturer customers to assure that the scope and effectiveness of the recall are consistent throughout the supply chain.

Once a contamination event occurs, a company should assess the claims it may have against responsible suppliers, as well as the claims it may face from its

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COVER STORY

own customers. Depending on state law, there may be an array of ways to collect from a supplier.

STEP 7: COMMUNICATE

EFFECTIVELY WITH CONSUMERS Maintaining consumer trust during a recall is key, and the company should focus on three pillars to maintain the messaging: (1) transparency; (2) consistency; and (3) responsiveness. Managing recall communications is not unlike other marketing campaigns.

Companies can use existing communications platforms to publicly acknowledge the recall, apologize as appropriate, and reinforce their commitments to consumer safety.

Social media postings or placing notices in marketing materials helps get the word out.

It also is important that the company’s message is delivered to customers and consumers consistently. Set up a toll-free number to handle the number of calls expected after the recall only after call center staff have been trained to properly convey the company’s message during the recall. Again, outside consultants can help staff call centers with experienced and well-trained responders.

Like it or not, in the end, a business will be remembered by how it reacts during a recall and how it engages with the public.

Irrespective of how brilliant and successful a marketing plan was prior to the recall, failure to properly execute a successful recall will result in long term consequences. What appears to be a temporary business disruption can quickly result in bankruptcy, a congressional hearing, or worse.

Properly preparing for and executing a carefully crafted recall plan can make all the difference.

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continued

The introduction of the Food Safety Modernization Act (FSMA) forced many companies to address their food safety standards and compliance, but the regulation does not require any of that to be digitized. In fact, most companies are still documenting manually on paper, or at best, on Excel spreadsheets.

The results of these antiquated documentation processes are becoming clear, however, as today’s 24/7 news cycle draws consumer attention to what seems like monthly food recalls. Beyond the cost of these recalls, the added brand damage has piqued the interest of large food manufacturers who are just now starting to come around to the idea of a digital transformation of their food safety practices.

“The food industry is waking up to digital transformation in the safety space. They’ve spent a lot of money on automation to transform production, but the amount of automation when it comes to safety has lagged behind, and that is definitely changing,” says David Hatch, chief strategy and growth officer for Corvium.

“The more forward thinking companies and brands are starting to realize it’s not just a compliance thing, but it’s also a business driver.

Through looking at the data and understanding what’s happening with the behavior of bacteria, you can get ahead of [a potential recall], and that’s kind of a whole new concept,” he adds.

The Problem with Manual Processes Software platforms

such as Corvium’s are helping large food manufacturers such as Sargento, Danone and Lindt manage food safety programs to not only reduce the stress of an audit but to get ahead of recalls and proactively conduct environmental monitoring on the production floor.

While the majority of the industry has yet to embrace analytic-based tools when it comes to food safety, the problem with manual safety practices is three-fold: ➊ Data silos—Hatch explains that not only are manual processes cumbersome, but they create the purest form of a data silo.

“You’re creating data that cannot be shared, cannot be networked, cannot be analyzed, and so it kind of operates in its own little microcosm,” he notes. ➋ Human error—Mislabeling, illegible handwriting or a missed step in the process are just a few

The food industry is waking up to digital transformation in the safety space.”

David Hatch, chief strategy and growth officer, Corvium

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You’re not just complying, you are actually improving your business

and reducing your risk.”

David Hatch, chief strategy and growth officer, Corvium

continued

examples of how human error can cause a million dollar mistake. ➌ Lack of analysis—With paper documentation there is no ability to analyze trends and root cause to determine what is going on in your production lines.

“What you don’t get to see over time is that a location or test point or production line has seen more than its fair share of problems, and maybe we have a machine or equipment failure that we need to address, or maybe the technician needs to be retrained. All these things you can get from analyzing data over time,” Hatch explains.

Corvium looked at each of these factors and determined there must be a better way.

“If we can automate this process, we can reduce human error, we can collect all of the data that is being produced through all the testing

and diagnostic results, and we can start to show companies a different value equation,” Hatch explains.

Visibility into your entire enterprise in one dashboard or platform enables a continuous improvement cycle, which Hatch adds not only can we help them reduce the cost and the time and the effort to run their testing program, but can increase the efficacy of that program.

“We can start to show organizations that they might not have to do as many tear downs or clean in place operations that stop a production line if they Who’s to blame? are getting ahead of the Who’s to blame? detection and remediation of pathogens and If you’re looking to blame someone for spoiled allergens and other confood, it’s usually the brand or the manufacturer taminants. Moreover, who takes it on the chin. What if freshness could you’re not just combe a shared responsibility, such as a nearby lake plying, you’re not just or a favorite public park; a resource rather than checking the box and a burden? Suppose measuring freshness could meeting the regulated be something you want to use often because its criteria; you are actually benefits are so great? Imagine knowing who, improving your business and how, and when spoilage happens, and not and reducing your risk,” just a proximate, somewhat arbitrary “sell by” he adds. or “use by” date, but a real indication of what, A large food manand when, and for how long? ufacturer that works with some of the www.infratab.com (805) 986-8880 largest retailers and restaurants in the world

Spoiled?

Spoiled?

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vusta / iStock / Getty Images Plus

COVER STORY

implemented Corvium’s platform after realizing they needed to make an investment that was not just about compliance and regulatory management but risk management.

“They understand how [a food related recall or issue] can harm their brand with their ecosystem of distribution and customers. They’re looking at this technology as not just a checkbox, but they are actually measuring their performance as a business on their ability to always close out a corrective action in enough time so that they are handling the issue and not asking someone else to do it,” explains Hatch.

For example, they are continuously working to ensure they have standard operating procedures that everybody understands across all 33 locations. Thus, if there is a safety concern, they can handle it properly and do things like draw a margin around a product. Because they know which product was produced on which production line and at what time, they can remove all product from an hour before and an hour after that timeframe before it even goes out their door.

“You never want to make a call to a distributor saying, “Hey, you know that truckload you just took, bring it back.’ Worse yet, ‘you know that product one your shelves, take it off,’” Hatch notes. www.foodlogistics.com

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NESTLE’S TRANSPARENCY EFFORTS PROVIDE FOOD SAFETY BENEFITS

By Lara L. Sowinski Food safety and supply chain transparency are dependent upon one another and closely intertwined. Behind the Brands, part of Oxfam’s GROW campaign, provides a scorecard on the world’s Big 10 food companies as a way to answer “what are they doing to clean up their supply chains?”

Nestle is one of the Big 10 companies ranked by Behind the Brands. The others include: PepsiCo, Unilever, Mondelez, Coca-Cola, Mars, Danone, Associated British Foods (ABF), General Mills and Kellogg’s.

Transparency is one of the seven themes that Behind the Brands uses in its scorecard.

In February, Nestle announced it would disclose a list of suppliers along with a variety of data for 15 of its priority commodities, the first disclosure of its kind in the industry. The 15 commodities comprise 95 percent of Nestle’s annual sourcing of raw materials.

“Consumers want to know what is in their food and where it comes from. Therefore, transparency in our supply chains is essential, and we will continue to lead in this area,” states the company’s Magdi Batato, executive vice president and head of operations. “Following the public disclosure of our palm oil and pulp and paper supply chains last year, we are now pleased to release supply chain information for soya, meat (beef, pork, veal, lamb/mutton), hazelnuts and vanilla.

“By mid-2019, we will also publish the supply chain information for our other priority commodities, which include seafood, coconut, vegetables, spices, coffee, cocoa, dairy, poultry, eggs, cereals and sugar,” he adds.

Nestle’s supply chain transparency disclosure includes the list of direct (Tier 1) suppliers, upstream locations and country of origins, as well as total volume sourced for each commodity.

Behind the Brands gives Nestle a “7” on its scorecard, and praises the company as “one of the top in transparency.”

According to the organization, “Nestle reveals where it sources from, how much it sources for key commodities, including some key suppliers. Nestle provides excellent sustainability reporting and is the only company disclosing the ratio of CEO and median employee pay, but it provides very limited information on taxation.”

Limitations Still Exist Many industries, such as banking and healthcare, have already adopted workflow and data analytics software. The food industry has finally started down that path as well, but its low margins have been a huge barrier.

[Food] is the “Food is not a highly profitable business world’s largest to be in. It is the world’ largest industry, but industry, but a budget for cutting edge technology is a new idea,” says Hatch. But he does see that a budget for cutting edge changing as industry leaders continue to educate on its importance. technology “We have to be an agent of change. The is a new market has to be educated into action, into idea.” a new way of thinking,” he adds. “UnderDavid Hatch, chief standing the value of a slicer is very easy: I strategy and growth officer, Corvium get this many more sausages out the door if I can slice them faster. It’s a very direct equation to value, and because there aren’t a lot of PhD level technologists and data scientists working in food, helping executives understand the value of data is taking longer.”

The sensitivity of food related data is another impediment.

The idea of sharing pathogen data on the cloud is still alarming to some, even as cloud security has vastly improved over the last five years.

“It’s a mindset challenge to help executives understand to reduce risk, you’ve got to get access to this data and to do that you’ve got to get modern technology,” Hatch concludes.

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THIRD-PARTY & REFRIGERATED LOGISTICS

BY MARY SHACKLETT

Mary Shacklett is the president of Transworld Data, a technology analytics, market research and consulting firm.

Prior to founding the company, she was vice president of product research and software development at Summit Information Systems. She may be reached at mshacklett@ twdtransworld.com.

24

Meeting the Demands of Home Delivery As online grocery orders grow, more consumers will expect “fresh” versus frozen products. This is accelerating refrigerated food inventory turn cycles, and is forcing significant changes for warehouses, which historically have been able to hold foods longer, and logistics providers, which likewise have worked with warehouses and

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F

ood waste costs U.S. consumers, businesses and farms over $218 billion per year.

Although some of this spoilage isn’t due to refrigeration, cold chain problems play a definite role in contributing to food waste in the U.S. and abroad.

Adding to the challenge, U.S. consumers are now demanding new ways of receiving their groceries—including direct home delivery.

Cold chain logistics providers must be able to handle these home driven requests as well as the more traditional transportation routes to warehouses, distributors and grocery retailers.

In October 2018, consultancy KPMG published a survey of 2,000 U.S. consumers, which revealed that while a majority of respondents still preferred in-store grocery shopping, a growing percentage of consumers were starting to order groceries that were directly delivered to their homes. Another finding from the survey showed that frequent online shoppers were attracted to the product assortment, and 25 percent named product quality as the chief factor for buying groceries online. Only 18 percent cited price.

Andrei Stanescu / iStock Editorial / Getty Images Plus

Cold chain management expertise is more critical than ever as the food chain expands.

Motortion / iStock / Getty Images Plus

REFRIGERATED LOGIS MORE ONLINE GROCERIES TO CONSUMERS’ D

other distribution points as final destinations—and not with the end consumers themselves.

“To meet the new demands of home delivery, you need to run an end-to-end cold chain, with refrigeration on the last mile,” says Daniel Sokolovsky, founder and CEO of AxleHire, a refrigerated logistics provider. “You also have to be concerned about getting to

customers on the first attempt to deliver, because many retailers promise delivery within the first hour of shipping.”

Grocers are responding to those demands. Safeway offers home delivery within two hours of placing an order. Amazon obviously offers home delivery. Instacart delivers groceries in two hours from Whole Foods, Target, Costco and Petco, while services www.foodlogistics.com

4/8/19 9:31 AM

GISTICS DELIVERS RS’ DOORSTEPS that arrive at one- and two-week intervals. “All of this has had an impact on the cold chain and on refrigerated logistics providers, because you have to be mobile and agile to meet these home-based needs,” adds Sokolovsky.

milindri / iStock / Getty Images Plus

Technology to Track and Monitor Perishables

like HelloFresh offer pre-prepared meal plans with home delivery.

“Consumers are willing to pay a premium for one- hour delivery,” says Sokolovsky. “In this market, people are not only getting meal kits, but meals that are fully prepared.”

Additionally, states like California and Florida have companies that offer diet plans with planned meals www.foodlogistics.com

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quality of orders. Among them are: • Locating transportation near urban hubs, warehouse and retail pickup points; • Well planned routes that can be flexibly altered; • Backup transportation in the event of a vehicle failure; • Sensor monitoring of groceries and truck travel; • Performance metrics and efforts to continuously improve performance; and • Well planned handoffs of cargo, especially when it comes to covering the “last mile” of routes.

The solution for many refrigerated logistics transporters has been the adoption of more sensors and systems that monitor temperatures of food, and that track delivery trucks on their routes.

“You have to be prepared, and technology is an enabler of this preparedness,” says Sokolovsky. “For example, what happens if a truck breaks down on the highway, and you have one hour to deliver a perishable food order? On time delivery is our No. 1 metric. In these circumstances, you have to have a backup plan when a vehicle fails, so another vehicle can step in and complete the job.”

The consequences of not making deliveries on time, or of delivering goods that are compromised while en route, are expensive returns.

Food retailers hold their transporters responsible for this.

In this environment, there are several approaches that logistics providers take to ensure SHIPCHOPTANK.COM delivery timelines and

To meet the demands of home delivery,

you need to run an end-toend cold chain.”

Daniel Sokolovsky, founder and CEO, AxleHire

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SR: 3PL continued

Route Planning and Customer Satisfaction Many elements go into planning the delivery of cold chain cargo, says Sokolovsky, especially with more consumers expecting deliveries directly to their homes. “You have to decide the right insulation for the food you are transporting.

You want to be communicating with the customer so you can deliver on your first attempt and avoid the risk to freshness that occurs when a customer isn’t present to receive an order the first time you try to deliver. Also, different climate zones require flexible adaptation,” he explains.

For instance, if you’re using insulation that will normally preserve the freshness of food for two days, the same packaging might only last six to eight hours if you’re delivering to a customer in Phoenix,

Arizona during the summer when the temperature is 120 degrees.

To carry out these variegated deliveries, the transporter’s logistics system must be seamless, responsive and configured in a way that requires little manual intervention. If an order calls for delivery to a customer between 10 a.m. and 11 a.m. and the first delivery attempt is unsuccessful, this system should be able to reroute a different truck to the stop and alert the customer that delivery was missed the first time but is coming a second time during the original timeframe. This ensures timely deliver because this time a notified customer is at home ready to receive the order.

Sokolovsky says his company also sends out feedback surveys to customers after deliveries. “We want to ensure that our process is working the way that we want it to, and we also want to continue to engage with customers,” he says.

By equipping cargo and trucks

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with sensors, cold chain transporters can also monitor both vehicle travel and state of goods in a real-time or near real-time mode. This enables a dispatcher at headquarters to receive an alert when a food container that should be kept at 38 degrees suddenly drops to freezing.

“In that case, the alert from the system gets to the dispatcher, who then calls the driver of the truck so the driver can address the problem,” says Sokolovsky. “The same thing happens if we suddenly see a truck en route that gets delayed because it is in unexpectedly heavy traffic.

A sensor-generated alert gets sent to a dispatcher, and the dispatcher gets busy. He or she decides if another vehicle needs to get rerouted, or if another driver is needed to take over.”

New Approaches to Home and Apartment Delivery One of the most difficult situa-

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Take advantage of this opportunity to network with the companies immersed in the fight against Listeria and who are developing the innovative tools and technologies you can use to better manage your day-to-day food safety operations, especially Listeria monocytogenes.

REGISTER TODAY! WWW.UNITEDFRESHSHOW.ORG

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www.foodlogistics.com

4/8/19 9:31 AM

tions for cold chain transporters in the home consumer market is ensuring that customers are home to receive perishable groceries when the groceries are delivered.

To address the problem, Sokolovsky says his firm is currently studying the concept of strategically locating “food lockers” around cities where delivered orders of perishable foods could be stored for pickup.

“This concept would provision office and apartment buildings with refrigerated delivery lockers that can store perishable goods if consumers aren’t available for delivery,” says Sokolovsky. “By strategically locating these lockers, and issuing unit codes to consumers that give them access to the bins that store their goods in the lockers, we can avoid missed deliveries and still be sure that the refrigerated goods were delivered to the consumer on time. Each locker can have its own unique temperature setting, so it can be properly calibrated to the refrigeration level required for delivery.”

The locker concept is not yet deployed, and is being reviewed for expense to deploy, cost to maintain, and whether a consumer would be willing to pay an additional fee to have locker storage.

cers moving to more online directto-home delivery options in order to compete with purely online food retailers, as well as more customers migrating to online ordering of their groceries, with high expectations that the groceries will be delivered on time to them, and in excellent quality.

“This places pressures on cold chain logistics providers, as well as on retail stores to deliver what

the market expects,” notes Sokolovsky. “But we are still evolving at a time when nobody really knows yet what consumers want, because the home delivery market is still in an early stage of development…There are many different approaches that can be taken. The main question we must ultimately answer is—how do we make this happen? This is what we are positioning ourselves to do.”

The cold chain logistics industry responding to home delivery is in metamorphosis.”

Daniel Sokolovsky, founder and CEO, AxleHire

Online Grocery: A Work in Progress Amazon’s push into the grocery business has already changed how brick-and-mortar stores are selling and delivering refrigerated goods to consumers. However, it’s not Amazon alone that’s changing the game.

Diet and convenience online meal kit and prepared meal outlets are also challenging traditional retail grocery stores by offering a greater variety of foods, coupled with timely and perishable goods deliveries to homes, office and apartments.

“The cold chain logistics industry responding to home delivery trends and heated competition among food retailers is in a metamorphosis now,” says Sokolovsky.

He adds that he continues to see traditional brick-and-mortar growww.foodlogistics.com

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SPECIAL REPORT

BY JIM ENDRES

DO FOOD COMPANIES NEED TO GO ON A

TRUCK MILE DIET? A

t the Centers for Disease Control and Prevention (CDC), there’s a weigh scale (a really big one) that the agency uses to help gauge the relative health of the country. Its latest conclusion: Americans are fat.

Collectively, the CDC reports that 70 percent of us are overweight, and 40 percent of us are obese.

So, what’s that got to do with logistics? Well, the freight industry is immersed in its own obesity epidemic. Instead of pounds, we need to shed truck miles.

Those extra miles place a crushing financial burden on private and commercial fleets. The costs are particularly onerous in the food industry, where razor thin margins simply aren’t capable of absorbing the cost of inefficient back-end operations.

Fat Has Financial Consequences Fat, on a body or a business, has consequences.

Let’s talk food. As far back as 2001, the U.S. Surgeon General linked America’s “overweight and obesity epidemic” to a host of diseases. Some put the cost of obesity-linked healthcare as high as $315 billion annually.

Just as excess calories drive up healthcare costs, excess truck miles are the root cause of a host of supply chain cost drivers. More miles mean: • Higher fuel costs • Reduced truck life • Increased equipment costs • More drivers, inflating labor costs • Higher maintenance costs Thanks to the American Trans-

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EACH EXTRA TRUCK MILE COSTS

$1.69

American Transportation Research Institute

mnbb / iStock / Getty Images Plus

The industry continues to add more trucks to manage consumer demands when technology could be the answer.

portation Research Institute’s annual study, we know that each extra truck mile we drive is costing us $1.69.

Let’s look at some numbers. The Federal Highway Administration tells us that the average truck travels 68,000 miles a year. Using the American Trucking Association’s (ATA) estimate of 3.63 million Class 8 trucks in operation, that adds up to 246.8 billion truck miles driven per year.

In Paragon’s experience across hundreds of private fleet evaluations, poor truck routing practices can inflate truck fleet inefficiency by 10 percent to 30 percent. But assuming a 5 percent efficiency gain is possible across America’s fleets, we’re still talking about 12.3 billion

avoidable miles and $20.9 billion in preventable costs.

Why is no one paying attention to this?

The Root of the Problem To understand how we got into this mess, you first need to appreciate the daily whirlwind within which fleet managers operate.

Today, consumers want faster, more frequent deliveries made to tighter time windows and with more precise ETA data. As fleet managers struggle to address these customer service challenges, internal pressures mount to support larger order volumes at the same cost with the same resources.

Somewhere between this rock and www.foodlogistics.com

4/4/19 2:40 PM

POOR TRUCK ROUTING PRACTICES CAN

INFLATE TRUCK FLEET

INEFFICIENCY

needed, draining company profits in the process.

Tech Helps Fight the Flab

Luckily, technology can help.

In the same way that Fitbits and calorie-counting apps are helping people trim down, truck route optimization software can help keep Paragon excess truck miles to a minimum.

This software uses sophisticated algorithms to assess dozens of factors that could impact delivery time and distance, such as average road speeds, unloading time for each stop and meal breaks. It does this across hundreds of stops in a fleet’s daily delivery plan. Despite the millions of possible permutations, the software kicks out a highly accurate, multi-stop route plan within minutes, minimizing time and miles. To accomplish the same task in a manual planning environment would take multiple route planners hours, with far less accurate results.

In planning truck routes, we need to stop asking humans to do the work of a powerful computer.

Private delivery fleet operators, in particular, have been slow to adopt technology to improve fleet efficiency. Instead, they rely on rudimentary systems, even spreadsheets, to manage highly complex route Average truck travels: 68,000 miles a year planning.

Class 8 trucks in operation: Around 3.63 million Fleet manTHAT ADDS UP TO agers aren’t oblivious to the need to for routing efficiency.

American Trucking Association and Federal Highway Administration They want to cut the hard place, fleet managers must fat, but there’s no simple “bathgenerate an optimized truck routing room mirror test” to suggest action plan that makes everyone happy. is required. No equivalent to “ideal But it’s just not possible—at least freight BMI” to serve as a point of not without the aid of technology. comparison with current delivery When you don’t give route- or performance. So, businesses stick load-planners the tools to balance with “the way we’ve always done service and cost factors, they will it,” particularly when orders are do whatever is needed to meet being processed and deliveries are delivery requirements and avoid being made without glitches or failure. As a result, trucks and customer complaints. drivers are added that aren’t really When it comes to truck fleets,

10-30%

246.8 BILLION TRUCK MILES DRIVEN PER YEAR

www.foodlogistics.com

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inefficiency can hide in a way that a bulging waistline can’t. Even to the savviest business owners, route inefficiencies don’t stand out on a P&L. Identifying them requires some detective work.

C d

Putting Your Fleet on a Truck Mile Diet

If w ov

At most small to mid-sized distribution businesses, delivery route planning processes lack the sophistication to produce routes precisely planned down to the minute and the mile. What’s the upside of investing in leading-edge systems? Here’s an exercise you can do right now. Multiply your total miles by 10 percent and 30 percent, then multiply those figures by $1.69 to arrive at a range of savings.

These savings drop straight to the bottom line once routing software is paid for in 3-12 months.

According to the CDC, about 50 percent of Americans have been on a diet in the last year, supporting a $33 billion weight loss product industry—much of which centers around counting and controlling calories.

For fleet operators, the truck mile is as obvious an enemy as the calorie is to dieters. It’s the common denominator for a host of ills that are driving up your fleet operating costs and carbon footprint. We need to start counting truck miles like dieters count calories.

John ope

The ‘Freight-loss’ Challenge Remember when the makers of Special K cereal asked us if we could “pinch an inch?” Fleet operators in the food industry, whether private or commercial, need to figure out just how many unwanted, unnecessary and expensive miles could be removed while meeting delivery requirements.

It’s time for a good, hard look in the mirror. The simple truth is that more miles equate to less profit.

By going on a truck-mile diet with the aid of proven technology, food manufacturers and distributors can seize a golden opportunity to get a far more attractive bottom line.

Jim Endres is general manager at Paragon Software Systems Inc., which develops and supports transportation routing and scheduling software solutions at over 1,100 client sites in 61 countries.

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SECTOR REPORTS WAREHOUSING

BY AMY WUNDERLIN

OPPORTUNITIES ARISE IN YARD MANAGEMENT

Y

ard management has typically been low priority for many companies. Increased pressure from carriers and consumers, leading to rising transportation costs and capacity issues, however, is requiring faster and more efficient operations across all areas of the supply chain.

For the most part, most organizations have already adopted solutions to solve for the pain points across their transportation network and in the warehouse, so the next logical step is a solution for their own backyard yard.

“More or less people have solved a lot of the other problems. They’ve solved the problem in the warehouse.

They’ve solved the problem outside of the yard in the transport management side of things. Now there’s that one area that still needs to be resolved, which is just the yard,” says Greg Braun, senior vice president of sales and marketing for C3 Solutions, a provider of yard management and dock scheduling software.

Digital transformation projects across the supply chain,

PINC Solutions

Executives are paying more attention to yard management solutions to optimize operations across the supply chain.

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which have created greater visiadds Dan Clark, founder and presibility, are to thank for much of the dent of Kuebix. yard management shift, “All of these things explains Matt Yearling, combine to make shipPeople CEO of PINC Solutions, have solved a pers without yard control who adds that logistics lot of the other unattractive partners managers are finally to carriers that have the problems. waking up to the gap in There’s option to take their capacity their yard. one area elsewhere. The same goes “People are seeing this for customers who expect that still their products on time and as a blind spot between needs transportation and warewith excellent service,” Clark to be house and are beginning explains. resolved.” And if you’re going to to figure out how to eliminate that blind spot,” Greg Braun, senior solve the visibility and provice president, C3 he adds. ductivity problems in your Solutions Long trailer wait times, yard, Braun adds “it’s going unproductive personnel numbers, to take a bit more sophistication poorly synchronized movement of than two-way radios and clipboard.” goods and ineffective dock planning are among those gaps, which can Yard Management’s be especially damning in Evolution the food industry where quality and freshness, In simple terms, good yard customer expectations management is about ensuring the and timely deliver are right trailer gets to the right spot crucial. at the right time—and doing that as Recent changes in effectively as possible. government mandates In a traditional yard, you have a and regulations have dedicated hustler driver that moves also put increased trailers around. Those drivers are pressure on vehicle and very costly, and ultimately there driver time, making it are limits to how efficient they can all the more critical for be, which generally also causes a trucks to be efficiently visibility problem. managed in the yard, “People come to us and say, ‘My www.foodlogistics.com

4/4/19 2:43 PM

The power of the smart phone should not be underestimated. Using the phone’s GPS, yard managers can locate a truck and send mobile notifications to the driver with instructions.

PINC Solutions

yard is costing too much money.

We’ve got tons of yard drivers out there. They’re not very efficient.

I’ve got people taking manual inventories of my yard, and I don’t know what’s in the yard. Even if I

know it’s there, I have a hard time getting it unloaded in time just because I don’t have that visibility,” Braun says.

Velocity is also a huge problem in the yard. Carriers spend a lot

of time sitting idle, and with an ongoing driver shortage and new regulations monitoring their hours of service, drivers have become choosier about where they spend their time.

“Carriers will say that they’re probably 65 percent productive, because a big chunk of their time is idle. They spend too long at facilities, and the facilities need to make the experience a little bit more effective and efficient for drivers to get in and out,” says Yearling.

Yearling adds that we are now reaching the point where facilities will be rated based on the driver’s experience, and “we already hear people, drivers specifically, are refusing to go to specific locations because the experience is poor, and they can’t necessarily get in and out fast enough.”

Carriers will say that they’re probably 65 percent productive,

because a big chunk of their time is idle.”

Matt Yearling, CEO, PINC Solutions

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APRIL 2019 | FOOD LOGISTICS

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SR: WAREHOUSING continued

Optimizing the yard with a technological upgrade has the potential to impact each of these pain point.

“The payback to this is making your yard more cost effective and by doing that, you’re going to gain other benefits as well. You’re going to gain visibility, and you’re going to improve the velocity in your yard because now things are flowing much better and so forth,” Braun says.

Technology’s Role

PINC Solutions

According to Yearling, the food industry is “very unsophisticated” when it comes to many aspects of the supply chain—and yard management is especially technology challenged.

“People have spent and invested a lot in transportation management systems and warehouse management systems. Folks, especially in the grocery industry, are starting to put in automated storage and retrieval systems. But still, outside the four walls, it’s still the Wild West, and folks are just starting to look at this as an area to apply more technology,” he adds.

In today’s average yard, Yearling says there are no automated business processes and no understanding of where assets are or the historical utilization of assets. “[The yard] is a key part of the operation that people lack visibility and are not necessarily managing that effectively,” he adds. “They’re managing it with manual processes, like Post-it notes on white boards and things like that. If you can move

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that to an automated system and a up, rather than showing up at the platform that really identifies where gatehouse and asking, ‘who are you? everything is and optimizes your Show me your paperwork,” the driver utilization of assets and the process can already be checked it and display and the people and the equipment a QR code on their smart phone. Just used to manage the facility, then scan that and you’ll know everything not only can you do the operation about the driver,” he explains. at least 30 percent more effective, Braun notes the power of the but also you get greater insight into smart phone should not be underyour inventory, which strategically estimated when it comes to the for a company is important.” yard. The relatively affordable techKuebix’s Clark adds that modunology that every driver already has larity of that process will be key to offers a simple solution to commuthe future of YMS. nication efficiencies by enabling a “Without a single driver to receive directions on platform connecting the [The yard] is their phone. Using the GPS on warehouse, yard, carri- a key part of the it, yard managers can locate ers, trucks and logistics operation that the truck and direct the driver professionals, commuto the correct parking locapeople nication needs to be tion and provide additional lack conducted over phone messages about what they visibility need to do and where. and email, unreliable and are not methods at the best For example, if it’s an necessarily of times,” he explains, outside drivers first time on managing that noting that “companies site, the operator can provide effectively.” don’t want another instructions such as, “Here is piece of technology that Matt Yearling, CEO, where you need to park.” And PINC Solutions cannot integrate seamonce a dock door is freed up, lessly with their other messages can be automaticalsystems. Instead, they are asking ly sent that say, “You’re up next; go for specific features or tools that to door 15.” will help them manage their yards Real-time visibility can also be more efficiently, and they want gained when a truck is equipped those features to be built on top of with a trackable ELD or RFID, says already existing systems.”

Clark. Messages and updates can be The gate seems to be the first sent to all major stakeholders as a area undergoing a technological truck enters the yard. revolution. Yearling says he is Clark adds that another aspect of seeing more and more customers yard management that often goes looking to remove labor from overlooked are analytics. the gate and automating it like a “Analytics generate actionable reself-service kiosk. ports and dashboards that help users Braun likens the concept to an airunderstand their yard operations so port check point. “When drivers show that they can make better strategic decisions. This means they can quickly impact their bottom lines with yard improvements,” he explains.

Yearling further adds to that point that implementing a YMS is not just about operating faster, better and cheaper, but having “a better understanding around the analytics associated with, ‘How is my labor operating? How are my facilities being effective? How am I utilizing assets?’ If I have better understanding of my utilization I can do some cost avoidance.” www.foodlogistics.com

4/4/19 2:43 PM

REGISTRATION IS

OPEN FOR THE 2019 SHOW!

JUNE 10-12, 2019 | CHICAGO, IL McCORMICK PLACE WHERE FOOD AND LOGISTICS MEET If you produce, handle, store, transport or are involved in the distribution of perishable products, then the Global Cold Chain Expo is for you!

There is something for everybody at the Global Cold Chain Expo!

Warehousing and logistics companies...send your facility general managers and operations team to learn, network, and meet with vendors Food manufacturers...send your supply chain managers to learn and build relationships with service providers Controlled environment contractors... leverage the educational offerings to learn what your customers are focused on and connect with subcontractors

Exhibiting opportunities still available!

Co-location partners:

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FLOG0419_30-33__WAREHOUSING.indd 33

4/4/19 2:43 PM

TRANSPORTATION

uatp2 / iStock / Getty Images Plus

SECTOR REPORTS

BY JASON PALMER

GOING BEYOND EXONERATION:

Video-based safety systems help fleets settle claims quickly, consistently and efficiently.

34

V

ideo-based safety systems offer many obvious benefits, including driver exoneration, risk management, cargo and vehicle theft protection, compliance with standard operating procedures, and enhanced driver satisfaction and retention. All of those are important to keeping drivers safe and fleets operating efficiently, especially considering the Federal Motor Carrier Safety Administration (FMCSA) reported that 4,311 large trucks and buses were involved in fatal crashes and 87,000 in injury crashes in the U.S. in 2015. That’s more than 11 fatal crashes and 238 injury crashes every day.

The same report noted the average cost of a large-truck related injury is $462,366 per crash, while the average cost of a fatal largetruck accident can skyrocket up to $11.6 million. In total, the estimated annual cost of accidents involving large trucks is well over $134 bil-

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VIDEO CAN LOWER LIABILITY AND INSURANCE PREMIUMS lion. This is why having video to help mitigate the risky driving behaviors and protect fleets from dangerous and costly accidents is crucial.

But a lesser known benefit of video-based safety and transportation intelligence is the ability to lower a fleet’s liability and their ever-rising insurance premiums. With visibility and context that only video can provide, fleets are able to settle claims quickly, consistently and efficiently, which in turn positively impacts the bottom line. No matter the industry, fleets big and small understand that video is a critical tool for exoneration, litigation and subrogation—an immeasurable value.

“Since implementing a video-based safety program, we have seen tremendous improvement in our drivers and their driving habits,” says Jeff Reed, president of Skyline Transportation. “As a result, our insurance costs have been dramatically reduced. In fact, we’ve

seen a 70 percent reduction in our insurance cost, and that’s been a real benefit for our company and our drivers.”

Defending Against Liability Claims With rising costs, fleets across industries are turning toward video-based safety programs to defend against liability claims. With any claim, the first 24 hours are critical; more time spent between incident and resolution equates to more money expended trying to resolve the issue.

Video provides a second pair of eyes on the road. All too often, truck drivers are the first to be blamed for any incident, but with video, a driver’s narrative can easily be supported by factual evidence.

“We’re a target,” notes Golden State Foods’ driver Greg Legge.

“The cameras are for our own safety and the safety of other www.foodlogistics.com

4/4/19 2:46 PM

Diminishing Subrogation Expenses Subrogation—when an insurance company seeks reimbursement from the person or entity legally responsible for an accident after the insurer has paid out money on behalf of its insured—is another area video can impact. Whether that is money paid for property damage, deductible amounts, diminished value, pain and suffering, or loss of consortium, video can help lower and even diminish those expenses.

For Averitt Express, its use of a video-based safety program has enabled the company to prevent lawsuits and increase subrogation www.foodlogistics.com

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collections by 15 percent since deployment in 2017.

One common incident for many fleets is a truck backing into another vehicle, then driving off without claiming responsibility.

With video, it’s simple and fast to pull the offending company’s name, vehicle license plate number and company DOT number. With this information in hand, fleets can immediately move to resolution by providing the video footage to the other company and avoid an insurance claim all together.

“When drivers are involved in an incident that’s not their fault, we’re not wasting time or money fighting claims, because we can prove exactly what happened with the video.

We’ve found these exonerations are paying for the system,” says Ken Humphries, vice president of safety and employee relations at Schilli Corporation.

Keeping Internal Processes in Check Along with having video, it’s essential that fleets have a specific internal claims management process to ensure they’re handled quickly, consistently and efficiently every time, allowing drivers to return to the road as soon as possible. When fleets have to shell out money to resolve a claim and a driver is not able to complete a route, fleets are negatively impacting their bottom line twice. A well-defined process ensures consistency from one claim to the next and aids in the speed to resolution.

Video is also helpful for responding to claims of negligence. By

using video and a comprehensive coaching program to correct driver performance, fleets are showing their commitment to safety and dedication to taking proactive steps to address high-risk driver behavior.

With the majority of collisions caused by human error, it’s vital fleets demonstrate they know what their drivers are doing on the road.

Many rely on a programmatic video-based driver risk management solution to monitor, manage and proactively intervene to improve driving habits.

To optimize the benefits of video fleet-wide, it’s imperative to ensure both driver and management buy-in at every step of the process. At Smithfield Foods, Michael says they engage their drivers in a conversation, so they understood the program and how it works.

“Once it was clear to them that video is only recorded if a risky maneuver or external G-force is detected, many drivers made a personal commitment to avoid causing a trigger by driving safely each and every time they hit the road. The results speak for themselves,” he adds.

Individual fleets may have distinct reasons for adopting a video-based safety and transportation intelligence solution. While a variety of business needs may drive the decision to incorporate video as a key element of a comprehensive safety and risk management program, the benefits are wide reaching. Fleet leadership and drivers alike ultimately benefit, with myriad operational and financial benefits.

Jason Palmer is the chief operations officer for SmartDrive, a driver safety and transportation intelligence company based in San Diego, California.

A video-based platform is a key tool for Smithfield Foods to protect its drivers, the public and its reputation.

SmartDrive

people. It’s a tool to help make us better drivers.”

Drivers and fleets look to video to exonerate them when they aren’t at fault, which reduces the number of violations on a driver’s commercial driver’s license (CDL). With fewer violations, the CDL isn’t at risk of being taken away, and fleets don’t have to worry about letting go of good drivers.

“Some companies are worried about having a video-based system due to liability issues in case a driver actually is at fault in an incident.

However, the benefits—including being able to exonerate drivers when not at fault and being able to prevent accidents—far outweigh the risks,” says James Michael, senior operations manager at Smithfield Foods. “As a private fleet, we want to ensure our brand is synonymous with safety. Leveraging a video-based platform is a key tool for us to protect our drivers, the motoring public and our reputation.”

When a driver is at fault, video can help the claims adjuster quickly assess the facts, allowing all parties to act promptly and resolve the claim. Leslie Leazer, vice president of corporate claims and litigation at Knight-Swift Transportation, agrees. “Our company loves when we can provide video as it reduces the amount of time (and money) required to understand the situation and get to the truth,” she explains.

APRIL 2019 | FOOD LOGISTICS

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SECTOR REPORTS SOFTWARE & TECHNOLOGY

BY HENRY CANITZ

phive2015 / iStock / Getty Images Plus

PLANTING THE SEEDS FOR

BLOCKCHAIN

Few companies have moved past the pilot stage with blockchain technology, leaving many to wonder if it’s even worth the hype.

B

Track and Trace: lockchain is a hot topic Just the Beginning across the supply chain industry and often accomThere is no doubt that adopting panied by more questions than blockchain capabilities can improve answers. With all the hype you the ability to track and trace food might think that every midsize and and beverage products from field to large company has some level of fork. Considering the importance an operational blockchain placed by consumers on food capability in place. This safety, the ingredients couldn’t be farther and the source of the from the truth. ingredients, the Yes, there are a ability to track and few companies trace is a must experimenting have to sucwith pilots, but ceed in the F&B very few companies industry. In fact, have committed to in a recent survey standardizing conducted parts of their

by Clutch, 70 RESPONDENTS SAID THAT F&B percent of the supply chain operations using BUSINESSES SHOULD COMMIT respondents blockchain. said that F&B TO CORPORATE SOCIAL So what is businesses RESPONSIBILITY holding compashould commit (INCLUDING FOOD SAFETY) nies back from to corporate embracing blockchain, and in social responsibility (including food particular, what needs to be done safety), and 71 percent said that to grow its adoption in the food restaurants should address food and beverage (F&B) supply chain? insecurity in their local community.

70%

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But there is more to blockchain than track and trace. Blockchain capabilities, for example, can provide significant value in the digital transformation of your supply chain. The digital supply chain opens access to additional internal and external data to help streamline collaboration and accelerate decision making. In particular, blockchain excels where information is shared across the enterprise and/or with suppliers and customers. It is a true enabler of your digitalization efforts.

The distributed nature of a blockchain database means that when one party enters data into a blockchain each authorized party has immediate access to see and use that data. It is quite exciting when you think about sensing customer demand and real-time inventory positions instantly shared up and down the supply chain. Now, you are able to automate and accelerate the customer fulfillment process with greater precision and confidence. www.foodlogistics.com

4/8/19 9:42 AM

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SR: SOFTWARE & TECHNOLOGY continued

Start discovering how to develop business value.”

So what is holding us back? The value of blockchain has been proven. IBM is currently working with more than 500 companies across a diverse set of industries. Their Food Trust Blockchain initiative connects growers, processors, distributors and retailers through a permissioned, permanent and shared record of food system data. Leading companies participating in IBM’s Food Trust Blockchain, including Walmart, Carrefour and others, are already reaping the benefits of blockchain capabilities.

Smaller F&B companies have also discovered the value of blockchain.

For example, Alpha Acid Brewing, a small batch California brewer, implemented a blockchain application to track materials and ingredients from its suppliers to optimize its manufacturing processes and provide higher quality beer.

Technology is not an impediment to blockchain adoption.

Advanced planning systems have the capability to utilize blockchain data to improve demand planning, inventory management and deployment. Think of blockchain data as another data source along with the Internet of Things (IoT), point of sale (POS), and social media to

andresr / E+ / Getty Images

Henry Canitz is the product marketing and business development director at Logility.

He brings more than 25 years of experience building high-performance supply chains. This experience includes evaluating, selecting, implementing, using and marketing supply chain technology.

Challenges or Opportunities?

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ipopba / iStock / Getty Images Plus

Blockchain works. Stop piloting the technology.

drive supply chain efficiencies and effectiveness. Advanced planning systems have the ability to consume blockchain data and publish data to blockchains.

The obstacle to successful blockchain efforts is the focus of the blockchain effort itself. Many pilots focus on validating if blockchain technology works instead of how to add value or solve problems. Consider this, when you implement enterprise technology, the focus is on how to get value from that platform through automation, accelerating processes, and making better and more-timely decisions. Blockchain works. Apply these same principles to blockchain, and stop piloting the technology. Start discovering how to develop business value. A first step is often to realize that blockchain is not an IT project; rather it should be viewed as a component of your digital supply chain transformation that can provide significant value.

As a supply chain practitioner in the F&B industry how can you help plant the seeds to grow

adoption of blockchain capabilities at your company? ❶ Become the expert on how blockchain can help solve your company’s supply chain issues and create long-term value. ❷ Educate your company’s leadership on blockchain and the specific applications where you believe your company will receive the largest value, including in the areas of track and trace, data visibility and timeliness. ❸ Advance the philosophy that blockchain should be a component of your company’s overall supply chain digital transformation.

Blockchain is one way to verify and manage the explosion of available digital data and avoid undue risk due to bad data. ❹ Evaluate your supply chain planning system’s ability to use blockchain data to improve planning speed and accuracy and to publish blockchain data to a distributed database. If needed, build the business case for improving your supply chain planning capabilities.

Blockchain is overhyped, which has caused confusion on what it should and should not be used for. There are very real and legitimate blockchain use cases, including data verification, tracking products, multi-organizational collaboration, meeting compliance and regulatory requirements, enhancing planning, and bolstering customer satisfaction that can create significant value for a F&B company. The availability of blockchains designed for the F&B industry is projected to grow exponentially over the next five years.

The last thing you want is to miss out on what some experts believe to be the next big enabler of the supply chain. www.foodlogistics.com

4/8/19 9:42 AM

Are you a top third-party logistics & cold storage provider?

NOW ACCEPTING NOMINATIONS Nomination deadline: May 24, 2019 Winners will be announced in the August 2019 issue

Calling all software and technology providers If you ensure a safe, efficient and reliable global food and beverage supply chain then you could be recognized.

NOW ACCEPTING NOMINATIONS Nomination deadline: September 20, 2019 Winners will be announced in the November/December 2019 issue

SUBMIT YOUR NOMINATION AT:

FOODLOGISTICS.COM/AWARDS Global Supply Chain Solutions for the Food and Beverage Industry

Nomination dates and issues may change.

Consult the call-for-entries email and nomination survey for confirmation

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4/8/19 9:42 AM

SECTOR REPORTS OCEAN PORTS & CARRIERS

THE OCEAN SHIPPING SECTOR GOES T

BY LARA L. SOWINSKI

DIGITAL

businesses to improve the efficiency Increasingly, retailers, CPG of their global supply chains, and companies and other BCOs are debecause ocean shipping sits squaremanding higher visibility in an effort ly in the middle of global to combat against delays, There will fraud and lost shipments, supply chains, “there will no doubt be no doubt be continued which is pushing digitization continued demand for ocean along the ocean shipping demand for supply chain innovation supply chain, he emphasizes. ocean going forward, marked At the same time, funding supply by greater connectivity, for maritime shipping startvisibility, flexibility and ups is on the rise. chain automation,” Reddy says. innovation “While we have seen a During a CB Insights’ slight pull back in 2018, going presentation entitled, overall funding to start-ups forward.”

“Digitizing the First Mile: catering to the maritime analyst, shipping industry has Technology & Shipping,” NatanCBReddy, Insights Reddy discussed how significantly increased technology is beginning over the past several years. to permeate the ocean shipping This is due in part to large deals to sector—one that has traditionally start-ups like Flexport, which most relied on phone calls, faxes and recently raised $100 million as part paper trails. of a Series D round of funding from First Round Capital, among others,” explains Reddy.

SELECT BLOCKCHAIN SHIPPING INITIATIVES (2017 - 2018) In addition, SoftBank Vision Date Summary Select Players Fund, along with several partners, Mar-18 Consortium that tested a blockchain solution on 12 separate shipments to APL, ABInBev, acceneliminate the need for printed shipping documents. ture, Kuehne + Nagel announced in February a $1 billion Jan-18 After previous collaboration, Maersk and IBM formed a new blockchain comMaersk, IBM investment in the company, making pany to commercialize blockchain use. So far, dozens of companies have been Flexport the most well funded on boarded. start-up in the digital freight forSep-17 Carrier HMM completed its first blockchain pilot voyage, as part of a larger HMM, Samsung SDS warding space. consortium, tracking cargo with blockchain and IoT technology from booking through delivery.

“The company provides real-time Sep-17 Partnership to launch a blockchain platform that helps to simplify marine insur- Maersk, EY, guardfreight and logistics capabilities to ance, an area commonly plagued by excessive paperwork. The platform, dubbed time, Microsoft, hundreds of clients, including many Insurwave, went live in May 2018.

ACORD small-to-medium e-commerce Aug-17 Official partnership to improve shipping security and efficiency through block- PIL, PSA, IBM chain. Completed successful blockchain trial tracing cargo from Chongqing to firms, giving them an opportunity Singapore in February 2018. to compete against giants like

Technology innovations are delivering on BCOs’ demands for improved visibility, price transparency and supply chain performance.

40

he collapse of Hanjin Shipping in late 2016 left thousands of containers stranded at sea. BCOs were not only scrambling to retrieve materials and merchandise, in many cases they were hard-pressed to even locate the containers holding them.

In some ways, the Hanjin bankruptcy was a catalyst for improving visibility in the ocean shipping sector. But, there are other drivers, too.

“We are seeing a rise in supply chain technology driven by greater innovation drivers that include the rise of e-commerce and giants like Amazon; a rise in global tariffs; global climate-related regulations; and increased consumer awareness for sustainable sourcing,” says Natan Reddy, an analyst with CB Insights.

Many of these drivers are forcing

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www.foodlogistics.com

4/4/19 3:35 PM

MEET MAERSK’S CAPTAIN PETER

Damco

Amazon,” he says.

Many of Flexport’s clients are e-commerce and consumer startups, such as Casper, Warby Parker and Ring.

However, the gravitation toward innovation and technology is not reserved solely for start-ups, adds Reddy.

“Incumbent supply chain players are developing in-house technology to enhance supply chain visibility to compete against the rise of freight forwarding start-ups,” he says.

For example, Maersk’s freight forwarding arm, Damco, developed a digital freight forwarding platform called “Twill” in April 2017. The platform provides shippers with instant quotes, shipment tracking and digital document management.

It has since expanded to trade operations in China, the UK, India and France, among others.

The transportation aspect of the ocean shipping supply chain is also being transformed.

“ClearMetal is using AI-powered insights into the shipment transportation process for retailers and logistics providers, such as Panalpina,” Reddy says. The company “helps clients predict which carriers will provide the most reliable service and estimates the risks of delays.”

Blockchain is another technology that deserves mentioning, even www.foodlogistics.com

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though there are some who caution it’s too early to know if interoperability or other issues will slow adoption of blockchain technology in the supply chain.

If blockchain technology is able to achieve standardization and successful implementations, it could increase trade efficiency, and improve transparency and cybersecurity.

In the meantime, the ocean shipping industry is seeing an explosion of blockchain initiatives, Reddy points out, including those mentioned in the chart on page 40.

Maersk

In February, Maersk announced plans to enhance its Remote Container Management (RCM) platform with a virtual assistant named Captain Peter.

Anne-Sophie Zerlang Karlsen, head of global reefer management, explains that its goal for the RCM product is for it to look and feel like your favorite smartphone app. “There is still a lot of paper work and difficult processes in global trade. Captain Peter will take care of some of this complexity, by seamlessly engaging with the customer from end-to-end in the supply chain,” she says.

According to a Maersk press release, in the beginning, Captain Peter will follow some simple rules, sending up-to-date information via customers’ preferred channel, for example, SMS or e-mail, on container temperature and atmosphere conditions, as well as a timeline on its end-to-end journey. Should any deviations be observed, or the shipment delays, Captain Peter will notify the customer.

Once the container has arrived at its destination, Captain Peter will also check on its state and send an update to the customer. In time, customers will receive information configured to their specific needs.

The RCM technology makes a reefer’s location, temperature, humidity and power status easily available to the customer. Should any issues be detected, the customer can alert their supplier or have the shipment checked by local surveyors, potentially saving the customer millions of dollars in lost cargo.

“With the number of active users of the RCM platform constantly growing, the aspiration is for Captain Peter to gather enough information to be able to predict potential cargo damage and provide configuration suggestions before containers are shipped,” notes Zerlang Karlsen.

Maersk launched RCM for customers in September 2017. It provides transparency on information from 270,000 Maersk reefer containers equipped with machine-to-machine technology. Currently, over 2,300 customers have signed up for the RCM solution, translating to more than 70 percent of Maersk’s reefer volume.

ADVERTISER INDEX ADVERTISER.........................................................................................PAGE Choptank Transport, Inc..............................................................................................................................25 Columbia Machine, Inc.................................................................................................................................23 DAMBACH........................................................................................................................................................31 Elitech...................................................................................................................................................................27 Ford Motor Co............................................................................................................................................... 2-3 Global Cold Chain Alliance........................................................................................................................33 Great Dane Trailers Inc................................................................................................................................44 ID Label, Inc.......................................................................................................................................................13 Infratab................................................................................................................................................................22 Schneider Logistics........................................................................................................................................43 Thermo King......................................................................................................................................................17 Tosca Services LLC............................................................................................................................................7 Uline......................................................................................................................................................................21 United Fresh Produce Association.........................................................................................................26 Viking Cold Solutions, Inc......................................................................................................................5, 19

APRIL 2019 | FOOD LOGISTICS

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4/4/19 3:35 PM

FOOD (AND MORE) FOR THOUGHT

BY HEATHER JAMES

The Internet of Things Isn’t Science Fiction for Retail Success A JAMES

Heather James, vice president for software services at Getronics, has been in the retail technology industry for 20 years. James is based out of Greenville, South Carolina, where she leads a software services team, which provides software development, quality assurance, project management, systems integration and support services for retail clients.

42

s a child, I remember visiting the Home of the Future exhibit at the Epcot Center in the late 1980s, where lights, refrigerators and ovens were being controlled by computers. At the time, I was amazed by that, and thought, “wouldn’t it be cool if you could put a casserole in the oven before going to work, and while sitting at your desk, turn on the oven and dinner is ready when you arrive home.” Little did I know the future would include the Internet of Things (IoT) and make that fantasy a reality.

IoT is growing as more connected devices are released each day. This technology opens up many opportunities for retailers to transform the store employee and consumer journey. If you’ve spent time trying to find that one last item in the grocery store, you know how frustrating that can be. What if shoppers could pull it up on their smart phone or summon an in-store product-finding robot to point them in the right direction. IoT beacons can be used with store planogram data to provide product-finding services.

Or, what about customers who have gone to the store to pick up certain sale items only to find that the shelf is empty on the first day of the sale? IoT smart shelves can alert store team members to low stock and help the team focus on replenishing high churn displays.

Worse yet is leaving the grocery store and then realizing some favorite items were on sale. When shoppers checkout using a loyalty card, shopping habits are tracked by retailers. Retailers can use this data to notify shoppers via a mobile

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notification when they are near favorite items in the store on sale.

Responsive customer service via near field communication will be the new billboards.

The holy grail of IoT for grocery would be automated checkout. Go through the store, pick up items and walk out as the sensors on the items are read upon exit, totaling your bill and automatically paying it using the payment method set up in your mobile wallet.

As part of my job with Getronics, we work with large grocers to uncover IoT opportunities and implement solutions to redefine the consumer’s journey throughout the brick-and-mortar store. Items such as digital menu boards, digital signs and digital price tags can be installed throughout a store allowing for real-time pricing and the ability to offer flash sales at key times of the day, which can even be synched to marketing efforts.

Mobile point of sale (POS) implementations can be used in peripheral store departments such as wine bars, food counters or for click

and collect. Mobile POS implementations include consumer and store associate solutions running on iOS or Android devices—as well as solutions running on retailer owned devices—all providing more convenient checkouts for the consumer.

There are also solutions for store management, which allow them to spend more time on the sales floor engaging with customers and employees. For example, managers are able to see sales data, monitor POS terminals, send and receive alerts, and perform manager functions on an iOS or Android device.

Grocery retailers typically operate on small margins, and new technology can be challenging to implement. However, not doing so will likely be more costly as customer experience dominates the successful brick-and-mortar store. It is important for retailers to stay ahead of the competition while retaining consumer loyalty. Leaders in the grocery and retail industry must explore how IoT is part of their near- and long-term digital transformation strategy. www.foodlogistics.com

4/5/19 9:45 AM

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4/5/19 9:45 AM