Claassen: The economy seems to be affecting everyone in every business psychologically. But with these difficulties comes opportunities. One such opportunity in our cold storage supply chain is there is a robust demand for our storage space. The main reasons for this is that manufacturers achieve efficiencies through large production runs. This drives their need for storage and for Jacobson’s services. The impact of the economy is driving companies like ours to diversify their portfolio of customers. What I mean is people always have the need to eat and they can eat at home or out at restaurants. When we are developing our customer base, we aim to achieve a good mix of foodservice and grocery customers. In doing so, we achieve a good balance of customers so no matter where people choose to eat, we have a continued demand to supply.
How do food safety regulations affect your business?
Kitz: Regulations relating to produce are driving requirements for speed to market and control over safety. Grocery companies need to move produce quicker and with more control than ever before because of recent salmonella outbreaks. Another factor are the hours regulations relating to the amount of time between when produce is harvested from the ground to the time it is processed. Add to this the challenge in the marketplace where the economy is beginning to show signs of improving, which means a challenge to find capacity. So there are economic pressures on the operating side as providers search for drivers and equipment, and on the product side, you have these regulatory pressures. Somewhere in the middle, there is efficiency.
Claassen: One main challenge we have concerning regulations relates to how they are developed. Many times as regulations are being developed, they might not be well thought through, especially when it comes to implementing and enforcing them. Although regulations might sound good in theory, it is very difficult to implement them effectively. Often overlooked is who will pay for the costs associated with these programs. Ultimately, manufacturers and distribution channels will have to pass along these costs to consumers.
It might be prudent to have a panel of people representing the industry to help design how regulations can be implemented practically and cost-effectively. We in the industry can work with those who are proposing these new regulations to assure that the proper infrastructure is in place to support regulatory programs. Further complicating things are the number of different agencies the industry is required to report information to. Often these agencies do not share information among themselves, which can cause confusion among the agencies.
Enforcement must also be considered when designing new regulations. If you are a company that is doing everything possible to comply with regulations and your competitor takes its chances, this can put you at a definite competitive disadvantage. There is always a cost associated with implementing and complying; so there must be an enforcement agency to assure everyone is in compliance.
Ampuja: The issue of safety regulations is one major concern keeping CEOs in the food industry awake at night. There is a lot of outsourcing, bringing products in from Canada, Mexico, and China primarily. Large companies more and more are taking a stand by not entrusting the traceability to overseas companies. Instead, they are sending their own people overseas to examine products and assure they are traceable.
A separate wrinkle for the frozen foods guys is the temperature piece, especially monitoring temperatures throughout the entire supply chain. Warehouses have had tracking mechanisms for years and have done a very good job verifying that temperatures have been kept at the required levels. But the big question is what happens when products go onto a truck. Putting temperature probes into products at the end of the supply chain doesn’t really tell you what happened along the way and this is where I think the fix will be using RFID to track temperatures all along the cold chain. Because you really want to be able to know what temperatures products have been exposed to at each handoff point along the chain.
How are you addressing customers’ sustainability concerns?
Claassen: Sustainability is taking on a higher profile than ever before. For instance, at Jacobson, we now have an environmental coordinator and we implement environmentally friendly programs that make sense to our company and to our customers. We are always looking for ways to cut costs and become more efficient in cooling our facilities and recycling all types of materials possible. When considering these opportunities, you should try to ensure there is a return on your investment before implementing these solutions.