Perishable shrink costs retailers a tremendous amount of money. Vulnerable items such as meat, dairy, fruit, vegetables and flowers can expire prematurely due to incorrect temperature handling in the supply chain. Transportation and interim storage at the distribution center all affect the final quality of the saleable product. Consumers are quick to judge on appearance and remember when a product does not meet expectations.
Gary Nowacki, CEO of TraceGains, Longmont, CO, says, “There are technology solutions available to overcoming the high cost of perishable shrink and they must prioritize inventory and shipments based on FEFO: First Expired, First Out.”
The FEFO concept is based on the following core ideas:
1) Temperature control must be monitored;
2) Temperature varies greatly inside a storage room, container or truck;
3) Even slight temperature variation affects the remaining shelf life of produce and temperature exposure has a cumulative effect;
4) Identifying the temperature exposure of individual pallets or cases of produce allows prioritization on the basis of remaining shelf life, instead of simple transit and storage times.
To determine how different temperatures cumulatively affect the remaining life of the product, one must measure the exact temperature accumulations in small granularity within each area of the truck or storage facility in conjunction with shelf-life modeling. Solutions must automatically calculate expiration dates of perishables when received at the dock as well as document trip-level temperature data at item, carton or pallet for a more successful conflict and dispute resolution.
Assuring freshness for the entire refrigerated food supply chain requires much more than just a cold chain and cold storage solution. A complete end-to-end temperature traceability is needed for all temperature-sensitive products as well as predicting the remaining shelf-life when products arrive.
Traceability programs must be converted from a cost-center to a profit center by using appropriate data collection devices to tie logistical information with temperature data collected at regular intervals throughout transportation and storage on the item, carton or pallet level across any part of the supply chain.
It is much more than just temperature readings in the vehicle. Several features to consider include reliable “credit card”-sized temperature tags which can be easily to attach to any container utilizing wireless RFID technology which simplifies tag initialization and data collection as perishables travel through the supply chain.
To contain costs battery-powered tags are highly suggested and they are fully reusable and reconfigurable for future shipments (typically for one year). There is no need to compromise on accuracy and quality assurance (every tag must be calibrated) and solutions must address compliance with EPC data standards and global ISO RFID standards.
Nowacki also urges that “when collecting these data it is essential that companies can seamlessly integrate into proven full-chain traceability applications for alerting, analysis, and reporting—helping companies pinpoint profit opportunities.”
Few temperature tracing technology firms have collected years of research and analysis into produce and proteins spoilage rates; this information is important because remaining shelf life must be automatically determined from cold chain temperature profiles captured throughout the supply chain process. The ability to set upper/lower limit monitoring and real time alerts directly impacts the percentage of perishable shrink which is often as high as 50 percent and regularly 30 percent.
Through advanced statistical analysis and reporting companies will gain the ability to trace back and trace forward on individual items subjected to complex processing, packing, and logistical handling involving commingling and product transformations.
Scalable solutions are necessary since the need for this temperature tracing exists from the lowest to the highest volume environments. Web-based Software-as-a-Service (SaaS) subscription models can also drastically minimizes up-front implementation time and expense.
“Reducing perishable shrink is the fastest way for presidents and CEOs to drive real profit to their company’s bottom line,” says Larry Miller at Retail Control, Phoenix. “By implementing best-in-class processes and practices, smart companies are reducing their store shrink 10 percent to 18 percent in the first 12 months and an additional 12 percent to 15 percent in the following 12 months, all to drive year-over-year store sales and profit.
“True loss prevention only really occurs when loss is prevented before it happens by implementing behavior changing programs, practices, and technologies whose impact can be measured. Sarbanes-Oxley demands accountability and accountability must be preceded by disciplined execution. Achieving this demands a new level of leadership and a new way of thinking about loss prevention,” says Miller.