Issues in Temperature-Controlled Supply Chains

Issues in Temperature-Controlled Supply Chains

The discussion above and comments in the introduction allow the identification of a number of key issues in TCSC. Here, three are identified for further discussion: the issues of costs, food safety and HACCP, and part- nerships.

The basic supply configuration in the temperature-controlled channel is not really much different from those in ordinary retail distribution channels. The demands placed on the components however are far more extreme, and thus the issue of costs of facilities and operations is important.

TCSCs place strict conditions on the design, equipment and discipline of the operation, which makes the cost greater than for ambient products. Temperature-controlled storage facilities need to be maintained at the appropriate temperature with accurate recording equipment and cooling equipment, including the capacity to cope with high ambient temperatures especially in the summer. Vehicle docking bays need air bags that inflate around the vehicle to prevent exposure to ambient temperatures . For frozen storage facilities, the loading and unloading bays should be at 0°C.

Vehicles require appropriate insulation and refrigeration and control panels to set and to maintain the product at the correct temperature. An important facet of this transport refrigeration is that it is not designed to remove heat from the product (as in ‘normal refrigeration’), so it is essential that the heat is taken out of the product before it is loaded onto a vehicle. If not, heat will transfer to other products causing them to be exposed to a temperature outside the designated range. Some vehicles have bulkheads and several evaporators so that different sections can be set at different temperatures. The benefit of this is that vehicle utilization is improved, but operating procedures are made more complicated. This also affects costs. The cost of a multi-temperature refrigerated trailer is about 100,000 compared to around 30,000 for an ambient trailer. The cost of warehousing is about 20 per square foot compared to about & pound ;10 for ambient. Warehouse operatives and drivers must behave in accordance with the requirements for chill chain integrity to protect the product. Losing a trailer load of product through overheating is not only expensive but also severely impacts on service level to retail and the consumer, because the pace of the supply chain does not leave time to recover with alternative product. Such cost considerations have enabled niche operators to enter and develop the market for frozen and chilled distribution. There is also a specialist association in the UK to assist this sector of the logistics industry (Cold Storage and Distribution Federation – http://www.csdf.org.uk/ ) and to liaise with government on regulations in this sector.

As noted earlier, the integrity of TCSCs is important for food safety (see Deloitte/Cmi, 2003). This places an obligation of care and duty of implementation on the supplier, retailer and logistics. In the UK, for example, the Food Safety Act of 1990 defined the storage, handling and transportation requirements for food products, including temperature control for certain categories. One of the provisions of the Food Safety Act 1990 makes it an absolute offence to sell food that is unfit for human consumption. Food that has ‘gone off ’ due to inadequate temperature control falls into this category. The Act however allows for a defence of ‘due diligence’ against any charges. Thus a business may be able to mount a defence based on evidence that all reasonable precautions had been exercised to avoid the commission of the offence. In terms of temperature control, this implies that there needs to be a system of control, maintenance, monitoring and recording (for evidence) of the temperature regimes in the supply chain.

The Food Standards (Temperature Control) Regulations of 1995 made it an offence to allow food to be kept at temperatures that could cause risk to health. This again implied a tightening of systems in the chain. This was effectively codified by the General Hygiene Act of 1995, which required all food businesses to adopt a risk management tool such as Hazard Analysis Critical Control Point (HACCP). Loader and Hobbs (1999) see this as a change in philosophy, representing a move away from an end-product food safety inspection approach to a preventative, scientific focus with the responsibility for risk management placed on the food business proprietor. As a result, HACCP and other systems (Sterns, Codron and Reardon, 2001) have been vital to establish process controls through the identification of critical points in the process that need to be monitored and controlled (see box).

Hazard Analysis Critical Control Points (HACCP)

It is important in the application of the disciplines of an integrated temperature-controlled supply chain to understand the principles of the obligations of suppliers, retailers and logistics service providers.

All have a duty of care for the product. In order to meet this duty of care they must demonstrate that they have applied due diligence in the structure and execution of their operation: that is, that they have taken all reasonable methods to ensure the care of the product.

One of these reasonable methods is Hazard Analysis Critical Control Points (HACCP), which is central to the discipline of chill chain integrity in logistics. The Quality Assurance department conducts a survey of the supply chain under its control, with the objective of identifying those circumstances where the product might be exposed to unsuitable conditions, or hazards. They rank these hazards according to the importance of their risk, for example as high, medium or low. Procedures are then put in place at an appropriate level to prevent that risk. To express this differently: identify the hazards, analyse their importance, identify which are critical and set up control procedures at these points. Once HACCP is put in place it becomes a strong argument that due diligence is being practised.

For temperature-controlled supply chains, there are big benefits from putting the physical and operational procedures in place along the whole length of the supply chain. This investment reduces a high risk to a low risk. By stabilizing the temperature throughout the life of the product, suppliers and retailers can concentrate on other aspects that can add value to the product, such as growing varieties.

If we take the example of the movement of chill goods from distribution centre to retail stores on multi-temperature vehicles, then the risk to food safety is high and the risk of occurrence is high. The Critical Control points for loading at the distribution centre are:

• The temperature setting is stated on the load sheet and run sheet.

• The loader checks the load sheet and sets temperatures for compartment .

• The loader secures the bulkhead.

• The loader switches refrigeration on and ticks the relevant temperature on the load sheet.

• Once loading is complete a supervisor checks settings and switches against load sheet and signs off if correct.

• The load sheet is handed into the goods out office.

• The driver checks digital readings (usually at the front of unit, visible in the rearview mirror) against the run sheet and if correct, signs off and hands it in to the goods out office.

• The goods out clerk checks if the temperatures on the load sheet and run sheet match, and if correct, allows the vehicle to leave.

• The goods out supervisor undertakes daily checks to assure compliance.

Source: author interviews

These Acts in the UK were in essence national responses to approaches being recommended in Europe and codified in the EU legislation. The food scares in the UK of the late 1990s also brought forward a response. The Food Standards Act 1999 created the Food Standards Agency (FSA) in April 2000. The Act was intended to induce all those involved in the food supply chain to improve their food handling practices, including temperature control. There is no doubt that as the FSA becomes more established, it will have a stronger role to play in TCSC than we have seen to date ( http://www.foodstandards.gov.uk ).

This onus on due diligence and the responsibility of businesses had a major effect on systems of control and monitoring of performance. It also however had an effect on the business relationships and governance in place. If a retailer for example wishes to be protected from claims, it must ensure that its suppliers are undertaking good practices, in addition to its own practice. This is not only true for retailer brand products, but for all sourced products. As such, traceability and tracking become more fundamental and good partnerships become crucial. As costs rise in introducing new systems, increasing the depth and quality of partner- ships is both a safeguard and offers possible cost benefits. As a result, partnerships expanded considerably after 1991 in the UK (Wilson, 1996. Loader and Hobbs, 1999; Fearne and Hughes, 2000; Lindgreen and Hingley, 2003). Food retailers today are keen to have such partnerships and to use them in their marketing, as seen in the numerous ‘farm assured’ type schemes. Such partnerships and changes in organization of the supply chain are not restricted to UK suppliers. Dolan and Humphrey (2000) show how in Africa, the requirements of the leading UK retailers have transformed the horticultural sector in scale and operational terms, leaving smaller producers in a precarious position. This scale dimension is linked closely to the legal requirements and the costs of compliance and potential chain failure.

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