Posts in Food & Beverage

Cannabis Disruption in the Food & Beverage Industry

September 17th, 2019 Posted by Food & Beverage, Transportation 0 thoughts on “Cannabis Disruption in the Food & Beverage Industry”

Cannabis Disruption in the Food & Beverage Industry

Authors: QProducts & Services Food & Beverage Team, Under the Direction of Kevin Lynch and Stephen Wozniak


The recent and continuous growth of the cannabis industry has attracted many businesses to join in on this lucrative and evolving space. With the recreational use of cannabis now legal in 11 states, and medical marijuana legal in 23 states, cannabis is on its way to possibly becoming an $80 billion industry by 2030, according to estimates by Cowen, Inc. The explosive growth of this space in a short period of time has created a need for a new era of supply chain management to help adapt to new regulations, distribution models, and other challenges related to a highly-regulated but thriving industry, according to Green Entrepreneur.

In the food and beverage industry specifically, we’re experiencing mainstream adoption from food and beverage companies, new and increased competition, and challenges in the supply chain.


What is Cannabis?


Cannabis, also referred to as marijuana, comes from a group of three plants with psychoactive properties: Cannabis sativa, Cannabis indica, and Cannabis ruderalis. When the flowers of these plants are harvested and dried, you’re left with cannabis, one of the most common drugs in the world. It is made up of more than 120 components, also known as cannabinoids, of which we can find cannabidiol (CBD) and tetrahydrocannabinol (THC). While THC is psychoactive, CBD is not, and you can find cannabis products that contain just CBD, THC, or a combination of both.



Where Did CBD Come From?


Cannabidiol (CBD) is a compound extracted from hemp or marijuana. The 2018 Farm Bill excluded hemp from the definition of marijuana and removed it from the Controlled Substances Act (CSA).


CBD was first discovered by Dr. Roger Adams and his team at the University of Illinois in 1940, however, its structure was not made clear until 1963. While it may lead some to assume that CBD is a newly discovered ingredient, cannabis and CBD have a history that dates back thousands of years. According to CBD Origin, the first documented use of cannabis-derived medicine dates back to 2737 B.C. It can be said that Chinese Emperor Sheng Nung used a cannabis-infused tea to aid with a variety of ailments including memory, malaria, rheumatism, and gout. Throughout history, cannabis and CBD have been used for therapeutic purposes, however, during the rise of modern medicine, it was not recognized due to a lack of scientific evidence.


More recently, and with the legalization of medical marijuana, researchers have been prompted to dive more into CBD and its potential medicinal uses. While the stigma towards CBD and cannabis has changed over the last few decades in the United States, we are still in the early stages of research, legalization, and recreational use. However, with the federal legalization of hemp and hemp-derived CBD, more and more CBD products are being sold online by major retailers including Sephora and Neiman Marcus.



Image result for cbd oil stock image



The Legalization of Hemp


The Agriculture Improvement Act of 2018, also known as the 2018 Farm Bill, was signed on December 20th, 2018, and will remain in force through 2023. The passing of the 2018 Farm Bill allowed the legalization of hemp agriculture and products in all 50 U.S. states. In the United States, hemp plants are defined as any cannabis plant that has 0.3 percent or less THC. Any cannabis plant that has a THC content greater than 0.3 percent is classified as marijuana. From a chemical composition standpoint, hemp cannot get you high.


According to Analytical Cannabis, the increased legality of hemp is largely to thank for the rapid acceleration in diversity and availability of hemp-derived CBD oil. Unless you go to a marijuana dispensary to purchase CBD oil, the CBD oil that you find is made exclusively from the hemp plant, which is also referred to as hemp oil or CBD hemp oil. Since CBD can be extracted from hemp, CBD is legal. However, there is still work to be done when it comes to FDA regulation. According to a leader of the U.S. Food and Drug Administration’s new cannabinoid work group, there is more research to be done before federal authorities can allow CBD treatments into food and beverage products. Just like any other new ingredient going into food or drugs, the FDA is unlikely to approve over-the-counter use without further research on the ingredient and its health benefits. With that being said, certain companies with a loyal customer base are likely to wait until CBD is FDA approved prior to marketing CBD products to consumers. While FDA approval is in the works, fortune 500 companies are educating themselves on the evolving market, investing heavily, and laying the groundwork within their networks.



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Mainstream Adoption in Food & Beverage


Cannabis-infused food and beverages are becoming a major trend as legalization grows across the country. According to Green Market Report, consumers in California purchased $180 million worth of cannabis-infused food and drinks in 2016, which rose to 18% in 2018. In Washington, sales of cannabis-infused treats increased 121% in 2016, and since Colorado first allowed recreational cannabis use, sales tripled from $17 million in the first quarter of 2014 to $53 million in the third quarter of 2016. Dixie Elixirs, a Colorado-based company that sells cannabis-infused products such as truffles, chocolate bars, mints, and juices, was one of the first companies to enter the market.


According to Food Institute, it is rumored that the Coca-Cola Company is reportedly in talks with Aurora Cannabis about developing cannabidiol-infused beverages, and is said to be particularly interested in drinks that can ease inflammation, pain, and cramping. Pepsi and Starbucks have indicated that they are monitoring developments, however, they have no plans at this time to pursue cannabis based or infused beverages. Furthermore, some major players including Constellation Brands, Molson Coors Brewing, and AB InBev have already invested in CBD and THC-infused non-alcoholic beverages. Given the mainstream adoption by many organizations, certain companies are reluctant about getting into CBD-infused products, even where they are legal. Many wonder if the products will harm their reputation or if they will be well-received by customers.

However, the data tells us that those apprehensions could likely be proven wrong. According to a study from A.T. Kearney, 30% of Americans are willing to try a cannabis-infused non-alcoholic beverage, and 17% would be interested in an alcoholic drink containing the substance.


Similarly, alcohol consumption is declining globally, and consumers are moving away from sugar-filled drinks in favor of healthier alternatives. More recently, New Age Beverages announced that it aims to release a line of CBD-infused drinks under the Marley Mellow Mood brand. While a market for non-alcoholic cannabis-infused beverages is emerging, this could lead to a disruption of the beverage market as new product lines are released and marketed as health drinks. Overtime, products using CBD as an ingredient could be considered part of the health and wellness space.


Although there is an emerging market for non-alcoholic cannabis-infused beverages, the wine industry has also started to develop cannabis-infused wines. California-based Cannavines has already released two CBD-infused wines: Red Blend x Headband and Chardonnay x Sour Diesel.



Image result for cannabis infused beverage



New and Increased Competition


The explosive growth of cannabis has caused companies across the food and beverage industry to take notice. The legalization of cannabis presents a “once-in-a-generation” opportunity for food and beverage companies to take action and establish themselves as dominant players in a competitive market. As certain organizations are exploring the market and learning about the value cannabis can have on their business, investors seem to be getting in on what some are calling “The Green Rush.”


Constellation Brands is already positioning themselves by taking advantage of the opportunity as they announced as of October 1st, they would acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana company. The $191 million deal will allow Constellation Brands to develop cannabis-infused beverages and not only stay ahead of evolving consumer trends, but stay ahead of the competition as well. According to The Wall Street Journal, Rob Sands, Constellation Brands’ CEO, stated that he doesn’t consider marijuana a serious threat to the beverage space, but that Constellation isn’t going to “stand around twiddling its thumbs” as the market grows.


According to the New York Business Journal, cannabis company Elev8 Brands Inc. recently purchased New York-based distributor YP Natural Inc., which distributes mainstream, non-CBD natural brands including Mondelez-owned Tate’s Bake Shop. The move is in an effort to expand their distribution and work to bottle their own brand of iced tea infused with CBD. Additionally, cannabis company Newstrike Brands Ltd. struck a deal to create co-branded edibles with Canadian specialty foods company Neal Brothers Inc., with the goal of creating cannabis-infused beverages. Across the U.S. and Canada, this expansion presents the potential opportunities for food and beverage companies to enter the market or possibly encounter increased competition within a new market.



Image result for the green rush



Challenges in the Supply Chain


In the U.S., California’s market is by far the largest in both geography and in the number of users regarding the cannabis industry. California distributors believe that they can develop reliable logistics to support the current cannabis market that would solve challenges across other regions, should cannabis become legal at the federal level. Currently, the nation faces the challenge of cannabis distribution as federal laws currently prohibit the transportation of cannabis across state lines. Because cannabis is illegal at the federal level, freight trucks that are regulated by the Department of Transportation are unable to carry cannabis. In addition to logistics operations, the cannabis industry still faces the stigma against the trade and the challenges that come with financial transactions as well.


The Wall Street Journal states that for more than 20 years, since California legalized cannabis for medicinal use in 1996, growers or cooperatives handled the delivery of their products to end users themselves. C4 Distro, a new cannabis distribution company, has already begun to implement a modern, advanced supply chain to California’s cannabis industry. Similar to beer distribution, manufacturers deliver their products to C4’s facilities where testing and taxes are handled. Then, the products are deployed to stores via the sales team, delivery teams, and trucks. However, alcohol is a legal product at the federal level while cannabis is not. Also, operators that serve other industries must be licensed specifically to handle cannabis, and those facilities would need to comply with state regulations. More recently, all cannabis goods for sale in California must be tested at licensed labs and have labeling showing the amount of THC in the product and must be sold in child-proof packaging.


Jennifer Lee, Partner and Cannabis Leader for Consumer Advisory and Analytics at Deloitte, stated “Most current and likely cannabis consumers want a variety of products offered at reasonable prices from suppliers who can vouch for the safety and origin of those products. Cannabis companies will need to have secure supply chains to protect the quality and integrity of their products, and retailers will need to meet consumer expectations, including providing a positive, engaging retailing experience and protecting the privacy of their customers, especially online.”


However, in many ways, the supply chain developing around legalized marijuana in California could lay the groundwork for an effective supply chain if cannabis were to achieve legalization at the federal level. The companies in California that are currently building a “cannabis superhighway” throughout the state similar to beer distribution could become well-positioned to handle logistics, merchandising, and compliance during the process while the drug is not fully legalized throughout the nation yet. In the future, it’s possible that we could see cannabis become a major part of the food and beverage supply chain, specific to alcohol, due to the involvement throughout the distribution process.


Image result for medicinal marijuana logistics


Final Thoughts


While there is increasing acceptance, there is still a need for education in the cannabis market. Due to the state by state legalization in the U.S., we have the opportunity to learn what is needed for a successful supply chain and we can also learn what could go wrong on a smaller scale.


For many organizations, the combination of existing profitable operations, advanced technology, and the prospect of gaining market share is exciting and presents many growth opportunities in an evolving market. From a supply chain perspective, businesses should be prepared and educated on the impact that cannabis could have on the food and beverage space specifically. From mainstream adoption by some of the major players to challenges and growth in certain states, companies have the opportunity to make the right moves ahead of the competition.


As cannabis continues to have an impact on the food and beverage industry, I hope this information was helpful in answering some of your questions regarding our supply chain, competition, and an outlook on the market.

How Blockchain is Being Used Today in the Food & Beverage Industries

September 4th, 2019 Posted by Food & Beverage, Technology 0 thoughts on “How Blockchain is Being Used Today in the Food & Beverage Industries”

How Blockchain is Being Used Today in the Food & Beverage Industries


Author: Kevin Lynch


While there has been a lot of talk in the media and we are seeing it revolutionize across many industries, blockchain technology is impacting the food and beverage industries faster than we realize. From Walmart to IBM, large, well-known companies are recognizing the importance of digitalizing our food and beverage system and are implementing the necessary procedures in order to trace food more accurately across the supply chain, combat food-borne illness, and bring improved transparency and efficiency to the global food supply chain.


What is Blockchain and How Does It Work?


Simply put, blockchain is a chain of “blocks” across a computer database that stores information. As more information is stored, more “blocks” are added to the chain. While this information can be stored, it cannot be copied. With most transactions, there is an intermediary such as a bank. The blockchain network has no intermediary or central authority – the information is transparent to anyone who has access to it. So how does it work? Think of a blockchain like a Google spreadsheet. The spreadsheet contains information about the many transactions of data, which then generates what is called a “hash,” or a combination of numbers and letters. As each transaction occurs, a “block” of digital data is created and the blocks become connected or chained together. As soon as a new block is formed, it can no longer be changed.


Improving Food Traceability


With blockchain technology, organizations can trace the entire lifecycle of food products from origin through every point of contact on its journey to the consumer. The Food Trust Solution, created by IBM, is the first blockchain safety solution that allows transaction partners to confidently and securely share food information, creating a more transparent and trustworthy global food supply chain. According to IBM, simplifying the food supply system could help consumers eat well, vendors save money, and omit the negative news stories in the media.


From leafy greens such as spinach and romaine lettuce to fresh fruit and vegetables, organizations such as Albertsons Companies, the world’s second-largest supermarket in terms of sales, are testing out IBM’s Food Trust blockchain. Announced this Spring, they began piloting the blockchain with suppliers of romaine lettuce, a product which was recently linked to a widespread outbreak of E-coli.


Additionally, Walmart issued a mandate to all of their suppliers of leafy greens, including spinach and romaine lettuce, stating they have to adopt blockchain by September of 2019.


In the food supply chain, information such as farm-origination details, batch numbers, processing data, factory information, expiration dates, storage temperatures, and shipping details are all valid sources of information that could be accessed through the blockchain. Having better food traceability through blockchain technology across the food supply chain allows companies to help reduce the spread of food-borne illnesses by pinpointing issues in the food chain through these blocks of data. At the same time, this could help avoid massive losses for retailers and suppliers at the time of a recall.


All of the transactions for one item of food can be seen and validated at any point in time in the blockchain. This will allow every party in the food supply chain to have a better picture of the lifecycle of the product, and these sources of data cannot be altered or tampered with.


If anything happens to a product along the line of production and distribution, organizations leveraging blockchain can easily pinpoint the source or track whomever is accountable.


“With the promise of fast and secure end-to-end product traceability, blockchain is easily one of the most energizing – and complex – technological developments of the past few years,” stated Melanie Nuce, Senior Vice President of Corporate Development at GS1 U.S. At the present, companies are using blockchain to continuously improve traceability within the food supply chain. In the near future, consumers may be able to trace their food from “farm to fork” with the scan of a QR code.



 Combatting Food-Borne Illness


Food safety is not just a food or public health issue, it is a supply chain issue. Similar to our ability to better trace food across the food supply chain with blockchain technology, blockchain is becoming increasingly prevalent in food safety. When foodborne illnesses occur, it is difficult to trace the source of contamination using traditional food supply methods, such as paper trail.


Last year, the World Health Organization published that an estimated 600 million people fall ill after eating contaminated food. In addition, according to the Centers for Disease Control and Prevention, about 1 in 6 people in the United States get sick from foodborne illnesses each year. With blockchain technology, the data sources available could provide links to trace these outbreaks more effectively and possibly limit the number that occur by more accurately tracing contaminated and diseased products.


According to Frank Yiannas, the Food and Drug Administration’s (FDA) deputy commissioner for food policy and response, the FDA is using blockchain to identify the sources of food safety issues, with the goal of creating more transparency in the food system.


So how could blockchain help the FDA track food sources faster? When the E-coli outbreak was announced to the public in November 2018, the FDA spent several days tracing the outbreak to farms in California, as many organizations are still using old methods of paper data and cabinet filing. According to tests conducted by Walmart and IBM, capturing the tracking information can happen in as little as 2.2 seconds with blockchain. As Don Durm, Vice President of Customer Solutions at PLM, states, “Blockchain technology has proven that we can trace food to its origin in a very complex and messy food supply chain that would normally take two weeks or more, to an astounding 2.2 seconds.” In the 2008 China incident, about 30,000 infants fell ill after consuming milk contaminated with melamine. This incident addresses another example of the importance of leveraging blockchain technology to reduce subsequent losses incurred due to contaminated products. With blockchain, there is no missing information when it comes to the history, location, and status of a food product. Having the ability to exactly pinpoint where the tainted food originated, where it was distributed, and where it was served or sold is vital in combatting food-borne illness in our food supply chain.


In August 2017, Walmart joined IBM’s Food Trust blockchain pilot along with other suppliers including Kroger, Nestle, Tyson Foods, and Dole. With a digital food system, these companies recognized the importance of becoming a proactive contributor to eradicate the challenges in our food system. For example, many of the mangos sold in Walmart stores are mostly grown by small farms in Central and South America and then transported by land, air, and sea to stores in the United States. Tracking a package of mangos using traditional methods can take several days or even weeks. With blockchain technology, this tracking process can be simplified and minimized to minutes, if not seconds. In the case of a recall or outbreak, stores can quickly access the source of the contamination through the blockchain and remove the mangos from the shelves the same day, versus using a traditional method that takes days or weeks, thus risking further complications from the contamination.

As part of the IBM Food Trust, they provide full transparency of food products from tracing, certifications, and fresh insights. Tracing is likely the most imperative piece of the IBM Food Trust as it can trace food products within seconds, show location or status, and verify credibility or safety of each product. Moreover, besides tracking recalls and contaminated products, blockchain technology has the capability of tracking spoilage or expired products as well. For example, with the implementation of temperature sensors in shipping containers, alerts can be sent and stored in the blockchain when a product goes above or below a specific temperature. When products sit at a higher temperature, foodborne illnesses are more likely to manifest, so having temperature records can prevent potentially tainted foods from making it to store shelves.



Bringing Transparency & Efficiency to the Food Supply Chain


IBM’s Food Trust is a great example of a company that is currently using blockchain to help bring transparency and efficiency to food supply chains and food safety. Real-time certifications, test data, and temperature data ensure that proper food handling protocols are met.

Secondarily, Greenfence, the food industry’s first remote auditing and certification platform, is leveraging blockchain technology to identify the people, locations, distributors, equipment, and anything else involved in the farm-to-table process of the food supply chain. Some of the advantages blockchain technology brings within the food supply chain include the following:

  • Any attempts to tamper with a food item as it moves through the food supply chain can easily be identified with blockchain technology
  • Stores and supermarkets can identify and remove products from their shelves once a potentially contaminated or hazardous product is identified
  • Consumers can be reassured that the food they are buying and eating is what the label states


In addition, blockchain could help eradicate counterfeits and food fraud in our global food supply chain as the data is much less vulnerable to being tampered with or lost. PricewaterhouseCoopers (PWC) estimates that food fraud is worth $52 billion globally each year. With blockchain, providing full visibility and traceability allows for better control over the food supply system, accurate data, and better customer satisfaction or customer trust in our global food supply.

Health supplements company Blackmores and dairy products supplier Fonterra have recently worked together to run a pilot program to prevent food fraud – a practice that involves packing foods with lower quality or counterfeit ingredients – using blockchain. Products will also be tagged with QR codes, a code used for storing information. These organizations strive to utilize blockchain to achieve supply chain traceability and transparency while boosting customer confidence. Moving forward, it’s going to be a continuous effort across all parties involved in the food supply chain to bring more transparency to our producers, retailers, and consumers.



Final Thoughts


Blockchain technology not only has the potential to transform the food industry, it has already begun to. With large, well-known companies such as IBM and Walmart implementing and mandating blockchain for their food supply chain efforts, it’s only a matter of time before we see a larger global shift of organizations leveraging blockchain technology.


However, for blockchain to work effectively, organizations need to transition from traditional styles of record-keeping such as the cabinet filing of paper documents to digital solutions that allow the data to be encrypted in a blockchain. For anyone interested in learning more about blockchain technology and its impact on the food and beverage industry, I hope this information was helpful in providing more information on a complex, exciting topic.



About QProducts & Services:

QProducts & Services is a manufacturer of passive temperature protection and cargo security solutions for the global supply chain. For over 25 years, they have developed innovative, cost-saving solutions for transporting temperature sensitive commodities. QProducts & Services has expanded their product line to include cargo security solutions and wireless temperature monitoring technologies. Manufactured just outside of Chicago, IL, their patented products are noted for durability, performance and reliability in protecting the integrity of shippers’ cargo throughout the supply chain.


August 2nd, 2019 Posted by Food & Beverage, Temperature Protection, Update 0 thoughts on “TOP 5 COLD CHAIN DRIVERS FOR 2020”

The Cold Chain transportation experts at QProducts & Services present the Top 5 Cold Chain Drivers for 2020.

Enter 2020 armed with knowledge that can help you strategically plan your cold chain operations. From cannabis disruption to wild weather, there are many things going on socially, logistically, and environmentally to be aware of. These insights are from speakers at the annual Cold Chain Council, and our internal experts at QProducts & Services.


QProducts & Services extends their gratitude to the many industry experts that spoke at the June Cold Chain Council for the Food & Beverage Industries. Together, they educated attendees on how to best leverage these drivers in anticipation of 2020.

Check Out the Top 5 Cold Chain Drivers for 2020 Below:




QProducts & Services is a manufacturer of passive temperature protection and cargo security solutions for the global supply chain. For over 25 years, they have developed innovative, cost-saving solutions for transporting temperature sensitive commodities. QProducts & Services has expanded their product line to include cargo security solutions and wireless temperature monitoring technologies. Manufactured just outside of Chicago, IL, their patented products are noted for durability, performance and reliability in protecting the integrity of shippers’ cargo throughout the supply chain.

CargoQuilt® protects from both heat and cold, as well as other environmental hazards.

CargoQuilt® Wraps Up Additional Savings For Shippers

August 28th, 2017 Posted by Food & Beverage, Over the Road, Temperature Protection 0 thoughts on “CargoQuilt® Wraps Up Additional Savings For Shippers”

As published in Food Logistics Magazine:

ARTICLE AUG 27, 2014

Kevin Lynch, National Account Manager at Q Products & Services’ (QPS), a manufacturer of insulated blankets, confirms that capacity issues in the trucking sector, particularly for OTRrefrigerated, are extremely tight.

“Our customers and prospects both are telling us when it comes to capacity for OTR refrigerated, it’s just not there,” he says. To make matters worse, most OTR refrigerated carriers do not have immediate plans to invest in new equipment to add capacity either, says Lynch.

QPS manufactures passive temperature protection products, including the Multi-Trip CargoQuilt, the flagship product in their quilt fleet, which covers an entire or partial load of freight enclosed in a trailer or container, for either domestic or international shipments. The CargoQuilt protects against freezing, heat and condensation damage.

While it is a relatively simple product, its ability to save money for shippers who covert their OTR refrigerated shipments to intermodal dry shipments is impressive. Furthermore, it gives shippers added flexibility by allowing them to use temperature-controlled equipment only when they really need it.

“It’s a win-win for shippers, because not only is there capacity on intermodal, but it’s a more cost effective compared to OTR,” says Lynch. Once shippers begin using the insulated blankets and understand how well they perform, they start looking elsewhere in their supply chain for opportunities to use insulated blankets, Lynch adds.

Logistics Podcast

Podcast: Staying Relevant, Staying Innovative in the Food/Bev Supply Chain

June 6th, 2017 Posted by Food & Beverage, Temperature Protection 0 thoughts on “Podcast: Staying Relevant, Staying Innovative in the Food/Bev Supply Chain”

Our Director of Sales for our Food and Beverage market, Kevin Lynch, joined the panel of this webinar by Food Logistics on staying relevant in the supply chain. Listen Here!

“How do companies stay relevant and innovative in today’s supply chain? Kevin Lynch, director of food and beverage at Q Products & Services, talks about those issues and how strategic partnerships and collaboration play a critical role in staying on the leading edge, which ultimately supports customers’ initiatives and business goals.”

Power In-Lock® is a patented, electronic internal locking system to prevent cargo theft

Cargo Theft is a Critical Issue to Food and Beverage Industry

December 16th, 2016 Posted by Food & Beverage, Technology 0 thoughts on “Cargo Theft is a Critical Issue to Food and Beverage Industry”

As published in Food Logistics Magazine:


Cargo theft is not limited to high-value commodities such as electronics. According to CargoNet, food and beverage was the most stolen commodity in the United States last year.

Meanwhile, FreightWatch International (FWI), a subsidiary of Sensitech Inc, estimates the average value of stolen food and drink shipments between 3Q 2014 – 2Q 2016 was $86,149 with seafood being the highest valued sub-category at nearly $200,000. The most targeted sub-category was meats at slightly below $100,000. FWI reports that food and drink shipments remain the most stolen commodity domestically with 23 percent of thefts from June – August 2016. Of those thefts, 77 percent were FTL (full truck loads) and 15 percent FPU (fictitious pickups).

The future of cargo theft in the food and beverage sector is unclear since time of year, economy, and accessibility all factor into what cargo criminals look for as a target. Nevertheless, the FWI Supply Chain Intelligence Center continues to observe and report on any particular product, or commodity that starts to become a trending target in cargo theft incidents across the United States. FWI indicates that the food and beverage supply chain is particularly vulnerable because 99.99 percent of companies in the industry do not institute a layered security program in their transportation and logistics operations.

“Aside from the nut growers in California, little has been done to combat the problem,” FWI says.

In order to protect themselves from cargo theft, companies must pay high insurance premiums. According to TT Club, a top insurance provider, theft is the number three reason for a claim. By outfitting trailers with tracking devices that make it possible to detect cargo theft and recover stolen assets, companies reduce premiums.

“Cargo theft is a customer service failure as it undermines a carrier’s ability to meet service expectations,” remarks Lina Paerez, product marketing manager, ORBCOMM. “Cargo theft can permanently damage a company’s reputation. When a shipper loses a load due to theft, it disrupts the distribution cycles. If carriers can’t provide a safe work environment for their drivers, it can lead to poor driver retention.”

Real Time Monitoring

FWI maintains that assisted-GPS covert tracking technology embedded in cargo is the preeminent force multiplier with respect to combating in-transit cargo theft. Electronic Freight Security (EFS) programs offer a solution as they provide real-time, end-to-end monitoring of cargo shipments through embedded track­ing technology. EFS also allows a shipper to maintain full visibility of the cargo for the duration of the shipment.

“As a complete virtual escort, this low-cost solution removes the vulnerabilities associated with human-based escorts, while significantly increasing the chances of recovery in the unfortunate event of a theft,” FWI states.

Proper EFS programs include pre-determined routes with immediate escalation protocols to ensure maximum compliance and security of the driver and cargo. Compliance to security protocols is critical. Immediate response and resolution to non-compliance incidents reduces opportunities for theft.

FWI got its start developing EFS technology to enable monitoring, reporting and recovery of high-value shipments in transit between manufacturing warehouses and delivery sites for cargo security. Its technology delivers real-time location, status and condition data as well as critical activity alerts that harden the supply chain and mitigate the risk of cargo theft.         “Aluminum containers and cargo holds represent some of the most challenging environments for GPS devices,” FWI officials state. “FWI manufactured devices optimize leading location-based services and machine-to-machine (M2M) technology that works in impaired settings where other GPS devices do not.”

The latest FWI Single-Use GEO Tracker is at the forefront in tracking technology. This tracker takes the complexity out of cargo tracking by offering convenience and simplicity—eliminating the organization and management of tracking equipment.

Telematics devices can track the location and status of transport assets for complete fleet visibility. “Operators receive alerts when a problem is detected: a trailer makes an unplanned stop, deviates from its route or leaves a geofence,” Paerez explains. “This enables dispatch to react to problems quickly. When cargo is stolen, tracking devices make it possible to track the trailer for quick recovery.”

Trailer tracking devices are becoming smaller and more inconspicuous, which makes them harder for thieves to spot and identify. Such systems now support mobile applications, which allow operators and drivers to monitor status and manage alerts from anywhere.

“Devices are also becoming increasingly sophisticated. They are quicker and easier to install and they require almost no maintenance or battery changes—solar powered devices can report for anywhere from 5 to 10 years with no intervention and little sun exposure,” Paerez adds.

Trailer Breach

Trailer breach (unauthorized door opening) or load tampering is another problem. A trailer tracking solution that incorporates cargo and door sensors and delivers notifications/reports when a trailer is loaded or unloaded and when a door opens or closes can help carriers to detect theft early.

“A comprehensive system can also include cargo sensing technology that reports on load status—vibration, light, temperature, humidity, shock, etc.—which makes it possible for carriers to detect cargo tampering as it occurs,” Paerez says.

“A common way to identify a valuable target is when external devices are securing the doors,” states Scott Borsodi, director of business development, at Q Products and Services (QPS), creator of the Power In-Lock cargo security system. This system locks the trailer from inside, making it out of sight and out of reach of thieves or anyone attempting to gain unauthorized access.

“Our doors are locked electronically from our Jackson, Miss. headquarters as soon as the trailer is loaded,” explains Chris Wood, spokesman for KLLM Transport Services.

The locking mechanism is centrally controlled from KLLM’s corporate dispatch through telematics. Once the lock is activated, the door cannot be opened until the trailer reaches its destination. Drivers only have the capability to unlock the trailer through the use of a one-time code entered on a keypad attached to the trailer. This keypad communicates with the internal lock through radio frequency and is only utilized in the event the satellite signal is disrupted.  The corporate dispatcher must provide the one time code to the driver. This prevents any type of collusion between the driver and an outside source from gaining access to the product within the trailer. The doors have sensors that document opening and closings and also indicate whether the trailer was locked or unlocked.

“Even in the event the external padlock and the shipper seal have been breached, we can demonstrate the trailer doors were never opened and satisfy the shipper’s and receiver’s quality control team that the product has remained safe during transit thereby avoiding a claim,” Wood remarks.

Q Products’ Borsodi stresses that Power In-Lock buys time in deterring theft. “Most thieves will give up if they can’t access the cargo within a minute or two,” he says. “By mounting a security solution on the inside of a container or trailer door, the thief doesn’t know what’s preventing the doors from opening. The internal feature is what makes our solution so unique.”

The importance of being able to prove a shipment was not tampered with cannot be understated. “A tampered shipment can be far more detrimental to a business than a few pallets getting stolen,” Borsodi states “Companies who intend to sustain a reputable brand simply can’t afford to take the risk of partnering with a carrier that is unable to help them comply with regulations,” states Borsodi.

Imminent regulations, specifically the Food Safety Modernization Act (FSMA), are probably the largest contributors forcing change, as shippers must be more diligent in selecting their transportation providers. As a result many shippers are taking a zero tolerance position as it relates to a trailer breach. Shippers are presenting transportation agreements to carriers that basically allow the shipper to claim the carrier for the entire shipment rather than being required to inspect the product and prove damages. Coinciding, transportation providers are employing reliable cargo security solutions when investing in new equipment and modern communication tools.

“Quite frankly, they have to if they want to haul their customer’s freight,” Borsodi says. “A common perception with regard to regulations is that they present challenges and increase operating costs. In reality, and speaking on behalf of some of our customers, when the proper technology is utilized it can exploit the weak links in the supply chain. As a result, they have realized cost savings by reducing shrink, cargo theft and minimizing supply chain disruptions.”

Karen E. Thuermer is an Alexandria, Virginia-based journalist who has been writing about logistics for several decades.

How Is Software & Technology Impacting The Food & Beverage Supply Chain?

July 16th, 2015 Posted by Food & Beverage, Technology 0 thoughts on “How Is Software & Technology Impacting The Food & Beverage Supply Chain?”

Industry executives weigh in on Big Data, analytics, apps and more.

As published in Food Logistics Magazine:

As part of this month’s special coverage on Software & Technology, we contacted over a dozen industry executives at companies that play a sEditignificant role in the food and beverage supply chain to ask them about the impact of Big Data, the Internet of Things (IoT), analytics, cloud technology, apps and more to get a sense of the changes underway and what they portend for the future. Without a doubt, Software & Technology represents one of the fastest-moving, promising and disruptive segments in the business and consumer worlds today. In the food/bev supply chain it facilitates visibility from farm-to-fork, compliance, improved food safety, productivity, better management of people and processes, and cost reductions and accuracy, among other benefits.

Following are highlights of the comments and quotes these industry executives shared with Food Logistics


Who: Kevin Lynch, National Account Executive, Q Products & Services

Key Topic: The impact of rejected loads on the supply chain

Takeaway: Applying technology to address this challenge

Lynch explains that, “Our business is unique because we have a diverse customer base that includes food manufacturers, motor carriers and retailers. In terms of the supply chain, all three play an important role that is dependent on one another to ensure a successful shipment is executed.” In addition, “Food safety regulations already impact our industry and will continue to do so moving forward, especially when something goes wrong,” he says.

“Think about the rippling effect a rejected load has on everyone involved. For example, the revenue lost by the shipper followed by a scramble to get another load prepped for the customer. The carrier will likely be hit with a claim to pay and then forced to delay a scheduled backhaul. Meanwhile, on the receiving end the customer is left with a delayed timeline to get the product on the shelf, resulting in potential lost sales. These are just a few of the consequences felt by each business. While it’s difficult to determine which company feels the most pain, the reality is that on some level everyone loses.”

Lynch acknowledges that rejected loads are sometimes unavoidable. However, “The preventable instances are the most frustrating to everyone involved. Tampered seals and missing temperature recorders are two of the more common variables causing shipments to be turned away. As an industry, we need to continue the development of proactive solutions by way of existing technology.”



Who: Chetan Tandon, CIO Allen Lund Company, LLC; ALC Logistics

Key Topic: Evaluating your software/technology spend

Takeaway: Look for a solution, not just a product

According to Tandon, “Technology has changed the way we look at the transportation and logistics industry today. Several factors play a major role in this evolution, products like mobile technology, transportation management systems (TMS), yard management, dock scheduling, warehouse management systems (WMS), and location and trailer tracking devices are just a few. Many companies have already taken advantage of such technologies, and some are playing catch up. With so many products in the market, how do you decide which one is the right match for your market segment, industry and company?”

Tandon says there are several key factors to consider:

Price: Expensive is not always the best. Many times mid-market solutions offer more bang for your buck. It is important to find out how much this solution will cost you over the next five years. Technology will change significantly in five years, and so will price.

Features: Does the solution offer all the features you are looking for? Can it grow with your company’s needs? A company needs to assess their business plan specific to growth and confirm that the software solution fits into the plan.

Platform:  As we all know, the tech world is experiencing a mobile war, browser war and operating system war. Is the solution your company is considering platform agnostic? If it is not, then this platform will not be in keeping with your business plans. Additionally, the “solution” will not be able to keep pace with the platform competition in the marketplace.

One size does not fit all: Is the solution customizable? The way you run your supply chain might be completely different from others in your industry. Can the solution be customized to fit your business needs or do you have to change your business process to fit the solution?

When shopping for software, keep in mind the various aspects in which technology interacts with your business. Look for a solution, not just a product.



Who: John Haggerty, Vice President, Burris Logistics

Key Topic: Cold chain challenges

Takeaway: Creating high performance strategic partnerships

“Today’s cold chain and its stewards are being stretched to new levels of performance by consumer demand, especially for products from all fresh categories,” emphasizes Haggerty. “More products are processed and harvested in more places requiring precision temperatures, critical handling, and faster movement than ever before. As cold chain resources tighten, older assets reach obsolescence, and the driver shortage deepens; food industry leaders should plan for these realities and look to create new, high-performance strategic partnerships.”

Choosing the right cold chain partners is crucial. Haggerty lists a handful of questions to consider when evaluating partners:

  • Will your potential partner be a true partner, one willing to go the distance, and share the pain and the gain with you?
  • Does your partner invest in people, training, and talent management?
  • Does your partner invest in “owned” cold chain assets and their proper maintenance?
  • Is your partner experienced and capable at multiple temperatures?
  • Do they have a solid track record and reputation of integrity?
  • Is your partner committed to constant improvement, process improvement, and process reengineering?
  • Does your partner invest in new technologies?
  • Is food safety and agency compliance part of your partner’s DNA and culture and do they live this every day?

According to Haggerty, “Cold chain logistics partnerships can create substantial value. They can also be executed with seamlessness, visibility, and transparency. New and emerging technologies allow for real-time visibility, as well as time, place, and temperature validation. Inventory visibility and full functionality through systemic integrations can essentially join two companies at the hip. The challenges of fresh supply chain execution may be effectively addressed through collaboration and true partnerships.”



Who: Michael Bargmann, Principal, Collaborative Logistics LLC

Key Topic: Tapping the potential of mobile apps and Big Data

Takeaway: Cloud stability, back-up systems and cybersecurity are concerns

“The logistics industry continues its journey towards the growing significance of moving information seamlessly along the supply chain,” notes Bargmann. “This critical evolution has been accentuated by the growing prominence of fresh products in the marketplace. The mobility and timeliness of this data is crucial and there is an ever-growing plethora of hardware and software available to drive this critical change.”

Collaboration isn’t a new concept in the supply chain sector, but recently there has been a renewed focused in this area.

“The changes in the food supply chain towards a quickly growing and expanding percentage of fresh foods has rekindled the interest and focus in collaboration,” explains Bargmann. “There are many tools being offered to assist in this journey to a collectively-managed profitable delivery of consumer expectations. The opportunities to enhance supply visibility and share data in real-time with cloud-enabled applications and mobile devices are becoming game changing.  Of great concern though are cloud stability, back-up systems, and cybersecurity.”

Bargmann cautions that, “Many transportation technologies, while very effective, can be cost prohibitive. Yet, mobile apps could impact these costs dramatically. It is possible in the near future that every truck will have a central tablet or similar mobile device which will integrate with the entire vehicle and virtually all current stand-alone technologies and data points such as GPS, diagnostics, cab and trailer condition monitoring, temperature controls, electronic logs, cameras, and more will be synchronized and driven by one device and available in real-time.   This would likely drive down the overall costs and somewhat commoditize or make generic the devices used at data gathering points and higher proprietary systems obsolete. Smart cargos with shipper specific sensory devices might also transmit through some sort of industry standard shared app.”

In addition, “While all the Big Data has been gathering for a long time, little good has been done to harvest and utilize it with any real meaning,” says Bargmann. “What good is the data if it can’t be shared and made actionable while it’s still relevant? Visualization software products seem to be effective in harvesting and bringing this data to an actionable place while still ripe.”



Who: Dan Filby, EVP and Managing Director, First Advantage

Key Topic: Big Data

Takeaway: Opportunities to improve carrier performance and profitability

In the U.S., the average for-hire truck drives 489 miles each time it hauls freight. With 10.3 million commercial trucks on the road, these vehicles are generating large volumes of information—or Big Data—while in operation. It’s estimated that today’s commercial vehicle generates about 1 terabyte of data annually, according to Filby.

“The existence of these data creates the opportunity for fleet operators to improve their operations with respect to a host of performance measures including pricing, routing, asset tracking and utilization, maintenance, and fuel optimization,” he says. Furthermore, “The existence of these data creates the opportunity for automated government audit and enforcement efforts.”

However, not all carriers invest in the time or analytic tools necessary to mine their own data.

“Some fleets look to an outside vendor because they do not have the internal capabilities or time to conduct this analysis on their own,” says Filby. “Some look to third-party vendors because they’re private carriers—for example, Pepsi—and while they have the capability to do so, it is more cost-effective to have a specialist do it for them so they can focus on their core businesses. Regardless of the reason, they don’t want data. They want management information.”

Big Data is only going to get bigger, remarks Filby. “The proliferation of data from trucks will continue to expand with the growth of onboard devices and a greater driver adoption of social media. With that comes the opportunity for analyses that deliver actionable information to commercial vehicle operators that drives top-line revenue and helps them control costs and bolster profitability in an industry with thin margins.”



Who: Mike Meehan, CTP, VP of Sales, Fleet Advantage

Key Topic: Mining Big Data for competitive advantage

Takeaway: Rethinking the fleet lifecycle management practice

“In the arena of food distribution, understanding the financial impact of integrating technologies that continually increase fuel efficiency and reduce emissions is imperative,” emphasizes Meehan. “Leveraging data can be the catalyst to elevate a distribution operation from a support function to competitive differentiator with quantifiable revenue enhancement strategies. Using newly-available technology that generates data from a wide variety of sources, then combining and mining that data to discover new ways of cutting costs is the key to gaining competitive advantage.”

Meehan says that, “While data has long been used for route optimization, only recently could it be leveraged to provide new insight into the equipment performance, operating costs and fleet lifecycle management practices. By combining equipment performance data with maintenance and finance data, it is possible to determine each vehicle’s point of economic obsolescence—the exact time that a tractor starts costing more to run than it does to replace it with a new model.  The data essentially provides a P&L statement on each truck.”

On the topic of fuel-related regulations, Meehan notes, “Fuel economy mandates on heavy duty trucks focused on emissions reduction and resource conservation and will be in effect through 2027. That means only one thing—continuous improvement in fuel economy for years to come. Since fuel is approximately 70 percent of a fleet’s operating cost, this is good news for the industry as a whole. Effective in model years 2014, Phase I mandates are indeed proving to save transportation operations millions of dollars annually in fuel and maintenance costs. The new data intelligence is prompting fleets to address long held fleet lifecycle management practices. Fleets are increasingly moving from a purchase/bank financing model to a short-term, more flexible leasing solution that allows them to capture the benefits of the fuel economy improvements (and) reduce their maintenance—gaining efficiencies and competitive advantage.”



Who: Lori Harner, Sr. Global Product Marketing Manager, International Business Systems (IBS)

Key Topic: Cost impact of Food Safety Modernization Act (FSMA)

Takeaway: Using technology to be proactive, not reactive

Despite helping to assure consumers have access to healthy, sustainably-produced food, the U.S. Food Safety Modernization Act (FSMA) brings with it additional costs, especially for smaller producers and distributors in the supply chain, notes Harner. Leveraging technology, especially around business intelligence (BI) and reporting, is an important strategy for mitigating these costs.

Technology can also help companies become more proactive as opposed to reactive, she explains.

“IBS offers a powerful suite of applications that can synchronize how a company communicates and responds to challenges associated with the FSMA. For example, if there’s a disruption, the distributor can change suppliers and/or initiate an inventory substitution by using their software to ‘see’ what’s going on. Ultimately, this boosts and retains customer loyalty and satisfaction, which is what everyone is looking for.”

At the same time, “The food/bev industry can learn a lot from the work that’s already been done by the pharmaceutical industry,” says Harner. “Many of the processes and best practices with regards to tracking and tracing in the pharma industry can be leveraged by the food/bev industry.”



Who: Bob Camozzo, President, Logistix Solutions

Key Topic: Maximizing logistics cost cutting strategies

Takeaway: Designing more user-friendly software solutions

“We work with many companies, both start-ups as well as established enterprises, in diverse industries,” explains Camozzo. “A common theme we are seeing from all our customers in the area of logistics, and specifically transportation management systems (TMS) software, is that companies today are really pushing the boundaries and using aggressive cost cutting strategies like cross-docking, backhauls, direct supplier shipments bypassing distribution center networks, managing their own inbound freight and moving from less than truckload (LTL) to multi-stop truckload and other consolidated freight methods.”

He adds that, “While these types of strategies used to be managed as one-off, manual processes, each of these strategies pose a big challenge for supply chain optimization software with even bigger opportunities to generate significant savings, often beyond the frequently-touted 10 to 15 percent goals companies set as a minimum ROI. The reason these strategies are so challenging to solve is that they are often unique to each company, therefore it’s a challenge to design software algorithms that provide flexible solutions for a broad spectrum of users.”

This requires even greater customization or rapid-response and continuous improvement, which the new generation of on-demand software or Software-as-a-Service is capable of providing, says Camozzo.

“Yet, for all the complexity required to generate solutions that increase levels of profitability and enhance customer service, software solutions still need to hide this complexity and still be easy to use. Much more user-friendly interfaces, better graphics and faster computers all contribute to making these software solutions easier to use for problems that are increasingly more complex, more challenging and, ultimately, much more profitable.”



Who: Peter Yost, VP of Marketing, MercuryGate International

Key Topic: Fleet management and food safety

Takeaway: An optimal plan requires careful analysis

“The food and beverage supply chain has challenges unique to its industry for transportation management,” says Yost. “End-to-end, or tower-to-tower, visibility of the location, and in some cases, the current temperature of the products on board is critical to ensuring food safety and integrity. Knowing where the inventory is and the condition of the inventory when in route allows the food company’s logistics team to react quickly to emergencies, keep the customer updated and reduce their own safety stock inventory levels.”

In addition, “Food companies that operate a fleet for deliveries are challenged to optimize the use of their vehicles and the use of contract carriers. Determining the optimum plan for meeting local and long-distance deliveries with the company’s fleet and contract carriers requires careful analysis of delivery windows, equipment types, pooling locations, and fleet/driver availability. Minimizing the miles driven and driver hours behind the wheel required to deliver products to customers saves money and reduces the company’s carbon footprint.”



Who: Amy Childress, VP, Marketing & Business Development, PakSense

Key Topic: Automating the transfer of cold chain data

Takeaway: Cellular connectivity removes human intervention

“At PakSense we are seeing a new trend regarding monitoring and maintaining the cold chain,” notes Childress. “Historically, customers were happy with placing a temperature logging device on a perishable load and downloading it at the receiving end. However, we are experiencing a shift in this thinking and perhaps this is in response to impending FSMA legislation. Today, there is increased interest in automating the transfer of this cold chain data and making it available to users via cloud computing for anytime, anywhere analysis and on-demand report generation.”

The company has responded to this market shift by creating bolt-on and extensible systems that utilize cellular connectivity to transmit cold chain data, she says. “For example, our AutoSense inbound system utilizes PakSense wireless labels and our cellular M2M readers. Labels are placed on loads by suppliers and when they arrive at a distribution center, the truck door opens and the temperature data from the wireless label is automatically downloaded to the reader without any human intervention. Emails with temperature data are automatically sent to QA staff smartphones and the data also resides in a database on the cloud. We have similar cellular-based facility monitoring systems and real-time loggers that provide temperature and location data in real-time, and they can be bolted on to our AutoSense Inbound monitoring system. All of these systems are automated and use cellular connectivity to transmit data to a central repository where users can analyze data further.”



Who: Ron Gillies, VP Sales & Marketing Americas, Printronix

Key Topic: Food traceability and compliance

Takeaway: Meeting GS1 standards

From his perspective, Gillies says that, “Creating compliant labels and tracking that data through the supply chain can be a challenge for many food producers/growers and manufactures. Today’s label software providers are making that easier through simple-to-use, GS1-compliant templates, but many challenges remain.”

For example, “How do you confirm the label has printed correctly? How do you print in a wide range of temperatures and still produce readable barcodes? Additionally, how do you capture the barcode and associated product data throughout the supply chain?” These are the types of challenges that are resolved by selecting the right barcode printer that can operate at a variety of temperatures, asserts Gillies.

“Real-time label validation is also essential to assure GS1 and industry compliance regulations, which will ultimately save businesses time, money (fines) and simultaneously help collect valuable data from their operations. Solutions that can provide these time and money savings are available from Printronix, such as the T8000, which can operate as low as 23 degrees F (5 degrees Celsius); along with our Online Data Validation and PrintNet Enterprise solutions, which can validate barcodes for compliance and manage print production through an entire organization, respectively. All crucial elements to the success of an efficient supply chain process.”



Who: Valentina Cecchi, Marketing Coordinator, System Logistics

Key Topic: Food safety compliance

Takeaway: Using AS/RS to support tracking and tracing

“Factory-to-fork traceability has many challenges. Key among them is seamlessly tracking and tracing all ingredients input through the final product output while optimizing speed of response at most efficient operating costs. Companies and organizations looking to modernize their processes and facilities should focus on systems and solutions that can support compliance regulations associated with the Food Safety Modernization Act (FSMA), which will be strongly enforced in the near future,” says Cecchi. In addition, “The application of best practices is necessary to decrease response time to customer/regulatory body inquiry or recall, limiting potential product loss and financial liability. With the understanding that data tracking and traceability is critical for food manufacturers, System Logistics software suite Systore provides all of the necessary interface points between the end users’ ERP system and the distribution center’s automation system, helping to keep the system running at peak performance.”

She adds that, “Moreover, by storing finished goods and raw materials in automatic storage and retrieval systems (AS/RS), inventory control and traceability can be guaranteed due to System Logistics` Systore software, which controls the material flow and reports back to the host WMS or ERP. The Systore software can provide a real-time snapshot at any given time and has many more functions to support the material management within the warehouse (i.e., quarantine, cycle counting, expired product or materials, etc). Additionally, utilizing AS/RS warehousing significantly minimizes product damage while increasing accuracy.”


Who: Kerry Byrne, President, TQL

Key Topic: Mobile apps

Takeaway: Speak-and-search features finds loads fast

In May, freight brokerage firm Total Quality Logistics (TQL) released Carrier Dashboard 4.1, the first mobile application in the trucking industry with speak-and-search technology designed to save time for drivers on the road and help them find freight more easily.

“We are the first to market with a mobile application that allows drivers to search for loads with voice commands,” says Byrne. “Technology is a serious competitive advantage. The faster carriers can find our loads, the easier it is for us to satisfy our customers’ delivery requirements.”

The app uses a form of artificial intelligence that continuously improves performance, along with recognizing regional accents and filtering out most ambient noise. The more drivers use the app, the better it gets. And when it’s time for the driver to head home, he/she simply asks the app to “take me home” and it finds them a load heading back to their home town.


Who: John Clark,

Key Topic: Apps for consumers and B2B; AS/RS

Takeaway: New tools improve cold storage facility management

“With the advent of ‘There’s an app for that,’ controlling your cold storage AS/RS via a tablet device makes sense,” says Clark. “One of our customers, Americold, uses this at their Indianapolis facility. With it, users can monitor the system—and more accurately, monitor by exception. They don’t need to see what’s working, but more so see where issues might occur. This saves on travel time throughout the facility as adjustments can be made within the facility and also from a control area outside the cold storage area.” For example:

  • Software solutions (TMS, WMS etc.)
  • Warehouse (AS/RS, forklift technology etc.)

“In the meantime, AS/RS technology continues to make inroads into the cold storage arena,” says Clark. “AS/RS falls into Level 3 of the four-level automation scale. Level 1 includes WMS and RF or voice-directed picking. This offers an ROI of as fast as 6 to 12 months. Level 2 automation includes conveyor or pick modules and can have an ROI of one to two years. Level 3 includes AS/RS solutions, which also encompasses conveyor and sortation as well as warehouse control and WMS, and can offer an ROI of three to four years. This was unheard of five years ago. Finally, these levels of automation solutions are incremental, so users can ‘dip their toes’ in the waters of automation and build out as they need to.”


“Demand Sensing Gets Its Day In The Sun”

By Lara L. Sowinski

One of the biggest buzzwords in the software and technology segment today is “disruptive,” as in disruptive innovations that create new—and unexpected—markets and value networks. The advent of digital photography and the resulting “disruption” of the chemical photography market is one example. In the supply chain space, Terra Technology’s invention of demand sensing 13 years ago fundamentally disrupted traditional planning systems with “advanced pattern recognition algorithms to sort through masses of real-time data, understand what is predictive and create the best picture of demand for every item at every location,” explains Byrne. “It is the way you would imagine demand planning to work if it were invented today instead of 50 years ago.”

He explains it this way. “When you decide how much milk to buy for your family, do you check historical shopping lists to see how much milk you bought this week last year, or do you open the fridge to see how much is there?”

The powerful algorithms in demand sensing are just like peeking inside the fridge and simultaneously examining hundreds of other signals to find predictive patterns in and between data sets. According to Terra Technology’s 2014 Forecasting Benchmark Study, on average, food companies that use demand sensing cut their forecast error by 41 percent across all items and years (2009 through 2013). Other food-specific findings from the study include:

  • Overall, the proliferation of food items remains pretty stable over time, but started to rise in the last two years with 13 percent more items in 2013 compared to 2009. In the same period, shipments were up 1 percent. As a result, sales per item dropped 10 percent.
  • The number of cumulative items almost doubled during this 5-year period, but was masked by a high churn rate of 92 percent. On average, each food company has been introducing three new items and discontinuing two items every day, 365 days a year for the past five years.
  • Finally, the ‘long tail’ continues to be a challenge. The slowest moving 50 percent of items contributed 2 percent of sales, while the fastest-moving 10 percent of items generated 70 percent of sales. In other words, companies could cut their complexity in half while losing at most 2 percent of their volume, probably less.

Meanwhile, demand sensing is still working to acquire widespread acceptance in the market place. Byrne says the five years following the initial launch were slow, with only one major deal each year. That changed, however, when Procter & Gamble (P&G) chose to implement demand sensing.

“It was a real endorsement and put us on the map,” says Byrne. P&G deployed Terra Technology’s demand sensing to approximately 75 percent of its global business and has also selected multi-enterprise demand sensing, inventory optimization and transportation forecasting.

Nils Mueller, P&G’s intelligent daily forecasting initiative manager, explains that, “In the current economic climate—with ever increasing volatility in demand—it is crucial to extend the supply chain visibility as close to our customers as possible. Speed today is of the essence. Only those companies that can respond quickly to customer and consumer needs will stay ahead. Terra’s software provides P&G the ability to stay ahead of shifts in consumer demand.”

Kellogg, Kimberly-Clark, Unilever, Mondelez, Kraft and General Mills are others that have implemented Terra Technology’s solutions. And while Byrne admits that some still don’t view demand sensing as a “must have” solution, like WMS, for instance, there are some positive signs on the horizon.

“Ten years ago, I really thought that retailer data was going to transform the supply chain,” he says. “It’s still getting there. You had a bunch of people that rushed in to do things like on-shelf availability management, but then there was a lull. However, it’s started picking up a bit. The recession forced everyone to shift their focus and a lot of projects got canned. But in the last few months I’ve suddenly seen a lot of customers and prospects doing a 3- to 5-year play around supply chain systems. It’s very exciting.”

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