The Invisible Produce Department

Profit Killer 
 

By Mike Nicometo, an Expert of FreshXperts

Everyone knows and deals with shrink.  It is visible everywhere.  So people generally consider shrink as quite 'Visible'.  What is often times "Invisible" is the cause of shrink, as the "actual cause" of accumulated shrink occurs in multiple places throughout the supply chain.  Shrink itself, only becomes "Visible" later, where we all have to scratch our heads, and wonder, 'Who Dun It?'

 Retailer produce operations expert Ron Pelger (another FreshXpert), meticulously explains how produce shrink occurs throughout retail operations, and what should be done to reduce shrink.  Yet it's perplex-ing to know that the store produce manager ends up taking the hit for shrink caused by others in the supply chain, long before product reaches the store. QC at receiving can't see 'Invisible' shelf life loss!

Recently, a world class tomato shipper told me a major pain point is receiving a claim from a retailer,  along with backup pictures & inspection reports...because their own QC people inspected the product before shipping it, and it was fine - plus the temperature monitor for the transport to the retailer was good too.  These loads end up rejected because of 'Invisible' loss of shelf life.   It is a common and costly problem, regardless of the commodity, the shipper, or the receiver. 

Temperature and time from harvest to cool are common variables NOT monitored on an individual pallet basis, yet they affect EACH pallet differently.  We process, palletize & ship product primarily on a FIFO basis, mixing variable shelf life product together, causing pain later in the supply chain.  The reality is that our QC/QA people don't have special X-Ray vision that lets them see all INVISIBLE shelf life loss introduced earlier in the supply chain.  Consider the below example of a controlled study of the impact of pre-cooling delays on full loads of strawberries, shipped from the west coast to the east coast.

  Keeping in mind that the only significant difference between each truck load was pre-cooling... 

• Every load passed QC at the retailer DC, because the shelf life loss was INVISIBLE
• How could the store produce manager know if the loss was due to store operations or not?
• And the above does not reveal what the consumer experienced with product actually sold

Without creating 'at least' pallet level temperature visibility throughout the supply chain, we can not know where the true cause of shrink occurred, so we can't fix and avoid it in the future.  We all do our best to reduce shrink, but when it happens, when the product deteriorates right in front of our eyes, we can't say exactly why.  This affects more than 'just profit' on any given load.  It affects quality, customer satisfaction, brand image, brand demand and food safety.

Invisible shelf life loss can be introduced at any of the custody segments within a supply chain.  The most likely segments may be; Cut to Cool Delay - US Customs Inspection - Cross Dock/Transfer - Store Display & Display Rotation...  Consider the custody segments for a common Mexico to US cool supply chain in the following diagram:

Amazingly, today's focus on temperature monitors is mainly the simple trucking segments!  Insurance...

If we can "affordably" monitor EVERY PALLET from harvest onward, with an "automated" data collection process, that would not slow operations down... we can enjoy significant advantages:

• Identify true source of shrink... fix the true problems... assign shrink cost to the right entity...
• Avoid shipping product with short legs on long shipments, just to dump it later!
• Improve food safety & quality ... Protect brand ...  Increase consumer satisfaction/demand

An example of emerging technologies providing promise in managing "Invisible Shrink Cause" is a Mexico to US project, I am currently involved with, that involves reusable RF temperature tags from Intelleflex (www.intelleflex.com).  We will monitor harvest to pack house time & temperature for every pallet received, grouping product by shelf life when palletizing, prior to shipment to the US.  We'll also identify recurring problems, so they can be fixed.  Brand owner wholesale shrink reduction may exceed $500k per year, with less than a $100k investment...where the retailer & consumer also benefit!

Taking things one step further, we can monitor the temperature of EVERY PALLET from pre-cool, through all brand owner custody points (up to the point it is shipped to the retailer or food service DC), with a monitor cost of around $32 per load, versus the current $29 per load.

•  Pallet Level Brand Owner Temperature & Inventory Movement Visibility & Traceability

Software companies are developing software to leverage the new temperature and inventory visibility data delivered by these new technologies.  Franwell Inc. (www.franwell.com) is creating software to empower retailers to manage their supply chain, right up to the point of sale in the store.  ProWare Services LLC (www.prowareservices.com) is enhancing their AgWare ERP Package to provide First Expiring First Out - Shelf Life Inventory Management functionality, as well as a stand-alone FEFO tool.

Looking deeper into the supply chain, it'll be interesting to see if companies like Innovative Fresh B.V. (www.innovativefresh.com), who work with retailer's customers to "measure the consumer experience" with products like their Taste Radar, can validate improved quality, consumer satisfaction and demand.

Look for future newsletters highlighting ongoing success with these new solutions.