Tag: cold food supply chain

OM Podcast #28: Thanksgiving in the Cold Food Supply Chain

Happy Thanksgiving!  In our latest podcast, Barry Render interviews Cindy Parker, Director of Operations at Americold Logistics LLC, which offers innovative supply chain solutions and cold storage.  Cindy and Barry discuss the importance of the cold food supply chain, particularly around important events like Thanksgiving.

 

Transcript

A Word document of this podcast will download by clicking the word Transcript above.

 

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OM in the News: Why Cold Food Storage is Hot

Fresh lobster from Maine. Bags of frozen peas. Racks of ribs, shrink-wrapped in plastic. Americans have come to expect that with a click of a button, almost any item, perishable or not, can be delivered to their homes the next day. The companies that makes this all possible are logistics operators, such as Linage and Americold, that most of us have never heard of but all of us depend on daily.

The cold-storage industry dates back to the 1800s, when a booming business selling blocks of ice enabled developers to build warehouses that could preserve food and extend its shelf life, writes The Wall Street Journal (July 27-28, 2024).

Technological breakthroughs in the early 1900s led to mechanical cooling systems that created more reliable, long-lasting cold storage. The invention of refrigerated shipping containers, trucks and railcars lengthened the food supply chain, enabling goods to travel around the world under safe conditions.

Frozen, concentrated orange juice hit U.S. grocery shelves after World War II and pushed more Americans to buy home refrigerators and freezers. What came swiftly after it was the fish stick and the TV dinner. And because then everyone had a freezer, the food companies start making stuff to put in it.

Sprawling cold-storage warehouses were built farther outside cities as Americans moved to the suburbs and began shopping at supermarkets weekly, rather than picking up fresh food daily. “The way our modern food system works is based on refrigeration,” said an industry expert. Cold storage is “the reason you can have tomatoes in the winter.”

The specialty warehouses also enabled the growth of the pharmaceutical industry in the U.S. The importance of cold storage was highlighted during the effort to distribute Covid-19 vaccines as drugmakers rushed to get shots that required storage at ultracold temperatures into the world.

The pandemic also changed the way Americans eat. Consumers over the past four years have switched to eating more meals at home as they cope with rising food costs. Shoppers are ordering ready-made meal kits and eating more frozen food. Frozen-food sales rose to $74 billion in 2023, up 33% above 2019. More than 18 million square feet of new temperature-controlled space has been built across the U.S. since 2019.

Our Podcast #14 “Feeding the World Through Complex Supply Chains” also deals with this topic.

Classroom discussion questions:

  1. How does this industry differ from traditional supply chains?
  2. What other reasons exist for the growth in demand for frozen foods?

OM in the News: Unilever’s Supply Chain Bounces Ice Cream

A pint of Ben & Jerry’s Churray for Churros flavor. Unilever recently spun off its ice cream business.

We recently posted a podcast dealing with cold foods, which are a unique kind of supply chain. Now, a major firm, Unilever, has decided that such a supply chain is more expensive and complex than it wants to carry.

Unilever has one of the biggest ice cream portfolios in the business, with popular brands including Ben & Jerry’s and Magnum. But the company’s leadership has decided to emphasize shelf-stable operations, which spans from lotions to mayonnaise. From manufacturing to transit and point of sale, Unilever’s ice cream business differs from the company’s other operating arms. Differences include end-to-end temperature control, equipment, storage facilities and modes of transportation. All those costs add up.

“If you get rid of the ice cream business, you’ve got this portfolio that, basically, you can use any warehouse, you can ship it from any truck, you can use the same processes,” said a Syracuse U. supply chain professor. “It makes life a lot easier from a control standpoint. A cold-storage warehouse alone can be 3-4 times more expensive than a regular one because it has to be insulated and a special ammonia is needed for refrigeration.”

Further, Unilever can’t have its frozen products sit on the same truck or container as shelf-stable products, writes Supply Chain Dive (April 19, 2024). Frozen food requires freezer trucks or freezer rail cars. The result is many moving parts. It means having too many different vendors that it’s working with to maintain its overall goods  Ice cream becoming a standalone business will help optimize Unilever’s manufacturing, logistics and distribution network. The standalone ice cream unit is still an attractive business and Unilever will likely end up selling it to the highest bidder.

Classroom discussion questions:

  1. How does the cold food supply chain differ from normal supply chains and why is it so complex?
  2. Review the podcast linked above. What is its main point?