Ambient Profiles - Deciphering the Supply Chain Elements (Part 1)

Weather has fascinated humans for thousands of years because it has a positive or negative affect in daily life (e.g. food supply in gathering, hunting, fishing, agriculture, traveling, etc.). Throughout history men have created explanations for these climatic events that were not only poorly forecasted but also misunderstood. The ancient Greeks for example,attributed these climatic changes to specific gods and their temperamental natures to explain everyday weather and gave meaning to the world around them. Greek mythology includes many fascinating and colorful stories of more than 40 gods, goddesses, nymphs, monsters and heroes related to weather and climate. For example, Aeolus was the god and ruler of the winds. All occurrences of favorable or unfavorable weather were interpreted as a sign of divine intervention.

Aeolus, the Wind God (Source : http://www.flickr.com/photos/buecherwurm/486825832/in/photostream/)

Cold Chain Supply also demands understanding and managing the ambient temperature that a shipping container is exposed to during its transport (i.e. ambient profile) because these ambient temperatures greatly affect the cold chain supply performance. Ambient profiles can be not only as fascinating but also as intricate as Greek Mythology. Fortunately, Cold Chain Supply professionals do not need the Greek weather deities and their divine interventions to manage the ambient profiles but a set of tools and practices to manage the temperature and other logistics factors during transportation. Keep in mind (and this is an important concept) that the ambient temperature may or may not be the same as the actual weather temperature because a container can be stored inside a warehouse with a temperature different from the actual outdoor temperature .  So let’s start with two frequently asked questions many cold chain supply professionals deal with, “What is an ambient profile?” and “Why are ambient profiles important?”

An ambient profile refers to the ambient temperature that a shipping container is exposed to during its transportation. It is common to find three elements in an ambient profile; the temperature, the transit date and time and the logistical step associated to this temperature/date-time point. Note that placing an external temperature logger to collect temperature data will provide the temperature the loggers were exposed to but may not guarantee that the shipping container is always exposed to the same temperatures. Temperature variations in storage areas (refrigerated or non-refrigerated warehouses), carrier fleets (aircraft, trucks, etc) and logistics handling procedures could lead to differences in ambient temperatures. The geographical location and season in which the transport is performed may impact the temperature variations as well. A well managed supply chain will be less influenced by weather variations due to location and seasons because the shipping container is moving through controlled and semi-controlled conditions of storage, carrier fleet and logistics handling instructions.

Defining realistic ambient profiles is critical to the performance of the cold chain supply for many reasons:

1)   It supports the optimal packaging design of the shipping containers. An incorrect profile drives over or under designed shipping containers. For example, a profile with unrealistic extreme cold temperatures will require more insulation and less frozen gel packs to reduce the risk of product loss due to freezing. On the other hand, a profile with unrealistic mild cold temperatures will demand less insulation and more refrigerated gel packs but will introduce a higher risk for product freezing.

2)   It helps the selection of the right distribution and logistics partner. Long transit times as well as extreme temperatures recorded by the external temperature monitors may be an indication not only of limited supply chain integration but also poor collaboration among the distribution and logistics partners. This lack of integration and collaboration may increase risks such as product loss or delays.

3)   It helps to maintain the identity, strength, quality, and purity of the product from beginning to end. Unrealistic profiles create over and under designed containers that expose the product to unnecessary hot and cold temperatures. Creating a profile requires not only understanding of the storage and transportation steps but also proper management of the distribution and logistics partners to provide realistic expected temperatures for the shipping container design and to align the distribution and logistics handling procedures that protect the product.

4)   It ensures patient safety by maintaining the product temperature within the manufacturer’s recommended allowable temperature ranges for storage and distribution.

5)   It increases customer satisfaction by minimizing product loss or temperature deviations that require product quarantine and investigation. A product loss event may require reverse logistics to bring the product back to the manufacturing or distribution location, to send the product to a laboratory for further testing or to ship it to a controlled site for incineration (i.e. destruction). An investigation will delay the product release upon arrival and may cause a stock out situation. Finally, product losses activates lengthy and expensive insurance claims processes and delays also trigger severe financial penalties for not meeting the delivery dates stated in the contract (i.e. supply chain agreements).

6)   It reduces the safety stock and pipeline inventory by reducing transit time and temperature variability. Larger transit time and temperature variability increase the risk and this increased risk requires more inventory overall.

7)   It reduces material (i.e. shipping container) and freight costs by removing inefficiencies in a container design (under or over design). The unrealistic profiles usually drive over-design that translate in bigger and heavier containers because more insulating material and gelpacks are added. Bigger and heavier containers may also cause a capacity issue in the carrier fleet.

8)   Increases compliance by ensuring the container is qualified for the worst case scenario so the Quality team has less temperature deviations to process and the Regulatory team has a modular qualification document that can speed up the submission to new markets.

9)   It calibrates and validates the dynamic environment found in the logistics by ensuring regular confirmation that the distribution and logistics handling instructions are being followed by the logistics partners.

Selecting or building ambient profiles for the shipping container qualification is a difficult and intense task because an ambient profile requires a deep understanding of the distribution process and the logistics involved. In my next posts I will describe how to build or select ambient profiles.

Until then...

Carlos

Cold Chain Industry Forecast for 2,013

This year is almost over and 2012 went by so quick but brought so many learning experiences for me. I was fortunate to attend and speak in few cold chain conferences (US, Brazil and China) where I not only learned more about the cold chain supply challenges in emerging markets but also shared and validated my ideas with many people working with emerging markets. I’d like to share with you some of the key points I gathered this year and my predictions for cold chain in 2013.

The growth in emerging markets has been faster than the logistics expansion efforts to support this growth, so the logistics industry has seen many changes. One of those changes is the available carriers to support the emerging markets. The long-haul routes, historically dominated by American and European airlines, are now a competition ground where Latin American, Asian and Middle East carriers that have shown a deeper knowledge of their regional Markets and have not only gained market share by expanding the network to include hubs in the European and US cities but also responded to the cold chain needs by investing in their fleet, facilities and trained personnel. Carriers are also increasing the amount of narrow-body aircrafts in their fleets, especially in  regional markets to take advantage of the more fuel-efficient smaller aircrafts and the flexibility to respond to changes (i.e. expansion and contraction) in passenger demand. All these changes in the carriers’ network has increased the level of complexity in managing cold chain logistics for emerging markets because the logistics process by nature includes a high number of participants and interfaces.

The  freight forwarders and logistics providers (3PL) have also stepped up to the challenges and understand that they must orchestrate the supply chain complexity and its participants to obtain a fast, efficient and resilient supply chain. They have understood that they are not just an extension of the airlines cargo sales. The traditional model where freight forwarders sold cargo space at standard rates on a commission basis is no longer applicable, and the freight forwarders must create value to their customers by actively optimizing costs and reducing risks. This integration of the freight forwarders has increased information sharing among carriers, containers suppliers, and other participants.

Regulations, standards and other industry good practices on temperature-controlled distribution as well as supply chain integrity (security) have grown exponentially, which confirms the demand expansion in emerging markets and the need to communicate among the logistics participants. Regulatory bodies in emerging markets have actively created or updated the regulations which may not have a global alignment yet. Many industry organizations have also created standards and pushed them to their members with limited success in the adoption of these new standards. Due to the increase in the need for security, the customs clearance process in many countries has become longer and the few countries with shorter clearance time are today the exception.

A increased demand for information sharing (temperature records, tracking, etc) and linking temperature records to each logistics step to help the supply chain participants monitor the process have resonated with the suppliers of these tracking devices and they have responded with cloud-based systems, but the adoption has been slow.

In 2013, I expect to see the following:

1) More collaboration among freight forwarders, carriers and container suppliers to optimize cargo (cube and weight) by designing containers with the right balance weight and volume for the vessel selected (aircraft, truck, etc.). This effort will be supported by the stability data for distribution that pharma and biotech companies are creating. They are aware that missing or delayed stability data for distribution will create over-designed containers and transportation. I foresee a bigger need for a narrow-body shipping containers that will support distribution in regional markets.

2) The increased integration among the participants and optimization may decrease the revenue for some participants (e.g. Freight Forwarders, carriers, etc), so these participants must actively work to offset the revenue decrease by creating services that add value to the supply chain. One example where value can be added is ensuring the best volume and weight balance in the vessel by aggregating demand of light and dense products. Another example will be providing storage and conditioning for containers to free up space and resources at the pharma companies.

3) An alignment of the current regulations and industry standards. I also expect more information sharing so each supply chain participant understands how all the parts fit together. Training and logistics audits will become more popular to ensure these standards are being used correctly. I see an opportunity for freight forwarders to take the lead in providing the training and audit services.

4) More cloud-based systems to integrate freight forwarder, temperature and manufacturer data and make it available not only to the consignee, but also the carriers, health authorities and customs. The need for cloud-based platform to share information is valid for global and domestic distribution because information flow will help optimize the supply chain cost and risks and will benefit the participants by highlighting the processes that can be improved to create value.

I am looking forward to the learning and networking opportunities that the next year will bring. Please feel free to reach out to me with your cold chain questions and predictions for 2013.

Until my next article.

Carlos Castro