Consumer concerns and expectations are driving substantial change in the field of perishables. How will this demanding area of warehousing and logistics need to alter to keep up?
Consumer concerns about perishable products
The refrigerated warehousing world is being shaken up by consumer concerns about health and safety – from the 2 Sisters Food Group through to worries about cross contact between organic and non-organic foodstuffs, the UK’s consumers in particular are asking difficult questions about the supply chain for their foods and perishables.
Organics, local sourcing and hydrogenation
Perhaps one of the quietest of revolutions has been the amount of changes in food processing in the last five years. Organic food stuffs and local sourcing have both led to an increase in ‘last mile’ delivery demands, as educated customers seek local products to reduce food miles. The reduction or removal of partially hydrogenated oils (aka trans fats) has dramatically shortened the shelf life of many products as well as increasing the potential for spoilage and wastage in both ambient and standard warehouses.
Immediate delivery as standard
A major shock to the world of logistics and warehousing is the demand for almost immediate delivery – often called the ‘Amazon Effect’. In the USA both CostCo and Amazon have altered their terms and conditions for grocery deliveries as a result of unexpected consumer demand and a failure to predict customer requirements in foodstuff deliveries. In the UK, where food delivery has been much more driven by fast food apps such as Deliveroo, the impact has been less noticeable but one definite change has been the number of vehicles a refrigerated warehouse can expect to receive in a day – in urban centres this number has trebled in five years, leading to many down the line effects for logistic planners.
Temperature controlled warehousing is essential if you have a perishable product range, chilled storage and frozen storage is located throughout the UK, due to the rising demand.
Supply chain transparency
In Europe, particularly Holland, Germany and the UK, a major trend is the requirement to provide transparency in the fresh food supply chain. While this began with food companies themselves – the processors and manufacturers, it rapidly moved out into the entire supply chain and complicates logistic processes especially in the fresh food industry which is already fighting very tight margins.
Time and distance – the perishable delivery equation
Consumers increasingly demand locally sourced food. Supply chain partners seek to streamline the chain to get perishable goods to customers as rapidly as possible. Social media and changing eating habits create a greater focus on how we eat as well as what we eat, and the impact of consumption on source producers is increasingly factored into buying decisions. All these elements impact both warehousing and logistics.
Case Study One – Palm Oil
Palm oil, at one time seen as the wonder ingredient for both cosmetics and food products, has come under intense scrutiny for its habitat-denuding agriculture. Today’s consumer confronted with a simple question – palm oil or orang utan – chooses the orang utan, leading to processors having to retrofit food/toiletry production plants to work with other, less stable, oil bases. This has two substantial impacts for warehousing and logistics:
a – more ambient space required for more temperature sensitive products which are now palm-oil free.
b – more requirement to demonstrate source for products means that storage and delivery, previously areas that hardly featured in consumer consciousness, are required to be visible. More paperwork, more inspections, more consumer queries.
Case study 2 – the death of the ready meal
Nearly two generations of consumer leaned heavily on processed food to support their lifestyles. Working women were supposed to whip up a meal from two boxes and a can. Families entrusted healthy eating to cereal manufacturers, ready meal processors and the extended shelf life product. Immense food production facilities sent out goods to many distribution centres using bulk shipments for those highly processed foods made by large corporations that could predict consumer demand with precision. Today consumers have much more varied dietary models (kosher/halal/vegan/gluten-free etc) within the same household, seek local foods, have concerns about processing (often backed up by government regulation) and actively seek out new food items and ideas. As a result food production facilities are small, artisan food and local distribution are major selling points. Processors have to change their products seasonally or to stay on trend with customer demand.
Changing logistics to meet the challenge
- As increasing urbanisation leads to more deliveries, the distribution model will need to adjust to cope with massive ‘last mile’ demand. 3PL warehousing can be a major contributor to this area.
- Predictive analytics will increasingly be used to give producers better forecasting for products – cloud computing is proving to be a driver of better decision-making at the beginning of the perishable supply chain.
- Real time information will drive repeat business – consumers increasingly want to pick their delivery times and nowhere is this more obvious than with perishable foods. Supply chain transparency will be vital to order fulfilment.
- Perishables are personal – whether food, medicines, flowers or cosmetics, perishables tend to be highly personal. Successful companies recognise this and add a personal touch to delivery systems to give the customer a sense of ‘bespoke service’, as Lush Cosmetics does with it’s ‘who packed your goodies’ box label. Many Paleo/‘Real’ food producers are already listing the origin of product down to a single farm.
- Automation will be used to cut down supply chain time – from WMS to robot pickers, the biggest ambient warehouses are already shortening the time from order to dispatch by up to 50%. Sharing warehousing is one way that perishables manufacturers can benefit from better technology without having to invest capital.
- 3PL will feature heavily as it allows more flexible transportation and gives organisations more opportunity to plan routes dynamically, often using previously unorthodox mechanisms such as cloud based delivery apps.
We specialise in sourcing professional warehouse space for rent and warehouse services across the UK. We work closely with reliable logistics companies, to improve businesses efficiency. The cost of temperature controlled storage such as chilled and frozen is significantly more expensive than ambient storage facilities, due to the costs involved in running a cold storage warehouse. If you require warehouse storage for your businesses perishable products, we can put you in touch with experienced cold storage 3PL providers, simply contact us today.