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Even in the best of times, cold chain 3PL work is high-stakes and compliance-intensive. What are some of the biggest regulatory issues at hand for cold chain amidst COVID-19? Elemica’s Cindi Hane gives us an overview.
In the old normal, foundational cold chain compliance included things like the U.S. Food & Drug Administration (FDA) and its various regulations for cold chain management. These guidelines give minimum requirements for storage and transportation of temperature-sensitive products. Maintaining temperature is, of course, the primary concern. Also key is the 2011 FDA Food Safety Modernization Act (FSMA), enacted to help prevent foodborne illnesses. Taken together, these compliance requirements have been a solid framework for cold chain providers.
Taking into consideration all of the compliance documentation required, the last 10 years or so has seen a trend of extensive digitization, integration and automation of back-end systems to help document measures taken at each step to remain in compliance. When, for example, outbreaks of Listeria affected a number of enterprises in 2019, many cold chain customers and 3PL providers were able to put their hands on digital records quickly and share that data to uncover potential oversights in real time.
Other trends in recent years have included more strategic use of analytics, automation through robotic technology for warehouse optimization, cold-enabled fulfillment hubs closer to consumers and commitments on the part of many enterprises to lower carbon emissions both now and in the future.
This is actually a really exciting time for cold chain compliance technology. In the now, a few high-impact technologies impacting 3PL cold chain are the Internet of Things (IoT), blockchain, specialized digital platforms, advanced analytics and the low cost of cloud computing.
Connecting everyday vehicles, devices, spaces, pallets, boxes and equipment with IoT sensors is making compliance management and monitoring easier—and more cost effective. Detailed temperature, humidity, location and other data is now available to all stakeholders, often in real-time. And pairing IoT tools with GPS and ELD data streams offer even more insight.
Technologies such as blockchain deliver unprecedented accountability down to the individual when managing and monitoring compliance. Custom digital platforms are connecting unrelated companies to help protect and document cold chain details and dynamics. Advanced analytics is helping cold chain 3PL providers self-identify and eliminate risk exposure. And inexpensive cloud computing means compliance data from all of this technology can be stored safely and redundantly offsite.
In the future? Advances in materials science will likely redefine thermal management standards. Renewable energy and carbon mandates will impact transportation costs. Wearables and augmented reality will likely give cold chain providers new tools in identifying off-temperature inventory or non-compliant conditions. And, of course, autonomous vehicles have the potential to take transportation regulations in a whole new direction.
Properly documented data is the cornerstone of supply chain compliance. But cold chain is just like any other 3PL operation and risk comes from a variety of different sources. There are 12 common categories of compliance oversight in cold chain 3PL environments. These include:
None of these things alone sound very complex or intimidating, but taken together and managed properly they keep even the best cold chain provider or customer on their toes.
It’s not so much that regulations have changed. The issue is more of a struggle to maintain existing food safety and regulatory compliance amidst the fight to also meet crisis-level fulfillments worldwide. The FDA offers additional guidance on its website on how to stay compliant with tips on:
There have been some temporary rules that give more flexibility to producers of shell eggs, as well as short-term flexibility in packaging and labeling, preventative controls and other matters. Check FDA.gov and click on COVID-19 and “Emergency Use Authorizations and Guidelines” for details.
As painful as this process has been, there will be a number of positive trends moving forward for cold chain managers and stakeholders. For one thing, enterprises will likely be more aggressive in both integrating and de-risking their supply chains. That will mean an insistence on more visibility, redundancy, forecasting and source diversity—especially for sources closer to the consumer when possible.
According to a recent study on COVID-19 Cold Chain Business Impact by Global Cold Chain Alliance members—which include cold chain warehouses, suppliers, transporters, etc.—costs increased for 80 percent of respondents. These increases ranged between 1 and 5 percent, and it’s likely at least some cost increase will be sustained in the near future, or possibly even increase further. About 75 percent of survey respondents said they expect growth in e-commerce and direct-to-consumer delivery of chilled or frozen products. Around 53 percent expect work-from-home to increase, and likely many of the no-contact precautions will also stick in the short term.
Expect a heavier regulatory environment in coming years, and more intense corporate pressure for supply chain infrastructure investments to prove out their ROI quickly. This is a tough business right now. A period of consolidation among cold chain 3PL providers is likely. But these trends will mean smarter, more integrated supply chains that pair proven technologies with leaner processes in a way that will benefit the industry over the long haul.
