The Reputational Risk of Poor Cold Chain Visibility

In India, the cold chain logistics sector is getting ready for the growing number of large multinational corporations providing their global brand products in India. Several new state-of-the art cold storage warehouses and logistics operations are emerging, to help these international food and pharmaceutical companies to maintain product quality, and ultimately, their global reputation.

The reputational risk is what renowned Indian entrepreneur Kiran Mazumdar Shaw, chairman and managing director of Biocon, referred to in an article in the Indian daily business newspaper, the Economic Times recently. She referred to the damage to the reputation of a major Indian drugs manufacturer due to questions about the product quality.

Speaking in the newspaper, she said, "Companies shouldn’t compromise on quality, compliance and IP." She also added, "We also need to see better harmonisation of the Indian regulatory system with those in the US and Europe".

This indeed was a debate at the recent Cold Chain India conference in Mumbai. Attendees were conscious of the fact that companies needed better guarantees of product compliance, and that good distribution practice (GDP) needed to be considered more widely in India.

It was also clear that only the large companies that could control their own cold chain were able to guarantee the temperature of a product through the entire product lifecycle. Several instances were cited of companies that relied on multiple transport companies or third party logistics providers, and were unable to assure that product temperature was maintained within required temperature ranges. According to Indian farmers quoted in an article in The Hindu newspaper, in the food sector, 30 percent of food wastage is due to issues related to transportation, and this includes issues related to cold storage.

At the conference, several speakers spoke about the need for technology to support companies with ensuring compliance. By ensuring compliance, they could ensure product quality and safety.

In a country like India, where social media and mobile connectivity is widespread, it only takes one incident where a product doesn’t meet consumer expectations, for the news to spread rapidly and damage the reputation of a company, product or brand. This is what Kiram Mazumdar Shaw was referring to in her article – the reputational risk for a company is high if product quality is compromised.

Evidence and confidence needed

In order to enable this assurance of product quality and safety, there was a healthy debate about the need for both evidence of product integrity and confidence in product integrity/quality (a summary of some of this debate can be found in this article in FnBnews).

This requires technology solutions that could provide real-time end-to-end visibility in the entire cold chain. Several speakers referred to the need for such solutions, and there were references to Dyzle’s real-time monitoring and analytics solution, that both provided the evidence of temperature (or other parameter) integrity, as well as providing real-time alerts for corrective action if a digression occurred.

In summary, India’s product and brand owners recognize the need to enhance all aspects of their cold chain so that product safety and compliance can be assured. The major multinationals and major retailers are already aware of this (major local brand Amul was quoted as a good example of having a sophisticated cold chain).

While cultural attitudes of the labour workforce in the industry need to be addressed (eg. with truck drivers understanding of the importance of maintaining power for the trucks they are driving), there is work being done by third party logistics companies and warehouses to install state-of-the-art cold chain storage and logistics. Once this infrastructure is available and cultural issues are addressed, India does have the chance of addressing a significant portion of the wastage that happens in the cold chain, but more importantly, to ensure that company and brand reputations are maintained more consistently.

First published on http://dyzle.wordpress.com/2013/06/03/the-reputational-risk-of-poor-cold-chain-visibility/

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