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Grocery retailers are taking on a long list of logistical challenges to optimize their cold chain ops and deliver superior customer experiences when all is said and done.

Retail is detail, according to a well-worn expression. The grocery cold chain takes that level of detail and puts it on steroids.

Grocers are heading into 2024 with a long list of logistical challenges, knowing full well that their priorities may need to be reordered as they anticipate or react to changing events on the ground.

‘When interest rates were low and money was cheap, excess inventory was not much of an issue. But now, with interest rates rising, coupled with demand reducing, many are looking at how to reduce costs in their supply chains.’

An abbreviated list of concerns includes changing consumer behaviors, labor, warehouse optimization, digitization of the supply chain, SKU rationalization, capital expenditures, fuel, sustainability, governmental regulations and geopolitical developments that hold the potential to complicate the safe movement of frozen and refrigerated foods from the first mile to the last.

Adam Thocher

THE FUTURE IS UNCLEAR

“Uncertainty is probably going to be the biggest challenge in 2024,” says Adam Thocher, senior vp of global programs & insights of the Global Cold Chain Alliance (GCCA) and executive director of the Global Cold Chain Foundation (GCCF), Arlington, Va. “While we see slowing inflationary pressures, consumers aren’t necessarily going to have a rosy outlook. This means, predicting the products that will be in demand may be a challenge up and down the cold chain.”

Retailers, says Thocher, understand that a laser focus on supply chain operations is imperative.

“We expect continued investments in areas that will provide more efficient service and operations for the cold chain. Technology inside the warehouses that con- tributes to moving products to customers faster and enhancements in warehouse management systems (WMS) that can save time and interaction,” Thocher says.

John Gaudet

Many current challenges facing retailers directly result from their response to maintaining a supply of goods during the roughest days of the novel coronavirus pandemic.

“Due to the unpredictability of the supply chain in the last few years, many manufacturers shifted from a just-in- time to a just-in-case model, which has caused inventories to swell. The result has been a very tight temperature-con- trolled capacity environment,” says John Gaudet, CTB, vp of business development for RLS Logistics, Glassboro, N.J. “Now that things have cooled off and demand has subsided, they are starting to feel the sting on their inventory carrying costs. When interest rates were low and money was cheap, excess inventory was not much of an issue. But now, with interest rates rising, coupled with demand reducing, many are looking at how to reduce costs in their supply chains.”

ROOM TO GROW

Dana Krug

Space constraints have become a significant issue for many grocers as demand for frozen and refrigerated foods has risen. Dana Krug, svp of cold chain fulfillment at Phononic, headquartered in Durham, N.C., said the issue isn’t confined to central warehouses. Store-level delivery and pickup operations are also experiencing growing pains.

Krug says it is taking longer for stores to take delivery of cold storage units they’ve ordered. This has created a situation where there are not enough refrigerators and freezers to hold store inventory in line with demand, particularly during peak sales periods such as the winter holidays.

“They’re just not completely prepared for it,” says Krug. “They’ve done a decent job for the year, making sure they can take care of chilled and frozen in the back room where they’re staging for the curbside and delivery. But with these peaks, they’re actually using the deli and bakery and running orders back and forth through the store. It’s very inefficient.”

‘They’re (grocers) actually using the deli and bakery and running orders back and forth through the store. It’s very inefficient.’

Stores handling 40 or 50 orders daily may not be adversely affected by cold space constraints, but those doing “upwards of 300” can be quickly over- whelmed. Krug says more retailers are looking to expand vertically in their micro-fulfillment operations. Many of these are turning to thermal electrics and portable cooling to expand capacity with the flexibility to respond to market conditions.

Stephen Midgley

AI PROVIDES THE BRAINS

Labor-associated issues continue to challenge retailers seeking to improve productivity and contain costs simultaneously. The answer to achieving these dual goals for many has been the expanded use of machine learning and artificial intelligence (AI) technology to make critical business decisions and the utilization of robotics and other forms of automation to speed distribution and fulfillment.

Stephen Midgley, vp, marketing, at Toronto-based Invafresh, sees AI as a “transformative force” with “the power to uncover hidden patterns and correlations within data.”

“Grocery retailers operate in an environment where data flows continuously from diverse sources, encompassing sales transactions, customer behaviors, supply chain movements and more. Because AI thrives on data-driven insights, the demand for processing and analyzing data will be critical,” says Midgley. “The opportunity for grocery retailers revolves around developing robust data-handling infrastructures capable of ingesting, processing, and deriving actionable insights to increasing margins, reducing food waste, and delivering an exceptional shopping experience for customers.”

West Hutchison

West Hutchison, president and CEO of Vertical Cold Storage in Dakota Dunes, S.D., says sharing information with cold chain partners is vital to optimizing performance. “Having quick access to information through common technology platforms helps lower risk throughout the supply chain. In our case it makes it easier to have suppliers actively man- age their inventory and control where product needs to be at any given time,” says Hutchison.

The combination of AI and robotics, according to Hutchison, is helping warehouse operators “identify unsafe behaviors in the workplace, leading to significant reductions in accidents. Internally, we’ve seen unsafe behavior reduced substantially as a result of this technology. That makes our facilities and the entire supply chain much safer for employees and others. We’re seeing other uses of AI throughout the operation, including energy efficiency and enhancements, sustainability and employee productivity.”

3PLs ON THE RISE

Chris Copenhaver

Chris Copenhaver, a senior director and national co-lead of Chica- go-based Cushman & Wakefield’s food & beverage advisory group, expects third-party logistics providers to become a more prominent business decisions and the utilization of robotics and other forms of cold chain player. “The 3PLs have been investing all this capital in the infrastructure. It’s easier for retailers to take that space down and not worry about the training, labor and all the services provided by the 3PLs.”

STATE-BY-STATE REGS ARE NO WAY TO RUN A COLD CHAIN BUSINESS

Alison Bodor

Alison Bodor, president and CEO of the American Frozen Food Institute, McLean, Va., sees a tightened labor market and a lack of cold storage space as factors that may adversely affect retailers. She then adds one item to her list.

“Processors, ingredient suppliers and related companies continue to grapple with regulatory burdens at the federal and state levels. Working with the U.S. Food & Drug Administration (FDA) has been challenging and the American Frozen Food Institute (AFFI) was instrumental in pushing the agency to seek new leadership for the foods program and a structure that will allow the agency to make quicker, risk-based food safety decisions and increase transparency and cooperation with stakeholders. Frozen food companies need science-based, federal regulation rather than policies legislated at the state level,” says Bodor.