Thanks to the changing consumption patterns, the frozen food industry has grown by leaps and bounds in recent years. Consumers today prefer frozen food for its convenience, value, and preservation of nutrition. With the easy availability of ready meals and home delivery services, a rising interest in different diets, and the aftereffects of the pandemic, the demand for frozen food, and hence cold storage, continues to increase.
With these rapid changes in the market, those producers and retailers who adapt to the market disruption by changing the way they operate will not only survive but prosper in this new environment. Let’s look at some of the key challenges faced by the cold store operators.
- Food spoilage- Regulating temperatures and humidity to maintain and sustain the lifecycle of the products
- Cold storage layouts- Optimizing the volumetric space of warehouses and designing an efficient storage layout that limits worker exposure to hazardous sub-zero environment
- Multiple cold temperature zones- Another related challenge is that cold storage facilities must have checks and balances in place to ensure that each refrigerated zone remains within its designated temperature range.
- Regulations and safety requirements- Strict government regulations and safety requirements need specific food safety and handling procedures to be followed, and that includes thorough inspections, hygiene checks and rigid temperature controls.
- Product traceability- Traceability offers the regulators, and customers, the ability to ensure that food handling is performed correctly and that the risk of waste and contamination is reduced to its minimum. Further, recalled products also need tight traceability.
- Limited labor availability-. Cold store operators face high personnel turnover in these types of facilities due to the harsh sub-zero working environment.
- Sustainability- The biggest issue facing sustainability is the high-power consumption of fossil fuels necessary to power the cold chain’s refrigeration systems. It is also a major challenge to prevent unwanted energy wastage through cold air leakage.
The rising demand for cold storage with fast and efficient order fulfilment that delivers exemplary customer experience, necessitates a move from traditional warehouses to automated ones. The other benefits of automated warehouses are, minimise operational cost, maximise space utilization, operational efficiency, and solve labour supply and safety issues.
Conventional Warehousing and its challenges
A Conventional Warehouse primarily uses manual handling systems for its operations, with a majority of tasks performed by workers, sometimes with minimal automation used. Conventional warehouses are time and labour intensive, and not cost efficient. Some typical challenges include:
- Infrastructure - Creating efficient high density storage layouts is a constant question for coldstore operators. There exists the necessity to minimize each cold area footprint in order to reduce the overall costs of constant cooling.
- Space utilisation - Typically, conventional storage solutions demand a high square footage per load - the storage space is underutilized, as manual handling requires more free space for maneuvering of the goods.
- Labour issues - Manual cold storage facilities require more manual work for longer periods of time in sub-zero temperatures, leading to health risks for labour involved. Harsh working environment in a sub-zero temperature makes it very difficult for cold store companies to balance between achieving the required work efficiency and ensuring that the workers are not subjected to prolonged exposure in the cold working environment, making it difficult to retain workers.
- High energy cost - Traditional cold storage premises tend to have outdated infrastructures, like poor building insulation, inefficient lighting, loss of cold or heat due to dock doors, leading to higher energy consumption. Energy efficiency should not only meet expenditure criteria, but also consumption and sustainability criteria to mitigate the impact of climate change and its consequences.
- Product pilferages - Food products are more difficult to trace once it gets stolen. Besides the losses due to damage of goods, theft is also adding to financial loss and other indirect loss (time to refill, non-availability of inventory, etc.).
If the warehousing processes are manual, it’s unlikely to be as efficient as it could be. The more hands-on the operations are, the greater the opportunity for errors and inefficiencies. Automation can help streamline the processes and maximise productivity. It can also help eliminate inefficiencies that could lead to cost overruns and lost sales.
Automated Versus Manual Warehouse
Automated Warehousing and its benefits
Warehouse automation includes all the software, hardware, people, and processes required to automate warehouse tasks for improved efficiency and accuracy. A wide range of technological and robotic solutions are available today, allowing businesses to pick and choose the best warehouse automation tools for their particular needs. Some benefits of automation include:
Improved food quality and shelf life
Automated cold storage facilities help manage food quality by maintaining optimum temperature and humidity levels, and improving shelf life through faster and more efficient operations. Food stored in cold storage retains nutritional value, colour and texture longer. Automation also ensures hygiene in handling of food products.
Reduced costs and improved efficiency
An automated warehouse helps you reduce overall costs and improve operational efficiency. For instance, our client BigBlue, a premier cold storage company in the Philippines, was able to increase storage capacity, maintain temperature consistency, improve labour working conditions, and reduce energy consumption by 35%, thanks to Körber’s Automated Solution.
Improved labour management
Automation of labour-intensive warehouses helps employees by improving their working conditions, and companies by reducing costs and improving efficiencies. For example, Körber implemented a high bay warehouse system for Sineurope, Asia’s premier seafood supplier. As a result, the dependence on labour reduced, leading to better manpower planning, reduced turnover and recruitment costs, lesser energy consumption and downtime, and fewer errors, pilferage and delays. The workers’ health and safety were also improved as they needed to spend less time in harsh sub-zero temperatures.
Conclusion: Automated Warehouses are the future
APAC is the fastest growing cold chain region in the world. And, according to our market research, the automated material handling market in the APAC region is projected to reach $25 billion by 2031.
More than 90% of warehouse operators report that optimising operation costs are critical to successfully balance the need for more space and labor. The difficulty of hiring and retaining a qualified workforce to meet demand makes Automated warehousing the optimal way to go, to address these issues. Initially, the investment in automated warehousing may seem expensive, if the inefficiencies of manual warehousing are considered together over a period of time, the ROI would fully justify this initial higher outlay of CAPEX.
We at Körber, work with some of the leading cold chain companies to optimize their cold storage supply chain management with adaptable solutions that drive efficiencies and real-time visibility across all aspects of their operations. Read our third and final blog on Cold Chain Automation to know more.
This article is part of a series:
Article 1: How can cold supply chains help ease the global problem of food waste?
Author: Win Thian Chai
Chief Executive Officer
Körber Supply Chain Automation Asia