For many Chinese and Vietnamese customers, frozen food is still a foreign idea. Large retailers in China and Vietnam continue to focus on fresh food selections like live chickens and in-store fish tanks. Nevertheless, consumer shopping and buying patterns are changing. Chilled goods, including juice and frozen foods are increasingly becoming popular in emerging markets like China, Vietnam, and India. Young men and women in specific, are driving consumer demand. This is accurate specifically in cities that are undergoing rapid urbanization. The growth is fueled also by new legislation in the retail environment that gives foreign investors and retail chains greater access to these markets. In all this retail frenzy, the cold chain is becoming a hot topic.
The challenges
Among the key challenges in emerging markets is a dysfunctional supply chain that is extremely fragmented inside the retail section. In a fragmented retail segment, businesses struggles to attain economies of scale on both the retail and supply sides. With the projected growth in these key emerging markets, even given the existing financial crisis, there are good opportunities for both nearby and foreign investors. Unfortunately, a lack of cold chain facilities is hampering expansion into these markets, specially in second and third tier cities. Even in initial tier cities, for example Shanghai, Ho Chi Minh City, and Mumbai, multinationals struggle to obtain the right cold chain partners and facilities. Foreign investors presently view the lack of an established cold chain as one of the significant barriers to marketplace entry.
How does the standard method function?
Agricultural generate normally travels from farmer to trader to agent to wholesaler to retailer. In some countries nearby administrators add extra distribution layers. In some cases, state-owned businesses will distribute items to provincial distributors before reaching local markets. Each and every step within the procedure adds additional handling and price. Generally goods are transported without boxes and with limited or no refrigeration. Items are exposed to the elements and, consequentially, many goods end up as waste. Excellent suffers as products travel down the chain with limited cold storage and frequent processing delays. China at present accounts for 13 percent of global fruit production and 40 percent of the world's vegetable output. Nevertheless, it truly is estimated that around 30 percent of the total production of fruit and vegetables are wasted on account of an inefficient cold chain. In India it can be estimated that about 60 percent of the value of agricultural output is lost between the farm and marketplace. An A.T. Kearney report on China estimates that only 15 percent of goods that demand chilled handling are presently handled that way. This compared to 85 percent in Europe.
What is required?
For any company, it can be critical to evaluate and recognize the cold chain system. Temperature control is significant as it is a key requirement to keep items within a specific temperature range all through the supply chain. This is often especially challenging in emerging markets. 1 remedy is investing in packaging which could safeguard items against temperature variations and enhance item good quality at the final destination. Businesses also have to have to have a clear understand of the item flow and routing dynamics, such as the transportation modes and refrigeration capability. Delays in delivery and processing can have severe effects on the good quality. Businesses will need to have a back-up program as transportation normally takes longer than expected in emerging markets.
The key to any cold chain is driving end to end processes and efficiency. It requires direct delivery with temperature cold trucks, warehousing and advance technology tracking and traceability for food safety. Organizations have to have to account for geographical aspects as they truck products for 1 end of a country to the other. Distribution centers (DCs) can play a key role in a company's cold chain technique. DCs have the ability to service a number of layers of the distribution program. This can further improve distribution and supply efficiencies.
Collaboration is significant
Cold chains are high priced to operate and in numerous cases a coordinated effort is missing. Nearby companies that try to establish their own facilities typically lack capital and expertise. For such providers, a key very first step to creating a cold chain is to seek out or develop a consortium. The consortium is going to be responsible for creating industry standards with government authorities. As standards are set, far more firms will join the consortium. It's critical to include all key stakeholders within the method. Powerful cold chain consortiums will include logistics providers, cold chain equipment suppliers, multinational and local companies within their membership. Stakeholders can collaborate throughout numerous projects and at the same time share risks. The entry of foreign retailers including Mal-Mart, Carrefour and Tesco can add cold chain expertise and help to reduce margins and increase efficiency in the overall system.
Rethink technologies
Technology investment is actually a key element of establishing a cold chain. Corporations require to have a long term perspective in relation to technologies investments. In several cases the technology and equipment are out there, but businesses find the investment too substantial and lack the economies of scale to make it a viable option. Locating providers to create the investment can be one of the key challenges in the course of marketplace entry. In emerging markets, providers seek straightforward and price powerful solutions to issues. As an example, some businesses now are working with pressure-sensitive labels. Once the label is exposed to distinct conditions, the label modifications colour and alerts the supply chain of a disruption in the cold chain.
Focus on education
Education is also key to developing a cold chain. Trainings and workshops can be employed to educate and inform partners about challenges and the way to overcome them. As an example, A.T. Kearney has run a series of conferences in China the UK along with the US to strengthen China's cold chain distribution systems. The conferences bring parties together which are interested to enter or expand their cold chain distribution in China. Such conferences and workshop are excellent venues to inform businesses and authorities about the health and safety risks, an increasingly vital topic.
The cold chain is critical to global trade in nearly all commodities. Having a growing demand among emerging market customers for chilled items, the cold chain is becoming an increasingly vital part of the supply chain strategy. Among the key requirements is going to be to lessen waste and boost excellent. Recent food shares in China plus the rest of Asia have highlighted the importance of food safety and wellness in the course of the process. With all this attention on the cold chain in emerging markets, the cold chain will likely heat up even further.
Tielman Nieuwoudt has extensive supply chain and operational encounter, covering more than twenty emerging market economies in Asia and Africa. He has managed end-to-end supply chains, from forecasting through order entry, control, inventory management, and Go-to-Market preparing and implementation. He is also an accomplished corporate trainer, and has been engaged within the development and implementation of a variety of training programs in Asia and Africa. Tielman is a Certified Supply Chain Expert (CSCP APICS) and has a Bachelors degree in Advertising (SA) and a MBA in International Enterprise from the University of Edinburgh in Scotland.
The challenges
Among the key challenges in emerging markets is a dysfunctional supply chain that is extremely fragmented inside the retail section. In a fragmented retail segment, businesses struggles to attain economies of scale on both the retail and supply sides. With the projected growth in these key emerging markets, even given the existing financial crisis, there are good opportunities for both nearby and foreign investors. Unfortunately, a lack of cold chain facilities is hampering expansion into these markets, specially in second and third tier cities. Even in initial tier cities, for example Shanghai, Ho Chi Minh City, and Mumbai, multinationals struggle to obtain the right cold chain partners and facilities. Foreign investors presently view the lack of an established cold chain as one of the significant barriers to marketplace entry.
How does the standard method function?
Agricultural generate normally travels from farmer to trader to agent to wholesaler to retailer. In some countries nearby administrators add extra distribution layers. In some cases, state-owned businesses will distribute items to provincial distributors before reaching local markets. Each and every step within the procedure adds additional handling and price. Generally goods are transported without boxes and with limited or no refrigeration. Items are exposed to the elements and, consequentially, many goods end up as waste. Excellent suffers as products travel down the chain with limited cold storage and frequent processing delays. China at present accounts for 13 percent of global fruit production and 40 percent of the world's vegetable output. Nevertheless, it truly is estimated that around 30 percent of the total production of fruit and vegetables are wasted on account of an inefficient cold chain. In India it can be estimated that about 60 percent of the value of agricultural output is lost between the farm and marketplace. An A.T. Kearney report on China estimates that only 15 percent of goods that demand chilled handling are presently handled that way. This compared to 85 percent in Europe.
What is required?
For any company, it can be critical to evaluate and recognize the cold chain system. Temperature control is significant as it is a key requirement to keep items within a specific temperature range all through the supply chain. This is often especially challenging in emerging markets. 1 remedy is investing in packaging which could safeguard items against temperature variations and enhance item good quality at the final destination. Businesses also have to have to have a clear understand of the item flow and routing dynamics, such as the transportation modes and refrigeration capability. Delays in delivery and processing can have severe effects on the good quality. Businesses will need to have a back-up program as transportation normally takes longer than expected in emerging markets.
The key to any cold chain is driving end to end processes and efficiency. It requires direct delivery with temperature cold trucks, warehousing and advance technology tracking and traceability for food safety. Organizations have to have to account for geographical aspects as they truck products for 1 end of a country to the other. Distribution centers (DCs) can play a key role in a company's cold chain technique. DCs have the ability to service a number of layers of the distribution program. This can further improve distribution and supply efficiencies.
Collaboration is significant
Cold chains are high priced to operate and in numerous cases a coordinated effort is missing. Nearby companies that try to establish their own facilities typically lack capital and expertise. For such providers, a key very first step to creating a cold chain is to seek out or develop a consortium. The consortium is going to be responsible for creating industry standards with government authorities. As standards are set, far more firms will join the consortium. It's critical to include all key stakeholders within the method. Powerful cold chain consortiums will include logistics providers, cold chain equipment suppliers, multinational and local companies within their membership. Stakeholders can collaborate throughout numerous projects and at the same time share risks. The entry of foreign retailers including Mal-Mart, Carrefour and Tesco can add cold chain expertise and help to reduce margins and increase efficiency in the overall system.
Rethink technologies
Technology investment is actually a key element of establishing a cold chain. Corporations require to have a long term perspective in relation to technologies investments. In several cases the technology and equipment are out there, but businesses find the investment too substantial and lack the economies of scale to make it a viable option. Locating providers to create the investment can be one of the key challenges in the course of marketplace entry. In emerging markets, providers seek straightforward and price powerful solutions to issues. As an example, some businesses now are working with pressure-sensitive labels. Once the label is exposed to distinct conditions, the label modifications colour and alerts the supply chain of a disruption in the cold chain.
Focus on education
Education is also key to developing a cold chain. Trainings and workshops can be employed to educate and inform partners about challenges and the way to overcome them. As an example, A.T. Kearney has run a series of conferences in China the UK along with the US to strengthen China's cold chain distribution systems. The conferences bring parties together which are interested to enter or expand their cold chain distribution in China. Such conferences and workshop are excellent venues to inform businesses and authorities about the health and safety risks, an increasingly vital topic.
The cold chain is critical to global trade in nearly all commodities. Having a growing demand among emerging market customers for chilled items, the cold chain is becoming an increasingly vital part of the supply chain strategy. Among the key requirements is going to be to lessen waste and boost excellent. Recent food shares in China plus the rest of Asia have highlighted the importance of food safety and wellness in the course of the process. With all this attention on the cold chain in emerging markets, the cold chain will likely heat up even further.
Tielman Nieuwoudt has extensive supply chain and operational encounter, covering more than twenty emerging market economies in Asia and Africa. He has managed end-to-end supply chains, from forecasting through order entry, control, inventory management, and Go-to-Market preparing and implementation. He is also an accomplished corporate trainer, and has been engaged within the development and implementation of a variety of training programs in Asia and Africa. Tielman is a Certified Supply Chain Expert (CSCP APICS) and has a Bachelors degree in Advertising (SA) and a MBA in International Enterprise from the University of Edinburgh in Scotland.
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