Report: Manual processes, lack of visibility lead to big losses in the cold chain

Pharmaceutical and food companies are losing millions of dollars a year in inventory spoilage due to failures in the cold chain, according to a report from supply chain tracking solutions firm Cloudleaf, released this week.

Cloudleaf surveyed 210 U.S. supply chain professionals in pharmaceutical and food and beverage industries for its first State of Supply Chain Visibility report and found that 92% say they can’t trust the data they have on products traveling through their supply chains. What’s more, survey respondents said they are losing millions of dollars a year in inventory from product spoilage due to the lack of supply chain visibility. Pharmaceutical companies surveyed said they lose between $95 million and $138 million a year while food and beverage companies say they lose, on average, between $71 million and $179 million per year.

Other survey findings include: 

• Almost all respondents (99%) in the pharmaceutical industry claimed to be using some sort of manual processes to achieve supply chain visibility. 

• Product damage or spoilage (30%), temperature excursions (25%), unexpected delays (24%), lost or misplaced inventory (21%), and compliance issues (20%) are the top five supply challenges plaguing the industry. 

• 87% of respondents in the pharmaceutical industry said they do not have 100% visibility into the condition of products in their supply chain during the last mile of delivery. 

The problem is taking on a higher profile as the cold chain strives to meet growing demand during the pandemic and as Covid-19 vaccine distribution rolls out across the country. 

“The Covid-19 pandemic has made abundantly clear how crucial end-to-end supply chain visibility truly is. The findings of this report illustrate a crippling reality for high-value supply chains and cold chains today,” Mahesh Veerina, president and CEO of Cloudleaf, said in a statement announcing the research. “A vast majority of companies recognize that the traditional methods of monitoring product as it travels through the supply chain simply do not offer the visibility necessary to ensure quality and compliance.”

Respondents in both industries say they rely on spreadsheets, pen and paper, and alarm clock technology—essentially, timing how long a product has been outside the cold chain as a way to determine its viability—to monitor products through the cold chain. Such methods don’t provide access to real-time data that can help companies take preventive action to maintain product quality, according to the research.

“The implications of these findings are significant for their operational and financial impacts as well as the final customer outcomes,” said Cloudleaf’s David Parker. “Food & beverage as well as pharmaceuticals rely heavily on cold chains that are meant to keep products at specific temperatures to maintain their safety, quality, efficacy, and regulatory compliance. Modern digital technologies are rapidly automating visibility and [can] deliver predictive remediation actions using [artificial intelligence and machine learning] to avoid the millions of dollars companies are losing and deliver better experience to their customers.”

Cloudleaf partnered with Sapio Research on the project, surveying more than 200 supply chain professionals between October 19 and November 6, 2020.