INCON13-GEN-076

INDIAN COLD SUPPLY CHAIN: A CASE STUDY

Shanu Fatehpuria
Designation: Student
Organization: IIM Shillong
City: Shillong
State: Meghalaya
Country: India

ABSTRACT
Cold supply chain forms the backbone of all kind of perishable products. India being one of
the major foods producing country faces a huge challenge to reduce its post-harvest loss as
well as make all kind of food products available at different corners of the country. This study
aims at studying the characteristics of two cold chains of different type of food product. A
focused approach is adopted to study the process in detail so as to know the intricacies
involved in the same. This study performs a comparative study focusing on the problems
faced by two consumable products in two corners of the country. An interview-based
approach is adopted to get the insights from these two different places based on which an
analogy is drawn. Through this study it is proved that in a single sector there is a great
requirement of a customized supply chain strategy for different kind of products.
Keywords: Cold Chain, Cold storages, Comparative study, Logistics, Post-harvest loss,
Surface storage.

INTRODUCTION
Globalization has made the world smaller in many respects. But still the transportation of
goods across locations depends on the actual distance between two locations. As the distance
of transportation to be done increases, the risk associated with the logistics also increases.
Risks like perish ability risk, damage risk etc. exist due to factors like temperature variations,
shock during transfer etc. Any damage to the commodity due these risks will ultimately result
in the decrease in their value. Hence the onus of damage free transportation lies with the
logistics system. It is essential in the global marketplace to get the right goods at the right
time to the right place(cf. Baldiwala, 2001). Through this study we aim to analyze one such
special system which helps to minimize the risk and achieve the desired objective namely the
Cold Supply Chaining the Indian context.
The cold chain refers to the transportation of temperature sensitive products along a supply
chain through thermal and refrigerated packaging methods and the logistical planning to
protect the integrity of these shipments. It is also defined as a logistic system that provides a
series of facilities for providing a climate-controlled environment consisting of storage and
distribution activities that maintains the product in an ideal environment from the point of
origin to the point of consumption or at least retail level. There are two main components of
the cold chain logistics system:
(a) Surface storage: Refrigerated warehouses for storage of perishable product in
consideration
(b) Refrigerated transportation: Reefer trucks, containers etc. for transport of perishable
product

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Various type of cold chain technologies have emerged to cater to the needs of different types
of products. The major technologies are as follows:
Dry ice: Solid carbon di oxide is about -80C and is capable of keeping a
shipment frozen for an extended period of time. It is particularly used for the shipping of
pharmaceuticals, dangerous goods and foodstuffs. Dry ice does not melt, instead it
sublimates when it comes in contact with air.
Gel packs: Large shares of pharmaceutical and medicinal shipments are
classified as chilled products, which mean they must be stored in a temperature range
between 2 and 8C. The common method to provide this temperature is to use gel packs,
or packages that contain phase changing substances that can go from solid to liquid and
vice versa to control an environment. Depending on the shipping requirements, these
packs can either start off in a frozen or refrigerated state. Along the transit process they
melt to liquids, while at the same time capturing escaping energy and maintaining an
internal temperature.
Eutectic plates: The principle is similar to gel packs. Instead, plates are filled
with a liquid and can be reused many times.
Liquid nitrogen: An especially cold substance, of about -196C, used to keep
packages frozen over a long period of time. Mainly used to transport biological cargo
such as tissues and organs. It is considered as a hazardous substance for the purpose of
transportation.
Quilts: Insulated pieces that are placed over or around freight to act as buffer in
temperature variations and to maintain the temperature relatively constant. Thus, frozen
freight will remain frozen for a longer time period, often long enough not to justify the
usage of more expensive refrigeration devices. Quilts can also be used to keep
temperature sensitive freight at room temperature while outside conditions can
substantially vary (e.g. during the summer or the winter).
Reefers: Generic name for a temperature controlled container, which can be a
van, small truck, a semi or a standard ISO container. These containers, which are
insulated, are specially designed to allow temperature controlled air circulation
maintained by an attached and independent refrigeration plant. The term increasingly
applies to refrigerated forty foot ISO containers.
This paper basically aims at finding the issues and challenges faced in cold chain of two
different kinds of food products by the help of case study. Here two products of the same
sector are taken for consideration. The first section explains the objective of this research.
The next section briefs the literature review followed by the methodology adopted for this
research. This is followed by a detailed look into two different cold chains and their
comparison on various parameters. Lastly, it is concluded with the recommendations for the
same.
RESEARCH MOTIVE
India, a large country with the second largest arable land in the world is amongst the Top 3 in
almost all food related agriculture production. India is the largest Producer of Milk, 2ndlargest
producer of Fruits and Vegetables, 3rdlargest producer of Food grains. But sadly only a
negligible amount of these agro produce gets processed. Hence, India possesses a
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tremendous potential to grow in food processing sector, where undeniably cold chain will be
the back bone of the industry.
A heavy wastage of food products during its transit and storage spells between the primary
producer and end consumer. The amount of fruits and vegetables wasted comes to the tune of
40% of the total production which is greater than the total production of Great Britain. Hence
there is a great need to keep a check on this post-harvest loss. This is only possible if the
transit facilities can be improved i.e. the cold chain can be improved.
In the light of the above factors, this paper tries to analyze the current scenario of the cold
chain in India, find the gaps in their performance and suggest improvements so that the Cold
Chain in India can be made in a much better state to enter into the next stage of its growth
phase.
RESEARCH SCOPE
The cold chain industry has its application spread across various domains and geographies.
Here in this study we limit ourselves to the agro-industry. The primary research is done with
people who are in the industry and operate links in the cold supply chain. The concentration
was mainly on the cold storage owners in Andhra Pradesh who deal with Chilli distribution
throughout the country. The secondary research covers the magazines, journal publications,
articles, internet materials pertaining to the same and also through analysis of companies
providing Cold Chain Service in India namely Snowman Ltd, RK food land etc.
Aim is to identify the external and internal factors which are major enablers of cold supply
chain, as identifying them ensues a better understanding of cold supply chain and also tell as
the area of improvements in the chain. Thus reducing the waste and also maintains the quality
of the products for end consumer in cost effective manner.
LITERATURE REVIEW
The use of Refrigeration technology to transport sensitive commodities dates back to 1797
when English Fishermen used natural ice to store their stock piles of Fish. It grew with the
colonization activities of the British, where they had to import a lot of product from various
countries to them. Namely fresh meat from South Africa, Frozen beef from Australia,
Bananas from South Asia etc. The credit to the fact that Banana which was once an exotic
fruit turned to be the largest consumed fruit in the world has to go to Cold chain emergence.
It will be very interesting to note that banana accounts for the most significant commodity
transported in the Food chain industry with 20% of all seaborne reefer trades. The cold Chain
as a separate industry grew in US due to various laws enacted by the federal government with
respect to transportation of drugs and vaccines.
With reference to agro-industry the Cold chain plays a role of preventing the fruits,
vegetables, Dairy products and the like from rotting. The same has been an itching problem
for the Indian Government which is accused of wasting about 40% of the total produce.
Indian Government has also given the Cold chain an Infrastructure status in its 2011-12
budget so that it reinforces the importance of the same (Anish and Aran, 2011). The losses
occur mostly after harvesting based on the level of infrastructure for handling them in
corresponding countries. The figure A gives an indication of the facilities available in the
countries based on their stage in development. Based on the figure above India can be
classified as in a region between developing and transitioning countries. Post-harvest losses

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are partly a function of the technology available in a country, as well as the extent to which
markets have developed for agricultural produce (Julian Parfitt et al, 2012).
Fig A. The types of facilities based on countries
Level of Diversification of Diet&Level of Urbanization

Level of Post-Harvest and Supply Chain Technology

METHODOLOGY
Basically two approaches were adopted to delve into the issues and challenges faced by this
industry. First was the secondary research approach wherein literature for the same was
referred. An extreme availability for the comparative study was not directly available making
the secondary research not helpful in terms of tangible results. Secondly the primary research
was carried by interview methodology in two parts for comparison.
In the first part of the research the cold supply chain was studied in the Indian context with
focused attention on one of the largest Chilly producer in country. A detailed research based
on convenience was conducted in Guntur (Andhra Pradesh) area to understand the various
layers of the cold supply chain. The aim of the study was to understand the various sub-
processes that add value and cost to the product. Four cold storage owners of Guntur were
interviewed extensively to get insights about this market.
The second part constituted studying the cold supply chain of Baskin Robbins which is a
global ice-cream parlor to which cold supply chain is very much central. This study was done
in Shillong by interviewing the Manager of Baskin Robbins in the Shillong outlet,
Mr.DevJannat, to understand the intricacies of the cold supply chain given the fact that
Shillong has locational disadvantage .Certain insights about their inventory management,
infrastructure and their limitations were received by the help of this extensive interview
explained in further sections.
MAJOR FINDINGS
As already discussed there are two elements of cold supply chain logistics system:
(a) Surface storage
(b) Refrigerated transportation
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There are many cold supply chains of certain firms that just uses only of these, i.e.; either
refrigerated storage or refrigerated transport.
COLD STORAGES IN GUNTUR
Guntur Chilly yard is the Asias largest chilly yard where 0.5 lakh chilly bags worth Rs.30 cr
arrives daily. It is located in the suburb area of Guntur in Andhra Pradesh. It is the platform
where different firms sell their chillies while various buyers (domestic and exporters) buy the
chillies.
Chillies are the season specific crop and total produce will come to this Chilly yard in the
months of January to April. This leads to glut in the market. Red chillies can be stored in
rural godowns or in the farmers homes for 4-8 months but the quality cannot be retained,
when stored under normal conditions room temperature, especially colour and moisture
(colour and moisture of the chillies are two important factors that determine the quality and
hence the price of the crop). Storing dried chillies in common godowns/homes results in
avoiding selling at existing price in the market but deteriorates the quality and results in low
price in the market. Also, farmers expecting good price store the chillies to sell during the
off-season. Hence, chillies are stored in the Cold Storages to preserve the quality - the colour
and moisture of the chillies.
Availability of Cold storages will provide congenial atmosphere for storing red chillies for
quite a long period without reduction in quality.
Five storied multi chamber structure with puff insulation and cooling mechanism for control
of atmosphere will help farmers to store the produce during harvesting season without
deterioration in quality.
Because of the demand for cold storages for chillies, there are around 75 cold storages
located near to the chilly yard in Guntur. These cold storages are owned and maintained by
individual firms who charge a rent for letting the famers use the space for storing their
chillies. These cold storages form an important phase in the cold supply chain of the chillies.

Fig 1. The cold supply chain of Chillies in Guntur.

A typical cold storage is 5 storied high occupying a volume of 1.2 Kft3(100X200X60 ft3)
and can store around 1,00,000 of chilly bags. A cold storage typically is divided into 2 or 3

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sub chambers. Each of these chambers has different cooling systems, which maintain the
temperature between 8 C and 10 C, which is the ideal temperature for storing the chillies.
These cooling systems are the major component of the total construction of the cost of cold
storage and consume lot of electricity for running. Also, the capacity of these cold storages is
in proportion to the volume of space it needs to cool or maintain the given temperature.
This process in Guntur is a Labour dependent process
A farmer is charged around 120 135 INR per bag as a rent for a maximum period of 10
months. As soon as the bags arrive for storing, the bags are manually moved into the cold
storage (by the labour who are contracted from time to time) and are arranged in the cooling
chambers as per the layout plan. When the farmer wishes to take out his stock, the bags are
again manually moved out as per the removal plan. A labour is paid 8 - 10 INR per bag for
taking a bag inside and 6 8 INR for taking out a chilly bag.The demand for the cold storage
space is varied across the year with more demand during off-season and less demand during
the peak season.
BASKIN-ROBBINS COLD SUPPLY CHAIN
Baskin Robbins, which started in India in 1993, is a global chain of ice-cream parlors with
around 425 stores in 95 cities across India. Baskin Robbins has the manufacturing plant in
Pune that supplies ice creams to the entire South Asia. The vital components are imported to
the Pune plant.
To a business of ice creams such as Baskin Robbins, cold chain logistics is central and very
critical. BR has tried their in-house logistics but failed due to lack of competence. Hence, the
whole logistics and the cold supply chain management in outsourced to a third party cold
chain logistics service provider Snowman Logistics that is the biggest and the only pan-
India cold chain logistics service provider. Fig 2 represents the cold chain for Baskin-Robbins
across India.
Fig 2.The cold supply chain of Baskin Robbins leveraged on the Snowman Logistics

Refer Appendix1 for the detailed list of 18 warehouses of Snowman Logistics.

Baskin Robbins leveraged on snowmans 18 ware houses that provide -25 C temperature
across India. Besides providing the refrigerated warehouse facilities, Snowman also provides
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refrigerated transportation on Pan India basis from its Pune manufacturing plant using their
dedicated Reefer trucks. During the setup of the different franchises across the country,
Baskin Robbins had certain challenges. Though it tried its hand by looking after the logistics
by itself using in-house competencies, it failed majorly as cold chain logistics are not its core
competency. Realizing this fact, Baskin Robbins outsourced the entire cold chain logistics
services to third parties like Snowman.
ISSUES & CHALLENGES: A COMPATRITIVE STUDY
For the cold storages at Guntur the following are the major challenges:
The cooling systems consume high amount of electricity and results in 25% of the
maintenance charges. Though there are many measures taken right from the
construction of the cold storage to insulate the walls of the building properly and
ensure high quality for thermal insulation using materials such as thermo-cool sheets,
etc.; due to non-uniform demand, the cooling systems have to run when the chambers
are under capacity. As there is a high variation in the demand, during the off-season,
the cold storage chambers are not completely occupied, i.e., the whole storage space
is not utilized but the cooling systems are operational to maintain the temperature for
the minimum stock that is there.
This part of the cold supply chain is highly labour intensive and labour dependent
and almost 20% of the annual expenses are labour expenses. Besides, the whole
process of taking in and out of the chilly bags is done manually. Since the labour is
employed on the contract basis, if there is no labour any given time, the whole process
is halted and is waiting for the availability of the labour. These kinds of situations lose
the good will of the cold storage and the farmers tend to go only to those cold storages
where there is availability of labour as they do not want to take chance on
deteriorating the quality of chilies. And the labour generally finds employment with
those cold storages where the wages are high.
Major challenges faced by Baskin-robins during expansion in Shillong is:
Prebuilt product needed to be stored at the right temperature so that quality is maintained
Power fluctuations and lack of infrastructure are problems
Lack of temperature controlled warehouses on Pan India basis
Variability of demand for ice-creams according to the seasons
Table 1 shows a comparative difference between the two cold chains studied. Here, it is seen
that although both the products were part of the same segment, the locational difference and
the product characteristics difference made it mandatory to possess different strategies for
products in the same sector. The challenges faced by them are different and so should be the
way to tackle them,

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Table 1. The comparative study of different types of cold chain

Source: Interviews & Analysis

Factors Chili Cold Storage Ice-Cream Cold storage

Place Guntur Shillong
Geographical Guntur district is Shillong is the capital of Meghalaya,
Description located in Andhra one of the smallest states in India
Pradesh along the east situated at an average altitude of
coast of Bay of Bengal 4,908 feet (1,496 m) above sea level
Locational Advantage High Low
Demand pattern Seasonal Almost same throughout the year
Production High Low
No. of days can be stored 8 month 3 months (Max.)
Logistics care Low High

CONCLUSION
The issues faced by both the supply chain are process specific. Shillongs locational
disadvantage makes the Baskins-Robbins cold chain outlet gets its supplies from Calcutta.
Abundant supplies of chillies and old cold storages impact the cold chain of red chillies at
Guntur. Some of the steps in order to deal with the challenges faced at Guntur can be:
Quality can be maintained during construction.The walls of the cold storage are
puff insulated for thermal insulation. Care should be taken right from the construction
phase to make sure that the desired quality is ensured. In case, the walls of the cold
storage are not properly insulated, the cooling systems consume more and more
electricity to maintain the required temperature.
Mini cold storages can be introduced. Mini cold storages are similar to cold
storages that are smaller in size in terms of the volume and hence can require smaller
cooling systems to cool them. A normal cold storage can store around 1,00,000 bags
with two equal chambers. A mini cold storage that can store around 10,000 to 20,000
bags can be constructed in every cold storage so that whenever there is less demand,
the bags can be stored in the mini cold storage. Hence, we can save on the electricity.
An elevator & conveyor belt can be used to reduce dependency. These cold
storages depend heavily on the availability if labour for the movement of the goods
that is expensive too. Hence, a conveyor belt that takes the bags into the cold storage
and an elevator that carries the bags between each of the storeys in the cold storage.
This is a one-time investment but the pay-back period can be very less (within 2-
years) as almost Rs. 20 lakhs is expensed for labour wages. The use of automated
movement of the goods first ensures that the goods can be taken in and delivered back
irrespective of the availability if the labour, which increases the goodwill of the cold
storage. In addition, the expense on the wages can be decreased significantly, while
the annual maintenance charges of the conveyor belt and the elevator costs lesser than
the annual labour wages.
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Solar panels can be installed to power the conveyor belt, elevator and the cooling
systems. Also, the geographical location of these cold storages is such that the solar
energy can be ensured all the year round.

The cold supply chain process is a special kind of logistics that handles the goods that
requires regulated temperatures for both transportation and storage. In this project, we
have studied the importance and necessity of the cold supply chain in agro sector such as
fruits, confectionaries, meat, etc. As discussed, there are many challenges that this supply
chain faces in terms of awareness and infrastructure available. Due to this, in India, there
is a significant shortage of the cold supply chain services.

This can be only increased if every sector gets ready to deal with challenges for its
different product in a different manner. A focused approach is very much required in this
case as a generalized approach will not help in mitigating the present gaps in the cold
supply chains for various products across India. This study proves this point very clearly.

REFERENCES

1. Agrawal D K (2005), Textbook of Logistics and Supply Chain Management,

MacMillanIndia Ltd., New Delhi.
2. Aneeshmatapurkar& Arnav Sinha (2011), Infrastructure Today, April
3. Baldiwala, Q. (2001) Developing a global supply chain,Logistics Spectrum, 35, 259.
4. Bhardwaj Sunil and PalaparthyIndrani (2008), Factors Influencing Indian
SupplyChains of Fruits and Vegetables: A Literature Review, The Icfai University Journal of
Supply Chain Management, Vol. 5, No. 3, pp. 59.
5. Julian Parfitt, Mark Barthel and Sarah Macnaughton(2012), Food waste within food
supply chains: quantification and potential for change to 2050
6. JitendraRathore, Anmaika Sharma, KaruneshSaxsena (2010) , Cold Chain
Infrastructure for Frozen Food: A Weak Link in Indian Retail Sector., IUP Journal of Supply
Chain Management; Mar2010, Vol. 7 Issue 1/2, p90-103
7. Postharvest Management of Fruit and Vegetables in the Asia-Pacific Region (2004),
FAO
8. Post-Harvestprofile of Chill 2009i, Government of India, Department of Agriculture
9. Rafik H. Bishara, Cold Chain Management An Essential Component of the Global
pharmaceutical Supply, American Pharmaceutical Review
10. Recommendations of the international summit cum exhibition, Food processing & Agri-
business (2009),Assohcham

Websites:
1. http://www.snowman.in
2. http://www.baskinrobbins.com
3. http://people.hofstra.edu/geotrans/index.html
4. http://www.rkfoodland.com
5. http://www.oemupdates.com
6. http://www.fnbnews.com
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APPENDIX 1

Reach of Snow Man Logistics, the service provider for Baskin Robbins.

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