Cold chain
Outsourcing of
Cold Storage
Time to get over inhibitions?
“Traditionally, organizations in developing
markets have insourced cold logistics to gain
control over temperature sensitive operations.
However, with better infrastructure and process,
inhibitions over outsourcing can be come over.”
This article addresses some of the key aspects
that can ensure product quality in an outsourced
cold warehouse and hence enables the
organizations to get over the reservations related
to outsourcing.
State of outsourcing of cold stores
A cold store is a warehouse designed to
store perishable products at lower than room
temperatures, ranging from +10C to -50C.
Products such as meat, dairy products, frozen
vegetables, ice creams etc. utilize such cold
stores. Since these products are sensitive to
exposure to room temperatures, a robust cold
chain can ensure product quality and reduce
perishability wastages.
Growth of organized retail, rise of processed
chilled foods and increasing export demand for
frozen foods are key drivers for growth in cold
store requirements in India. As per the report of
Associated Chambers of Commerce and Industry
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of India (ASSOCHAM) released in June 2014,
cold chain capacity in India is expected to grow
from 29 Mn Tonnes in 2013 to 47 Mn Tonnes in
2017. Of this, organized players are estimated to
contribute only 8% - 10% of the capacity.
Apprehensions to Outsourcing
The scenario is not very different in markets
of Middle-East, where the logistics maturity
is similar to that of India. In a market study
conducted by Miebach Consulting recently,
it was witnessed that more than 70% of the
warehousing capacity is insourced. Interestingly,
the study found out that more than 60% of the
respondents attributed insourcing decision
to gain better control over operations. These
organizations were apprehensive as to whether
an outsourced service provider would maintain
right temperatures and handle products as
required etc.
The scenario has far reaching implications from
a financial perspective too. Cold stores are 4-5
times more expensive to build compared to a dry
warehouse of similar size. If organizations can
invest this capital in the front end business, the
return on investment is generally much higher.
Guruprasad Srinivasan
Senior Consultant, Miebach Consulting
Ways to ensure quality in an
outsourced scenario
In addition to the general operating & service
level agreements that are signed with a 3PL for a
warehouse, it is important for the organization to
concentrate on the following 5 areas specific to
cold stores to ensure quality.
1. Temperature Control: A critical parameter
to measure is the level of deviation of
A cold store is a warehouse
designed to store perishable
products at lower than room
temperatures, ranging from +10C
to -50C. Products such as meat,
dairy products, frozen vegetables,
ice creams etc. utilize such
cold stores
temperature. Small deviations from the
required temperature are acceptable only
at the dock doors (due to door opening) and
during defrost cycles. Apart from temperature
sensors at the middle of warehouse, it is
recommended to have one in the warmest
part, which is usually near the dock doors.
These sensors should also be connected
to an alarm system in case temperature
drops below critical levels. This practice
of maintaining records of temperature and
regular audits of the same has been employed
by one of the leading global Quick Service
Restaurants (QSR) in India.
2. Front Chambers: A good cold store will
have the loading and unloading done through
a front chamber rather than directly from
Food & Beverages Processing

the main cold chamber. Apart from energy
savings, such a design will also reduce
frosting of the cold chamber due to reduction
in the hot air ingress into the cold chamber.
This area can be maintained at a slightly
higher temperature than that of the cold
chamber, depending on the time spent by the
product at this area. For example, the cold
store of a premium ice cream manufacturer
had the main cold chamber maintained at
-30C and the front chamber maintained at
-5C. This design is all the more critical for high
value products like products like ice creams
which may melt on few minutes of exposure
to room temperature.
3. Defrosting: Frost and ice form in the cold
chamber due to warm air entering from
outside. Presence of water at the floor or
water droplets dripping from frosted ice in
ceilings is a clear sign of poorly designed
defrost system. This severely impacts the
hygiene of the warehouse, regardless of the
type of product stored. A defrost cycle, either
through a manual or an automated system,
must be followed at the warehouse so as to
maintain hygiene and cooling performance
at the optimal levels. In case of automatic
defrosting systems, the defrost duration
must be calculated so that the temperature
increase in the cold chamber as a result of
defrosting is within desired levels. Optimal
defrosting is effective in reducing electricity
www.foodnbeveragesprocessing.com
costs of the warehouse, especially in
predominantly tropical conditions of India.
4. FIFO and Quality Checks: First-In First-Out
(FIFO) records are critical to reduce expiry
losses and these are to be maintained and
audited periodically. Needless to say, picking
and putaway processes should be designed
to ensure FIFO, wherein each batch can be
identified and located separately. Also, quality
checks at the front chambers should be kept to
a bare minimum. Any time consuming quality
check required for consignment or a sample
of the consignment should be performed
inside the cold chambers rather than in the
unloading areas.
5. Insulation: The design of insulation is
critical in tropical conditions of India since
it can reduce electricity costs during day
to day operations. However, it also forms
a substantial portion of construction cost
and hence care should be exercised to
arrive at the right insulation material and
thickness. Materials such as polystyrene
and polyurethane are commonly used for
insulation of roofs and walls. It is also
recommended to have a small door for staff
movement by the side of the dock door to
reduce hot air ingress.
Conclusion
Overall, it is important for organizations to dig
Cold chain
The design of insulation is critical
in tropical conditions of India since
it can reduce electricity costs during
day to day operations. However, it
also forms a substantial portion of
construction cost and hence care
should be exercised to arrive at
the right insulation material and
thickness
deep and assess specifications of cold store
infrastructure at the time of selecting a 3rd
party cold store for operations. This will enable
parameters like temperature control, defrost
cycles etc. to be measured apart from process
based KPIs like inventory accuracy, FIFO etc.
during day to day operations. Improved visibility
and measurement of KPIs is key to a more
favorable outlook on outsourcing temperature
sensitive products and should be the way forward
for Indian market!
(The author has 6 years of consulting experience
and has worked in several supply chain
transformation projects in Miebach Consulting,
which involves several areas of supply chain
like sourcing & production strategy, distribution
network design, logistics cost optimization,
outsourcing advisory, etc. He is an alumnus
of BITS (Pilani) & IIM Bangalore and can be
reached at guruprasad.s@miebach.com)
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