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Technology, Cold chain management
With climate change high on the global agenda, businesses in every industry are working to play their part in emissions reduction plans. According to the Living Planet Report, which is published every two years by the Global Footprint Network, we are consuming natural resources faster than the natural environment can replenish it. As a result, given the current trajectory, by 2030, we will need two planet earths to sustain our consumption levels as a society.
To run an effective business in the 21st century, enterprises will need to run it within the constraints of the natural world. This is especially true for the cold chain, a segment of the supply chain requiring strict temperature control, such as fresh and perishable foods, frozen foods, flowers, but also medicines, vaccines, and life sciences products such as blood. Temperature requirements are typically between 2°C and 8°C for pharmaceuticals. For frozen foods, temperatures can range from -18°C to -29°C or colder, 0°C to -1.5°C for frozen foods, and 0°C to 16°C for fresh fruits and vegetables.
A surge in the demand for temperature-sensitive and perishable products, together with global warming patterns, has led to an increase in cold transportation. Roughly 40 percent of all food and beverage products and 80 percent of life sciences products require temperature-controlled transportation, and those numbers are on the rise. By 2050, the world’s population will reach 9 billion and the consequent demand for food and drugs may at least double. How will businesses produce and distribute enough drugs and good quality food for the population without destroying the planet and jeopardizing the future? The resulting supply chain pressures are creating a need to adopt technological developments designed to support sustainability and carbon footprint reduction.
Distribution and transportation of temperature-controlled and perishable products have been major causes of greenhouse gas emissions. The modern supply chain accounts for more than 6 percent of greenhouse gas emissions and 80 percent of all water use. Carbon emissions in supply chains are on average four times those of a company’s direct operations.
Despite improvements in emissions, cold transport consumes 20 percent more fuel than other heavy vehicle types due to refrigeration equipment to regulate temperature and ensure quality, product safety, and shelf life. Wasting these products not only means that resources were wasted but the greenhouse gas emissions that it emits also have dangerous effects.
With global warming and more severe weather patterns exacerbating a host of public health threats, pharmaceutical manufacturers, food and beverage enterprises, suppliers, and cold chain logistics businesses are set to play an even greater role in driving sustainability efforts moving forward. These span efforts to reduce water and electricity, tighten supplier relationships, and maximize efficiency across the supply chain. Technology adoption and stakeholder collaboration across the supply chain will be key to driving sustainability efforts moving forward.
As man-made carbon emissions continue to change our planet’s climate, living conditions are changing with it. The effects of climate change on public health are an important consideration and one that the pharmaceutical and food sectors could play an even more important role.
A large amount of food and pharmaceutical product wastage currently has a substantial impact on the environment. The carbon footprint of food waste alone is an estimated 3.3 Giga-tons of Carbon (GtC) emissions, approximately 7 percent of all global emissions, according to the United Nations’ Food and Agriculture Organization (FAO). Pharmaceutical enterprises are attributing up to 50 percent or more of their carbon emissions to their supply chains.
Enterprises are becoming increasingly aware of the contributions they can make, both to emissions reduction imperatives and to tackling the consequences of climate change that are being felt now. Carbon emission reduction plans would need to span the supply chain and involve procurement, packaging, and modes of transport used.
Many large food and pharmaceutical enterprises have plans in place to reduce their carbon emissions, often with specific targets in mind. In the U.S., more than 150 businesses signed the White House’s American Business Act on Climate Pledge, which was launched in 2015 as a means for private sector enterprises to express support for strong international action on climate change, and to demonstrate their commitment to environmental sustainability and emissions reduction. For most, this will require a careful consideration and review of packaging, transportation methods, network design and warehousing, product waste reduction, alternative energy sources, and supplier relationships, among other things.
Biogen, Johnson & Johnson, Genentech, Patheon, and Novartis were among the global pharmaceutical enterprises who signed the pledge, while Amazon, Cargill, General Mills, Hershey’s, Mars, McDonald’s, Nestle, Pepsi, Target, and Walmart were among the top food and retailers to join as signatories.
Later in 2015, the Paris Agreement, reached by 195 countries at the UN’s climate change summit, aims for reducing global greenhouse-gas emissions enough to prevent the planet from warming by more than two degrees Celsius. A significant reduction in global greenhouse gas emissions worldwide, and above all, from business, is critical to achieving this goal.
Biogen has maintained carbon neutrality since the end of 2014. It was the first biopharmaceutical company to do so. The company has promised to work with its supply chain to reduce its direct and indirect operational carbon emissions by 80 percent by 2020 compared to its 2006 levels. Johnson & Johnson has pledged a 20 percent reduction in carbon emissions by 2020, and an 80 percent reduction by 2050, with a particular focus on its supply chain. Novartis has promised to cut its carbon emissions in half by 2030, and has committed to keeping the environmental impact from waste at a minimum by implementing clear waste reduction and responsible supply chain management strategies. In 2017, Baxter reduced its worldwide product transport emissions by 25 percent compared to 2015. It also converted approximately 30 percent of its road freight to rail during the year.
Many enterprises are also pledging other environmental targets, such as water and energy reduction. Sanofi aims to cut its carbon emission by half by 2025, and to achieve carbon-neutral status by 2050. Water and energy con Genentech pledged a 30 percent drop in carbon emissions by 2020, including 10 percent drop in CO2 from transportation activities.
GSK has recognized that around 50 percent of its carbon footprint comes from its supply chain, and another 4 percent comes from the transportation of its products in air, road, and sea shipments. As a result, it is working closely with suppliers and logistics partners to identify ways to reduce the collective environmental impact. Technology and modality planning have enabled GSK to take more than 1,500 vehicles off the road and reduce carbon emissions by 1000 tons CO2e per year.
Many food producers and retail chains have set similar objectives. Walmart is currently on track to reduce 1 billion metric tons of emissions from its global supply chain by 2030. While only ten percent of its greenhouse footprint is from its own emissions, General Mills has set a goal of reducing emissions by 28 percent by 2025 by working across its value chain with its suppliers, farmers, packaging producers, retailers, and consumers.
These corporate efforts demonstrate that sustainability and climate change are top of mind.
External pressures to adopt corporate responsibility programs aside, businesses should not overlook the benefits of adopting innovative solutions as part of their sustainability efforts. Food and life sciences enterprises looking to save money in the long-term by switching to more sustainable solutions and improving supply chain efficiency in the cold chain are now seeing substantial cost and resource savings, which can be allocated elsewhere. As a result, some companies now also consider sustainability performance an essential part of the overall supplier performance equation, in addition to key requirements of quality, cost, and delivery.
The potential business benefits of greener supply chains are considerable. Companies that succeed in making their operations more environmentally friendly can expect operational cost savings as a result of less waste, reduced fuel, energy, and transport costs, and a lack of compliance penalties. In 2017, more than 4,800 companies reported emission reductions amounting to 551 million metric tons of carbon dioxide. This equates to $14 billion in savings, and doesn’t factor in the additional cost savings arising out of reduced replacement products and fewer investigative hours spent on reviewing data in the event of an excursion. Moreover, supply chain improvements of this nature invariably enhance an organization’s brand and reputation considerably.
Improving cold chain management during transportation and storage can substantially help in reducing the carbon footprint of perishable waste, providing business and practical benefits and driving sustainability. The quality, safety, and integrity of medicines and perishable food and beverage products is dependent on a number of factors, such as internal temperatures, external climate conditions, humidity, and shocks that lead to spoilage. Monitoring and controlling these conditions while mitigating risk is crucial in order to prevent waste from increasing business’s carbon footprint.
The technologies available today, such as Controlant’s reusable, real-time IoT data loggers that transmit data to a cloud-enabled software platform can enable shippers to track and trace the conditions of temperature-sensitive and perishable products in real-time, thus ensuring that proper actions can be taken during transit to maintain the product’s quality. Moving forward, technology can help bring together the logistics industry to achieve collaboration and sustainability through the sharing of critical supply chain data through a single source of truth, including risk points, lanes, packaging, and transportation modes.
On a practical level, we need to operate within a one-planet budget. At an aspirational level, pharmaceutical and food manufacturers, suppliers, supply chain logistics, and retailers are looking to help change the trajectory of health for humanity. Healthy people need a healthy planet.
Innovation is how we bring new solutions. The environment is an element of the corporate innovation process, and taking care of the environment is everyone’s responsibility. Environmental health is human health. A company cannot be sustainable in a bubble, and no one organization can make the world.
As good corporate citizens, we all need to recognize the opportunity for key stakeholders to work together to stimulate innovation and technology adoption that can reduce waste, emissions, and the impact of climate change on human health. Although the requirements now needed to make a transformational change may take many years to generate a substantial impact, the journey must start today.
The potential for what can be achieved through technology and collaboration to improve the visibility, efficiency, and sustainability impact on the global food and health supply chain working may literally help shape the future.
Controlant provides real-time temperature and product movement visibility and supports stakeholder collaboration and continuous improvement across the end-to-end supply chain through centralized data sharing. Contact us to learn more or get started today.