Amazon’s purchase of Whole Foods is “the deal that made an industry shudder,” said Fortune magazine. Grocers and consumer-packaged-food companies are worried this may accelerate their decline, just as Amazon has overwhelmed bookstores and brick-and-mortar retailers. But for Amazon to make it pay off it has to master one of the trickiest corners of the supply chain—the cold chain.
The cold chain is the unbroken custody of perishable product through a series of refrigerated steps and handoffs, such as storage and distribution, to maintain a specified temperature range from point-of-origin through final consumption. Anyone who eats food knows when it isn’t done right—nasty texture, bruising, discoloration, and worst of all microbial growth. When fresh produce is involved, it’s also crucial to maintain air quality levels across parameters like carbon dioxide, oxygen, and humidity.
Amazon will hone in on two cold chains—from source to store, and from storage or shelf to home, as online ordering and home delivery of perishable foods grows more popular. The longer-distance cold chain is the more proven entity, handled by logistics providers operating refrigerated ships, containers, trucks, and warehouses; Whole Foods also has its own distribution centers for perishable foods.
Supply chain consultant Brittain Ladd thinks Amazon may strengthen the chain with a network of automated warehouses specific to the grocery business. “The goal will be to create as advanced a distribution capability as possible to provide customers with exceptional service and the freshest of fresh produce, vegetables, and meat,” he told Bloomberg News.
The online juggernaut can also leverage its big data and analytics know-how via Amazon Web Services. This could exploit what Kris Kosmala, GM for Asia Pacific at Quintiq, a Dassault Systèmes company, has noted previously are the “increased capabilities of sensors, monitoring equipment, and tracers in the cold chain. Real-time supply flow optimization based on this additional data can have significant impact on production processing and sequencing decisions, as well as on prevention of loss due to spoilage.”
While transport by longer and midrange cold chains is a service with credentialed providers, home delivery of perishable foods is the Wild West. Food Safety News reported that William Hallmann, a Rutgers University professor and chairman of the school’s Department of Human Ecology, worked with Tennessee State University researchers on a project funded by the USDA to look into food safety issues with home-delivered proteins like meat, fish, and poultry.
The results weren’t encouraging—nearly half of 160 monitored food orders for raw meat and fish arrived at temperatures above 40 degrees F. “That’s the top limit of the safe temperature zone where pathogens such as E. coli and Salmonella thrive,” Food Safety News reported.
Amazon will now apply its supply chain prowess to the challenge—a new sheriff in Dodge. It reportedly filed a trademark for prepared food kits, adding meal-kit delivery companies to its target sights. It’s business as usual for the online colossus—good news for consumers, more woes for competitors.
