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Resiliency in the Temperature-Controlled Supply Chain

Posted by Angie Hansen on May 26, 2020 3:45:04 PM

Food is not only a necessity, it’s a comfort. Having a good day? Grab some ice cream! Having a bad day? Make it a double scoop. But have you ever stopped to think about how your food goes from manufacturer to table?

The process is complex, especially for refrigerated and frozen foods, but it’s also resilient. Come blizzard, drought, hurricane – or even pandemic – the supply chain stands strong. COVID-19, or more accurately, the public’s response to COVID-19, has brought increased pressure and attention to this process. So, we’re pulling back the curtain and giving a behind-the-scenes look at how the temperature-controlled food supply chain runs and how it has been affected as of late.

From Production to Retail

Taking a temperature-controlled product from production to consumption includes five major steps, three of which Americold plays in. Through our range of facility types, our novel solutions take the headache out of cold food storage so companies can focus their time and attention on their core operations and other aspects of running a business.

First, food manufacturers across the U.S. process and package their products. Second, these goods are sent to a Production-Advantaged site, which is usually attached to or adjacent to the food manufacturing facility. Here, product is brought down to temperature, preserved, and stored until it is forward deployed. Americold’s Production Advantaged sites are often dedicated to specific customers or industries and carry, on average, a 30-day supply of food.

The next stop is a Major Market Distribution Center, where products from multiple manufacturers are stored together.  These cold storage facilities are located in every major distribution hub like Atlanta, Dallas, Chicago, Los Angeles, northeast Pennsylvania, and Salt Lake City, and typically carry another 30-day supply of food. Americold's Major Market Distribution Centers offer customers versatility for things like temperature (different rooms to suit different requirements), storage (bulk, racked, and automated operations), and seasonal fluctuations in demand.

At this point, the path food takes through the cold chain diverges depending on where the food will be purchased by end consumers.  Products destined for food service establishments, like restaurants, schools, universities, hotels, hospitals, sporting events and government programs, move from a Major Market Distribution Center to a Food Service Distribution Center.  Products that are destined for retail establishments, like grocery stores, big box/club stores and convenience stores, move on to a Retail Distribution Center.

Retail Distribution Centers, some of which Americold operates, carry yet another 30-day supply of product.  From there, the product makes it fifth and final stop, the grocery store. A typical grocery store in the U.S. carries about a 30-day supply of food to meet normal consumer demand, so at any given time there’s typically about four months of goods spread across the temperature-controlled food supply chain.

The COVID-19 Effect

Generally speaking, the U.S. food supply is not meaningfully impacted by the macro economic climate, though individual items may be. Food consumption is served through a balance of food service and retail. When the economy is good, heavier weighting goes towards the food service side and when the economy isn’t doing well it shifts to retail.

COVID-19 caused a very unexpected and rapid shift from food service to retail as people stopped eating out and began eating at home as stay-at-home orders went into effect.  Consumers rushed to grocery stores to stock up, depleting the on-site inventory that was stocked for regular operations.  Shelves were emptied creating the illusion of food shortages. However, consumers had simply exhausted the local, on-hand supply of certain items and not the entire supply chain.

This rush created a ripple effect as Retail Distribution Centers surged to replenish the stores, Major Market Distribution Centers surged to restock Retail Distribution Centers, Production Advantaged Sites surged to restock Major Market Distribution Centers. Every link in the supply chain flexed and increased activity to push inventory toward the consumer. 

The Americold team has talked extensively about the resiliency of the food supply chain during COVID-19. You can read more in this BBC article, this Wired article, and this S&P Global article.

In summary, the temperature-controlled food supply chain – and Americold’s diverse infrastructure – is built to withstand changes in food demand. For more information on our offerings and how our fixed commitment model helps ensure manufacturers and retailers have the space they need, even during a pandemic, contact us.  Let's talk!

Topics: Food Safety, Visibility in Supply Chain, Frozen produce, Temperature-controlled infrastructure, food security, COVID-19, supply chain, food supply chain, temperature-controlled supply chain