Visions and Value chains

Cold-chain development is commonly debated over round table discussions, mostly by business researchers and prospective financiers. The non-inclusion of practical domain experts can tend to make these discussions academic about value chains and the result is a wizardry of numbers. This happens frequently, largely because there are merely a handful of strategic experts who have partaken across the wide range of functions that make the cold chain - it truly is a niche sector! However, the cold-chain is increasingly taking importance as the heart and centre of food security in our future, and such discussions need to move from the rhetoric into the realm of reality.

[There is real need to include operative considerations – after all, even the original round table of King Arthur had a functional head with fighting knights on board, and only one wizard]

Definitions are for convenience

At a recent formal discussion of a PPP proposal, the attending resource persons (consultants from one of big 5), rather categorically reasoned that food processing is not a part of cold-chain business and hence such units were not considered in the project under debate. Hearing such blanket statements is a very distressing experience, particularly when long term plans are being developed with the overarching aim of public good. Such single-minded differentiation between cold-chain and processing units stems from an academic or research bent of mind, inexperienced in matters of business. 

Yet, if the aim is optimal utilisation of resources, with profitability and success in mind, then these narrow interpretations need to be shed and put aside, firmly. In the world of commerce, reason relates to align opportunities, maximise revenue, increase profitability options - common business sense.

Food security breach… and bridging it

Cold-chain infrastructure pieces comprise a physical bridge that enables the farm-to-fork flow of food. How does one correctly evaluate the infrastructure capacity needs of a cold-chain?

Only with access to relevant information and only with clear understanding of what comprises the total cold-chain. Unfortunately, such assessments in the past have related to one sole component, the cold store. The most commonly quoted capacity gap was assessed in 2010, where that report stated that the country (India) needed creating another 37 million metric tons in storage capacity.

That 2010 analysis assumed that all infrastructure created, continued to be operational, irrespective of technology or ageing. The assessment did not resort to first hand data on the existing usable and available capacity in the country. As a mere desk review of statistics, with the existing capacity not ascertained, the gap mentioned served purpose at a very basic level only.

Perpetuating fallacies - more on market research

Yet another spate of research reports were sent to me, some having quoted the National Centre for Cold-chain Development (NCCD); almost all referring to out-dated data and sadly, confidently extrapolating that into futuristic scenarios.


I cannot help but point out some of the errors and omissions, else yet another set of documents, poorly understood and researched would be bandied about as gospel (distorting whatever they aim to propound)!

Perpetuating misinformation or inexperienced interpretations is the biggest threat to India's cold-chain development. Worse… when they are given guise of authoritative alignment. More so, because these studies are frequently lapped up by the gullible who buy this largely to make plans and strategise their businesses.

These theorised documents would be agreeable and pass muster if they were but reports or outputs from study groups... if only they did not attempt to lend their secondary collation undue legitimacy aimed at decision makers.

Custodians missing in the Cold-chain

Looking ahead into 2013, the expectations from market and service providers are quite obvious to conclude. The Previous year has established that manufacturers and marketers will continue to push to outsource both critical and non-critical areas in logistics to ease working capital pressure on their company.

Yet, are the LSPs prepared and professional enough to match this opportunity? It will require innovative organisational leadership in finance and operations. The typical response though, is to reduce head count and fixed warehouse & transportation assets while maintaining service (exactly what their client company did by outsourcing their own requirement). LSPs need to respond otherwise and not play in tandem. Besides, maintaining service with lowered asset base means opening up to risk, or alternately requires another kind of asset – technology! The smart ones will manage; there will be intelligent contingency plans, back-haul network redesigning, productivity realignments and a move from transactional to strategic management and control.

India’s logistics sector usually has a limited outlook when projecting into the future. This is largely because of the gap in associated infrastructure and matching processes, thereby never allowing them to be truly ahead of the development curve.