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With exciting new advances in technology, growing environmental concerns, and a crop of industry-altering legislation looming, it's clear that the cold storage commodity industry is undergoing rapid change. This past July, over 200 cold chain professionals met for three days in Washington, D.C., to discuss the most pressing issues facing the industry at the annual Global Cold Chain Alliance Assembly of Committees.
The theme for the meeting was "Back to Basics," continuing a year long initiative to promote best industry practices by focusing on fundamentals of operations. This year's meeting, which attracted cold chain professionals from across the industry, was the first to be held under the umbrella of the Global Cold Chain Alliance. Launched in April 2007, the Alliance's goal is to enhance the cold chain, ensuring that perishable products retain their quality and safety through each link.
The beneficiaries were members of the International Association of Refrigerated Warehouses (IARW), World Food Logistics Organization (WFLO), International Refrigerated Transportation Association (IRTA), and the International Association for Cold Storage Construction (IACSC).
While attendees were encouraged to shift their focus to "Back to Basics," committees also delved into a variety of complex issues and the depth and diversity of content at this year's meeting was stronger than ever before. Speakers addressed 10 committees that spanned every aspect of the cold chain.
Tom Henry of ComPSM spoke to the Government Affairs Committee about the Department of Homeland Security (DHS) Chemical Facility Anti-Terrorism Standards. The regulations will affect most public refrigerated warehouses (PRWs). Henry warned that everybody with ammonia will have to comply starting in September and October. DHS will determine a facility's risk level and depending on that assignment, PRWs could be forced to extensively increase security, potentially impacting the volume of product moving through a facility. Failure to comply could result in civil penalties of $25,000 per violation and orders to cease operations. In response, IARW has created an ad hoc committee on chemical security to sort out the implications for PRW members and to see if there are any ways to facilitate member compliance.
Another major security-oriented concern discussed was the Transportation Worker Identification Credential (TWIC), a Transportation Security Administration and U.S. Coast Guard initiative that provides credentials to maritime workers requiring unescorted access to secure areas. Members of the refrigerated transportation and storage industry are awaiting the implementation of TWIC with serious trepidation. Although it is very popular with politicians, TWIC is deeply flawed and will prove enormously difficult for the refrigerated transportation industry to implement.
In the IARW-WFLO Trends and Industry Relations Committee, labor problems were front and center. The quality of labor has diminished greatly in the last few years, explained John Schrecongost of Henningsen Cold Storage. Facilities have to do considerable amounts of training owing to the higher voluntary turnover rate. Some speakers said that they now have to deal not only with training their own employees, but with those of their customers as well. Customers are expanding and providing more of their own services in warehouses and at the same time hiring young inexperienced staffers. Another critical labor issue is whether or not workers are legally in the United States. Friedman pointed out that between 15-20% of current employees in warehouses do not have the right to work in the United States. With enforcement efforts rising, the financial threat to PRWs is real.
In the IARW Warehouse Operations Committee, IARW Programs and Policy Consultant Benjamin Milk reported on pallets. In a survey Milk conducted, 73% of PRWs are seeing more bad pallets coming through their warehouses. Milk found that there is a serious lack of standards to classify pallets. The National Wooden Pallet and Container Association is willing to work with IARW to address some concerns and develop standards.
Ed Krupka of Burris Logistics gave an excellent case study in the IARW Technology Committee on voice picking, which he described as a human-to-information system interface that converts data to speech and speech to data. This exciting technology could replace or complement keyboards, keypads, scanners, and works for any activity in any environment. The benefits of voice picking include increased worker productivity, improved inventory accuracy and better customer service.
In the same committee, Ross Elliot of Accellos Inc. explained how executive dashboard technology can be used to analyze data and focus attention on key issues in a company.
The IARW-WFLO Refrigeration and Energy Committee made clear that reducing greenhouse gas emissions is going to be a key issue in the next few years as discussion bent towards new regulations put forth by European countries and the state of California. Chuck Toogood of United States Cold Storage spoke about refrigeration equipment systems migrating from Europe that combine ammonia and carbon dioxide. Costs are lower, maintenance is easier, and the amount of ammonia the plant uses has been cut dramatically, Toogood said. Meanwhile, Mike Webster, president of Icetec, spoke about reducing carbon footprints and solar power.
The hot-button issue this year was Key Performance Indicators (KPIs). Discussions and presentations on KPIs were prevalent throughout the meeting. In the IARW Technology Committee, Phil Obal of IDII recommended focusing on a small set of key indicators that are accomplishment based to make KPIs more valuable. He also described the "Challenge-Evaluate-For-Accountability (CEFA)" process, which asks whether the workforce has to change thinking and/or process based on a measure, then analyzes the benefit versus the cost of getting it, and finally establishes accountability.
KPIs popped up again in the IARW Finance and Administration Committee. IARW Chairman Ray Tarnowski (Philadelphia Warehousing and Cold Storage) joined Joe McCathran, CPA, of Linton Shafer Warfield & Garrett to review highlights of the 2006 Productivity and Benchmarking Survey Report, which collected data from 40 PRW companies representing 108 warehouses and covers operating ratios, wage and benefits, and financial performance. Members suggested that the invaluable report could be an ideal tool for defining KPIs in the industry.
The meeting overall was a phenomenal success. We were thrilled with the participation and the content, and everyone returned from the meeting with many new ideas and knowledge to improve their operations.