China Cold Chain Trend & Operation Management. Alex YU Vice-president Cold Chain Institute of CFLP Mar.,2017

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1 China Cold Chain Trend & Operation Management Alex YU Vice-president Cold Chain Institute of CFLP Mar.,2017

Alex Yu SCOR- P Alex provides supply chain solutions and implementation services for many clients in Asia Pacific and Great China region, helping them to improve the supply chain and logistics

2 Alex Yu SCOR- P Alex provides supply chain solutions and implementation services for many clients in Asia Pacific and Great China region, helping them to improve the supply chain and logistics performance. Alex is one of the SCOR model expert, hold the SCOR-P certification, dedicated to help client improving the supply chain capability. Alex was the logistics BU leader of EGL China (now acquired by CEVA), manage its contract logistics operation in China region, establish the team and develop the business. Alex served as regional solution leader for Exel (now acquired by DHL) in Asia Pacific region, lead his team to support the country logistics team to develop various logistics solutions, the project experience includes logistics network design, warehouse design, project implementation, transportation planning and continuous improvement. As a supply chain expert, Alex also served for Roland Berger as supply chain and logistics consultant, provide the logistics consulting services to various clients. He has been trained in China, Thailand, Singapore and UK, has been leading or involving in projects of many leading companies like P&G, Unilever, Nestle, Roche, J&J Medical, Li-ning, Lianhua, Carrefour, etc. He has been helped the clients in China, Singapore, Thailand, Vietnam, Malaysia, Philippine and many other countries. Alex held the MBA degree of Fudan University. 1

3 CONTENT China Cold Chain Trend The Simulation of Cold Chain Logistics Management of Cold Store Operation

China Cold Chain Trend Harvest/Slaughter Product/Process Storage/Delivery Retail terminals Entire cold chain transportation Clod Chain What is Cold

According to its characteristics, Cold chain is the logistics network, which is always in a low temperature state from the production to the

4 China Cold Chain Trend Harvest/Slaughter Product/Process Storage/Delivery Retail terminals Entire cold chain transportation Clod Chain What is Cold Chain? According to its characteristics, Cold chain is the logistics network, which is always in a low temperature state from the production to the consumption process in order to maintain product quality. [GB/T , 4.20] New Definition Cold Chain Logistics is a special supply chain, that ensures the products is in a controllable temperature state which maintain its quality from the purchasing of raw materials to the finished product. 1

5 China Cold Chain Trend Cold Chain Related Industries Chill room 0-10 Meat Products Frozen Foods Dairy Products Freezer -18 Chain restaurant Agricultural products Seafood Constant-temperature Multi-temperature Medicine Ice Cream Chemical Industry 2 5

6 China Cold Chain Trend Government Policy and legal environment Development Planning of Agricultural Products Cold Chain Logistics in 2010 from The State Council 国务院发布农产品冷链物流发展规划 Encourage the development of cross regional agriculture cold chain logistics facilities, implement cold chain operation standard, help to reduce the cold chain logistics cost from the central government in 2016 Food Safety Law in Oct.,2015 食品安全法 Chinese Ministry of Commerce and Financial Department gave support funds to about ten provinces to construct Cold chain facilities in 年商务部财政部 : 山东新疆等全国 10 个省市给予冷链设施建设扶持资金 3

7 China Cold Chain Trend Economic Environment Chinese economic is slow down, which brings to the slowing down of the logistics industry. While the Cold Chain is being further expanding % 12.72% 12.88% 13.17% 13.39% The total potential logistics of Cold Chain Foods from 2010 to 2015 (unit:billion RMB) 4 7

8 Chinese Cold Chain Trend The total potential logistics of cold chain foods was over 4 billion RMB in 2015 vegetables Sea foods fruits Meat foods Import foods Dairy foods Frozen foods Frozen drink Unit : billion RMB 5 8

China Cold Chain Trend The Volume of public cold store was 37.1million tons in 2015. The volume of Chinese public cold store from 2013 to 2015 24.11 38% 33.

9 China Cold Chain Trend The Volume of public cold store was 37.1million tons in The volume of Chinese public cold store from 2013 to % % 37.1 The number of Refrigerator truck was The number of Chinese Refrigerator truck from 2013 to % % (unit : million tons) 6 9

Chinese Cold Chain Trend The environment of Cold Chain continues to improve The new government attaches further importance to the foods safety Middle class population keeps increasing, which cause

The market size of First and Last 1 km of Agricultural products has expanded the market size of Fresh E-commerce was 520 billion RMB in 2015 and it is expanding quickly.

10 Chinese Cold Chain Trend The environment of Cold Chain continues to improve The new government attaches further importance to the foods safety Middle class population keeps increasing, which cause the needs of cold chain foods and logistics increase. Government and consumers awareness of the concept of cold chain logistics become more and more deep. The market size of First and Last 1 km of Agricultural products has expanded the market size of Fresh E-commerce was 520 billion RMB in 2015 and it is expanding quickly. The development of Fresh E-commerce depends on the capacity of cold chain logistics. And the comprehensive differentiation service experience of the first and last 1 km distribution will become the competitive core of Fresh E-commerce. cold chain logistics become more specialization and integration Chain restaurants, super market, convenient stores, Multi-temperature, total solutions, Joint distribution, integration services of warehousing and distribution 7 10

11 CONTENT China Cold Chain Trend The Simulation of Cold Chain Logistics Fine Management of Cold Store Operation

12 The Simulation of Cold Chain Logistics The issues of new build Cold Store The business requirement is not very clear, tender to cover all possibilities, lead to higher construction cost The construction of cold store don t align with operation requirement, which causes the cold store not fit to its operation and brings huge waste. lack of consideration of future expansion, cold chain facility cannot support the future operation scale. The supporting facilities of cold store don t fit the new cold chain operation requirement,which create additional bottlenecks in operation construction Lack of alignment operation 8 12

Despatch Office Cloaks Stair Reception Toilets First Stair Male Female Aid Female Male Stair

Simulation of Cold Chain Logistics connect construction and operation through simulation software

Entrance Lift - - Out In 01 12 13 14 15 16 17 18 19 20 21 Goods Out Pallet Gate - - Out In Feeder

13 Despatch Office Cloaks Stair Reception Toilets First Stair Male Female Aid Female Male Stair Ancillary Accomodation Generator Main Switch Panel Stair Quality Control Male Female Reception The Simulation of Cold Chain Logistics connect construction and operation through simulation software Warehouse design Operation Simulation Narrow Aisle Warehouse with Mezzanine Out 1-30 Staff Entrance Lift - - Out In Goods Out Pallet Gate - - Out In Feeder Goods In Out KEY Mezzanine Storage Narrow Aisles 1-30 Narrow Aisles

14 The Simulation of Cold Chain Logistics Simulation Application Existing cold store newly-built cold store find potential capability Try to maximize the use of existing facilities by trying different operating parameter Improve Operational performance Simulate existing operational scenarios, identify constraints, try new resource configurations, and find opportunities to break through bottlenecks. Verify planning results Use the future operational scenarios to verify that the planned cold storage facilities can meet operational requirements or not. Test the impact of future business growth To simulate the next few years under different conditions of business growth, planning and operation of facilities, Speed up the decision-making process, display traditional layout, three-dimensional images and the actual display of simulated operating animation video, which can help decision makers intuitive to see the results of planning and design. Improve communication efficiency. The changes can be displayed through the form of visualization at any time. Meanwhile, different scenes can be analyzed through the background of the operating indicators to see quantify operational performance 10 14

15 The Simulation of Cold Chain Logistics Applied operating parameters Layout throughput Picking method Operational resource Cost and Service Level Traffic flow By changing the different layouts, functional area, racks, shelves, movements, etc., to test the impact on operational efficiency. Test the operating performance under different throughput, understand the limits of throughput, and the bottleneck of the operation. Test the different picking methods, or different picking face location, the operating efficiency changes, looking for the best picking method. Verify the resource demand set in plan, including the number of staffs, shifts, MHE, and the operational requirements for the target throughput. Test different operating parameters, the cost composition and achievable service level. Verify logistics park in/out truck volume, parking spaces, road capacity, see if it is sufficient to support operational needs. 11

16 The Simulation of Cold Chain Logistics Case Study new build retail warehouse What If Scenarios Reconfigured block stack Product Zoning Wide Clamp truck Multi-tasking teams 12 16

17 The Simulation of Cold Chain Logistics Case Study rotated block stack 13 17

18 The Simulation of Cold Chain Logistics Simulation Case Final design & Actual construction June,2015 Apr.,

19 CONTENT China Cold Chain Trend The Simulation of Cold Chain Logistics Management of Cold Store Operation

20 Complete temperature traceability of Cold chain products Resource sharing of cold store Resource sharing of cold store, products and trucks

21 The best way to find a 寻找标准化冷库的最佳途径 standardized cold store Search Map Comments

22 Complete temperature traceability of Cold chain temperature monitoring full coverage the cold store, containers and trucks Shanxi *** WH, Temp:-18.5 Nanjing***WH, Temp:-18.3 Shanghai***WH, Temp:-19 Shanghai***Container, Temp: :35: :42: :27: :30:56

Complete temperature traceability of Cold chain 通过标签全程追溯, 提供全程 / 半程分析报告 Temperature traced by label, to provide full / half-way analysis report Cargo damage and

23 Complete temperature traceability of Cold chain 通过标签全程追溯, 提供全程 / 半程分析报告 Temperature traced by label, to provide full / half-way analysis report Cargo damage and temperature correlation Temperature Max-Min Max Jan. Feb. Mar. Apr. May June 0 Min-22 Monthly cargo damage( kg ) Monthly temperature( )