OCI’S Ron Atapattu Featured in Inbound Logistics

From flavor variations to temperature monitoring, when it comes to delivering this sweet treat, ice cream companies have it down cold.

The ice cream supply chain is hot. The average American enjoys about 22 pounds of ice cream each year, reports the International Dairy Foods Association (IDFA). Vanilla remains the most popular flavor, with chocolate and cookies and cream next in line. And, despite waistline concerns, premium ice cream—with its high fat content and correspondingly hefty calorie load—is the most popular type, according to IDFA.

No matter the flavor or type, ice cream is “a smile producer,” says
Dan Samson, chief executive officer with Lovin’ Scoopful, a producer of gourmet light ice cream that’s co-branded with the Special Olympics; it shares 25 percent of its profits with the organization and other causes.

To capture those smiles, however, ice cream companies have to ensure products maintain their quality as they travel from the manufacturing plant to the distribution center to the retailer, and finally into the consumer’s shopping cart and home. In addition to ingredients and flavorings, cold chain management and proper sanitation are key.

“The cold chain’s enemy is heat shock,” says Robert Roberts, professor and head of the food science department at Pennsylvania State University. Ice cream that warms up and refreezes tends to become icy and grainy.

The risk of an unwanted temperature change tends to be highest when the ice cream is moving from one location—say, a manufacturing plant—to another, such as a delivery truck. “There can’t be any fumbled hand-offs,” says Tom Foster, chair of the marketing and global supply chain department at Brigham Young University, Provo, Utah.

Ice cream production in the United States typically starts with a handful of ingredients: water, a milk or cream product, emulsifiers, stabilizers, and sugar, says Ron Atapattu, president and founder of Overseas Cargo Inc., a Miami-based third-party logistics company. These ingredients are blended together, and then the mix is pasteurized, homogenized, and cooled to about the consistency of soft-serve ice cream. Flavors, such as fruits or candy, are added. The ice cream is packaged and moves to a blast freezer, where its temperature drops to well below zero.

Ice cream producers continue to experiment with this basic recipe and add an ever-expanding number of variations, including exotic flavors and low-fat or allergen-free versions. This allows them to meet consumers’ changing preferences.

It also increases the cost and complexity of the ordering, demand planning, forecasting, and inventory functions. “That complexity creates nuances through the supply chain,” says Anne Goodchild, Ph.D., associate professor of transportation engineering at the University of Washington, Seattle.

FLAIR FOR FLAVOR

Perry’s Ice Cream, based outside Buffalo, N.Y., offers 75 flavors in multiple sizes, from All American (vanilla ice cream with maraschino cherries and black cherry swirls) to white raspberry cake (white cake ice cream with raspberry swirls), as well as frozen yogurt, novelties, sherbet, and sorbet. Perry’s also distributes products from other companies.

The variety brings balance to the company’s product portfolio and lends a competitive edge. “We aim to be a one-stop shop,” says Carl Patterson, director of distribution.

The range of products also adds complexity to manufacturing and distribution. Perry’s has turned to technology to help manage them. It relies on an in-house enterprise resource planning (ERP) system that helps track purchase orders to build a history that it can use—along with its knowledge of inventory levels, promotional activity, and lead times—to enhance demand planning.

The company’s 18 trucks bring products to distributors across several northeastern states, and return with the raw ingredients the plant needs, as well as products that Perry’s distributes for partners. Using in-house drivers enables Perry’s to more quickly adjust to changes in the production schedule due to demand fluctuations. “We’re able to make those accommodations at the last minute,” says Dave Mietz, transportation, distribution, and warehouse team leader. In addition, the drivers bring in approximately $4 million annually by distributing the company’s partner brands.

Wells Enterprises, the Le Mars, Iowa-based company behind Blue Bunny Ice Cream, is implementing voice-to-text technology in inventory picking operations, where freezer staff compile pallets of multiple products. The technology provides instructions on the products and quantities needed to compile a full pallet. Workers can confirm the inventory transactions via voice responses.

“The technology gives them an effective way to complete these operations while using both hands for product movement,” says Ryan Schaap, chief information officer for Wells Enterprises.

A growing number of artisanal producers, similar to those that have emerged in the craft beer and dark chocolate markets, are entering the ice cream sector. “Major ice cream manufacturers may see new competition from local, artisanal craft producers, the same way yogurt makers were blindsided by Chobani,” says Dave Donnan, partner with A.T. Kearney’s consumer products and retail practice.

These new ventures also need to establish supply chains. Tyler Malek started Portland, Ore.-based Salt & Straw in his kitchen. He headed to the farmer’s market and grocery store each morning, purchased ingredients for the day’s production, and then got to work. His company’s name harkens to the pre-refrigeration era, when ice cream producers used salt to control and lower the temperature of their ice cream mixture, and then packed it in straw to keep it cool. The name is a “way to pay homage to the tradition of making ice cream,” Malek says.

Salt & Straw operates eight locations (the number continues to grow) in Oregon and California, from which it sells ice cream in flavors such as Black Olive Brittle, Goat Cheese, and Honey Lavender. The choice of flavors changes every four weeks. The company sources most ingredients from local farmers and artisans.

Changing the menu lets Salt & Straw work with a diverse range of suppliers. It also adds complexity to its logistics operation. “Our supply chain has to be just as inventive as our flavors,” Malek says.

The company currently uses an ERP system developed in-house. “No other system can keep up with the speed at which we change flavors and products,” he adds.

A TASTE FOR ADVANCE PLANNING

Malek and his management team begin talking with suppliers months before Salt & Straw actually needs its ingredients. For instance, he began discussions about growing practices, logistics, and ordering with a local wasabi farmer in November, even though the company didn’t plan to offer wasabi and green apple ice cream until May.

When Malek expanded from Oregon to California, he decided not to simply ship all the flavoring from Portland, even though it would have been easier. “We didn’t want to import our product, just our culture and model,” he says. So, Salt & Straw creates five new flavors, using as many local ingredients, every four weeks, in Los Angeles as well as Portland.

In both locations, the company makes its ice cream in a commercial kitchen and delivers it to the stores at night. In Portland, Salt & Straw partnered with its dairy supplier. When the dairy drops off cream, it loads its truck with ice cream and delivers it to the shops. Because the dairy operates its own fleet of trucks, it expands and contracts its services as demand fluctuates more easily than Salt & Straw can, Malek says.

For Los Angeles, Salt & Straw purchased its own truck and hired a driver. Given the size of the city, deliveries have to be staggered, Malek says. While a driver in Portland may be able to get to all the company’s locations within several hours, in Los Angeles, it could take that long to get to one store.

DO NOT FUDGE

Tweaking the basic ice cream formula not only increases the complexity of demand planning and production scheduling, but it can change the ways in which the product reacts to changing temperatures. For instance, a mix of strawberry and chocolate ice cream may melt differently than either flavor on its own.

Additionally, most ice cream manufacturing plants have limited storage. When ice cream products are shipped to a warehouse for storage and distribution, proper handling is critical. “Any cold chain management interference can cause a distinct flavor change,” Atapattu notes.

To start, the trailer onto which the ice cream is loaded should be pre-cooled, Atapattu says. Many ice cream manufacturers won’t load until the inside of the trailer has maintained a core cooling temperature of at least -10 or -15 degrees, for at least one hour.

The method used to load the truck also can aid or inhibit proper cooling. Most modern freezer trucks disperse cold air through rails running the length of the floor. The pallets of ice cream should be staggered so the air isn’t blocked, and can freely circulate. “If restricted, the air does a poor job of cooling,” Atapattu says.

Even the location of the ice cream within a trailer can influence its risk of melting. On a hot summer day, heat induction may cause the ice cream closest to the exterior walls to move outside the desired temperature range.

While manufacturers and distributors can use sensors to check the ice cream’s temperature at different points in time, not all sensors will reveal whether the product warmed up and then cooled back down.

“Even small changes over time can cause trouble,” Roberts says. Some newer sensors will show if the temperature changed during a period of time, he adds.

KEEP IT COOL

The Internet of Things (IoT) plays a role in proper transport of ice cream and frozen foods, say Sean Riley, director of global supply chain and the manufacturing industry with global enterprise software supplier Software AG.

For instance, in addition to temperature sensors, the IoT can monitor the refrigeration unit’s operation. Say the sensor notices a truck’s cooling mechanism generating higher than normal RPMs just to maintain proper performance. The driver will know the ice cream needs to move from the truck to the freezer as rapidly as possible once it arrives at the warehouse, as the cooling mechanism may not work for much longer.

Software AG recently announced a partnership with Dell to embed this software within devices that allow the driver, manufacturer, and transportation provider to access this information in real time. “The software streamlines, speeds, and simplifies the monitoring process,” Riley says.

Advances in cold chain management technology are prompting North American producers to consider shipping to other parts of the world, and in particular, South America. “Ice cream companies see a lot of market growth there, because it’s counter-seasonal,” Foster says.

Although temperature shifts can degrade the ice cream eating experience, there’s a positive side: The changed texture can make it easier to determine if the ice cream moved outside established temperature parameters, which could lead to bacteria growth.

While temperature changes are a safety concern, most are apt to impact the quality of the ice cream before they compromise safety. “It’s when the ice cream looks like a milkshake that safety is a problem,” Roberts says.

Ice cream safety remains top of mind, especially given recent recalls. In 2015, Blue Bell Creameries of Brenham, Texas, voluntarily recalled ice cream, frozen yogurt, sherbet, and frozen snacks distributed in more than 20 states and internationally, according to the Food and Drug Administration. The recall was prompted by an outbreak of Listeriosis traced to Blue Bell’s facilities.

The issue of safe food transportation gained even more attention with the April 2016 issuance of the rule on the Sanitary Transport of Human and Animal Food. The rule’s goal is to prevent practices that can create food safety risks during transportation.

The rule applies to shippers, receivers, loaders, and carriers that transport food in the United States by motor or rail vehicle. They’re now required to ensure the vehicles are suitable for this function, can be adequately cleaned, and can maintain the temperature required for their intended use. The companies involved also have to maintain written records of their procedures, among other steps.

FAIR TRADE IN THE MIX

Another shift in the ice cream market is the growing number of consumers who want to know the products they purchase were made fairly—that is, that the manufacturers refrained from child labor and paid all their suppliers a fair price for the materials they purchased.

Ben & Jerry’s, the maker of such flavors as Cherry Garcia and The Tonight Dough, shifted to a fair trade supply chain by late 2014. According to the company, its mission is “to create linked prosperity for everyone that’s connected to our business: suppliers, employees, farmers, franchisees, customers, and neighbors alike.” The shift to fair trade aligned with this mission, says company spokesperson Lindsay Bumps.

To make this happen, the company had to evaluate and change suppliers for several hundred ingredients, says Rob Bellezza, factory director. The Ben & Jerry’s research and development team identified vendors and sourced the ingredients.

Then, employees had to run out the current inventory and move to the new suppliers, without disrupting business. “We couldn’t just flip a switch,” Bumps notes.

Moreover, this shift occurred even as the company was growing faster than its own projections. While that’s a nice problem to have, it requires ensuring adequate manufacturing capacity, effectively using the supplier network, and prioritizing SKUs.

One key was managing supplier relationships. “We work with our vendors to ensure their inventory models are covering the need to pull inventory faster, cutting down on lead times,” Bellezza says.

In addition, Ben & Jerry’s moved to a “hub system,” where key ingredients are shipped to a central distribution center, again allowing for shorter lead times, Bellezza explains.

Ben & Jerry’s also uses an extended warehouse management system that “provides a snapshot down to the bin location,” says Nolan Titcomb, logistics lead, Vermont manufacturing. “We know all our inventory at any time and can track the movement. It has been huge in improving inventory management.”

The company maintains trailers on site, pre-cooled and ready to go. It has implemented a solution that allows real-time visibility into all inbound and outbound trucks. Titcomb and his team can check a truck’s location and load temperature, among other data. “We now have the flexibility to amend the schedule if a truck is late getting in,” he says.

WHIPPING THE CHALLENGES

“Growing fast is exciting and stressful at the same time,” Bellezza says. “From a supply chain standpoint, it’s our responsibility to unleash the growth.”

From an expanding number of flavor variations to consumers’ changing preferences and demands for fair trade practices, managing the ice cream supply chain can be one rocky road. Using a blend of technology and delivery strategies, ice cream companies have the challenges licked.