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How to Benefit from Outsourcing Frozen Cold Chain Logistics

Tue, Apr 05, 2011

cold chain outsourcedOutsourcing: From Commodity to Partnership

Transportation and logistics outsourcing has evolved from a freight-based commodity to a value-added logistics and supply chain partnership in which logistics service providers (LSPs) have emerged as seamless extensions of the freight carrier. Today, LSPs generate results that meet or beat the shipper’s own capabilities. This is especially true in the life science industry and pharmaceutical cold chain where shipping biological materials has become so important, and is not the core competency of the shipper. By transferring responsibility for logistics infrastructure to a globally connected third party with cold chain expertise – valuable resources, both people and dollars can be freed up for other projects.

Traditionally, for example, a shipper managing its own cold chain must purchase, store, test, and maintain the packaging inventory, such as insulated boxes with dry ice or cryo-shippers and liquid nitrogen. These inventories have real financial impact in terms of real costs and space requirements. Unfortunately, industry metrics indicate that up to 30% of cryo-shippers are never returned adding real losses and additional cost.  Less tangible, but equally important is the personnel time and effort, e.g. staff must be trained to safely handle liquid nitrogen or may be exposed to handling hazardous dry ice.  If dealing with international shipments staff must know how much dry ice to pack to minimize risk of temperature excursions and must be trained to accurately fill out customs documentation for global destinations. Those same employees also must spend time tracking shipments and if using cryo-shippers, spend time ensuring the recovery of the cryo-shippers from their destinations.

But by shifting thinking from a freight-based mentality to a true outsourced partnership, biotech and pharmaceutical companies can work with cold chain specialists that have expertise in filling out the paperwork, monitoring the shipment and bear the cost of managing inventories.

Scalability

For those companies that have committed to minimizing risk of temperature excursions for the shipping of biological materials, the only suitable solution is the stable temperature of cryogenic shippers.  Unless your frozen cold chain shipping requirement are static, stable, or highly predictable, managing an appropriate level of inventory of cryogenic shippers is costly.  Too few cryo-shippers on-hand and shipments are held up delaying revenue or extra costs are incurred to expedite the return of inventory from the field.  Too many shippers and unused expensive inventory sits on shelves.

Outsourcing to a frozen cold chain service provider can provide overnight scalability. A client, for example, may have need for one shipment today, 50 tomorrow and 100 a few days later.  An LSP, like CryoPort, can maintain a suitable level of inventory by spreading the variability of demand over a larger customer base. And because the cryo-shippers are constantly in use, their maintenance and validation is a routine part of the service.  Therefore, LSPs provide the surge capacity life science companies need without the overhead of maintaining or retrieving their own inventory of specialty containers. 

Best Practices

As specialists, logistics service providers have benefited from seeing best practices throughout the industry and know what works and what doesn’t. And, because shipping is their core business, they have the intelligent infrastructure needed to respond to the constantly changing global transportation situations – such as weather, strikes, and foreign holidays – that may interfere with the routine delivery of the shipment.  In the past several years, shipping has been transformed from a commodity to a partnership in which cold chain specialists handle the most sensitive deliveries on time and at temperature with minimal shipper input.

Tags: Cold Chain Logistics, Outsourcing Cold Chain