IoT & Data Driven Cold Chain
Low temps, high growth. IoT, VarCode, and some inventory accounting tips for founders.
Imagine a meticulously controlled ecosystem that ensures your vaccine stays temperature-regulated from the lab to your doctor’s office, or your ice cream stays frozen from the factory floor to your doorstep - that's the cold chain system put simply, where temperature-controlled logistics revolutionize everything from food freshness to life-saving vaccines.
Where there are multiple angles of opportunity lies high growth, and the cold chain market is no exception. The market is projected to reach $542.9 billion in market cap by 2026, growing at a CAGR of 15.0% by 2026. The main driver: the food industry.
What does tech enablement look like?
I got to dive deep into the IoT (Internet of Things) space during my time in venture. It’s building a sophisticated neural system out of previously disconnected, “dumb” objects - allowing them to communicate with each other and with us.
For example, your smart thermostat can communicate with your phone to adjust the temperature in your home, or your fitness tracker can send your workout data to an app on your computer. IoT makes our lives more convenient and efficient by enabling devices to gather and share information without human intervention.
With products moving quickly between manufacturer → distributor→ end user, IoT sensors carry the data that each player in the supply chain flow relies on to ensure successful delivery.
(Source: Altexsoft)
Let’s take VarCode as a great example of IoT at play in the cold chain space. Using dynamic barcodes, their proprietary Smart Tag technology tracks the product’s temperature throughout its journey. (Tag sample below)
The tag is customized by the customer. Want a specific time duration and temperature threshold for the product?
Easy integrations. Unlocking additional ROI by linking to a customer’s current systems.
Data digitization. No margin for error through misinterpretation or printed documents.
Why it matters
This kind of technology is a huge risk mitigation play for companies in the food and pharma spaces.
For companies that rely on replenishments or safety stock, any damages make or break their numbers that drive how a company thinks about demand forecasting. The damage is often not realized until it arrives at the fulfillment center, in which case the company typically assigns blame to the fulfillment center for mishandling before pointing a finger at the manufacturer.
Blame game aside, the company has to now place a valuation on the unsellable product and project the impact on overall profitability. One way to reach this valuation is getting to the net realizable value (NRV = estimated selling price of an item - any additional costs necessary to make the sale).
For the founders who are reading this, here’s some helpful accounting:
Track and document the value of these goods. This involves recognizing the loss on the income statement and then reducing the overall value on the balance sheet.
Adjust entries. Accounting entries are made to adjust the inventory accounts and reflect the change in value due to the damaged items. These entries ensure that the financial statements accurately represent the economic reality of the damaged inventory.
What I’m reading this week
Read Write Own: Building the Next Era of the Internet, Chris Dixon
I said it while I was in my undergraduate years at NYU when I got to experience the boom and bust of crypto, and I’ll say it again - blockchain as a technology is going to be the driver we need to create accountability, ownership, and transparency. The value of blockchain seemed to get drowned out by the hype of crypto, and I wish this book had arrived sooner.
TLDR; RWO is a lucid and accessible way to understand the architecture of the internet and the power structures that underpin it all.
As a content creator, however new, I believe in creators taking full autonomy and ownership of their work. We’re continuously moving into an exciting new world order of the internet where owners of their digital assets can be heroes of how they monetize their work vs. victims of how platforms structure their take rates.
The three eras of the internet, as spelled out by Dixon:
I. "Read" Era (ca. 1990-2005)
Early internet protocol networks democratized information. Anyone could type a few words into a web browser and read about almost any topic via websites.
II. "Read, Write" Era (ca. 2006-2020)
Corporate networks democratized publishing. Anyone could publish their content via social media and other platforms.
III. "Read, Write, Own" Era (2020 - Present and beyond)
Natural synthesis of the two prior types, but with the goal of democratizing ownership. Anyone can become a network stakeholder and enjoy the economic upside that was once only enjoyed by corporate affiliates. They can read and write on the internet but they can now also own.
Newsstand
Are ocean spot rates past their peak? (FreightWaves)
Flexport’s Apple air freight deal has burned through cash (The Information)
Why blockchain technology hasn't dominated the supply chain... yet (Entrepreneur)
Up next on Chain of Supply
Last-Mile Delivery