Storage of dairy products becomes a public affair with the use of third-party refrigerated warehouses.

Third parties get a lot of buzz these days, from independent experts who conduct quality assurance audits to consultants brought on to evaluate systems such as HACCP and regulatory compliance to those enlisted to set up integrated processing equipment.

Off-site experts are also called upon not just for the services they provide, but where they provide those services. Public refrigerated warehouses (PRWs) run by third parties, for instance, are utilized by many food and beverage suppliers, including dairy companies, for the storage of products at various points in the cold chain.
The use of PRWs by dairy companies exemplifies other organizational and operational trends across this and other related industries. For one thing, dairies have continued to consolidate, as have their customers in retail and foodservice, making decision making more integrated and the need tor efficient storage and quick point-to-point distribution more important.

On another level, dairy processors squeezed for space and labor that are looking to outsource expertise and square footage have discovered that they’ve freed up time and space tor other functions. Also, by going with a PRW, those that produce perishable products like dairy foods and beverages entrust their products’ safety and quality to others. During periods marked by concerns over energy costs, meanwhile, manufacturers look for value through shared temperature-controlled storage space.
Beyond the operational realities faced by dairy companies, the changing nature of the products produced in today’s dairy plants has also propelled processors to go outside their walls for storage. The expansion of extended-shelf-life products is one example, with inventory able to stay in the warehouse for a longer period of time than in the past. Shelf-stable dairy and dairy-based products, encompassing items like aseptic milk, and powdered ingredients also are suited for PRWs in lieu of on-site storage areas, depending on the product type and how it fits into the processor’s product line.

Although PRWs are not for all dairies and many still opt for on-site or private warehouses, there is a steady use of public facilities for refrigerated and frozen dairy products. “Dairy is a large part of our business at several of our warehouses. They [dairy operators] are great business partners,” reports Bill Daniel, spokesman for full-service, multi-temperature storage company Henningsen Cold Storage Co., Hillsboro, Ore.

Rick Kappmeier, operations vice president, Western region for the British Columbia-based VersaCold Group, which runs 73 several temperature-controlled warehouses in the United States and Canada, agrees that throughout the food industry, companies are going public. “Our sites are very busy and we have some receiving 30 to 40 truckloads a day of product. It’s not all necessarily dairy, but we do a lot of cheese and butter,” he says.

PRW providers concur that there is a confluence of factors that have led to the increased utilization of their sites. Jerome Scherer, vice president of national sales and marketing for Union City, Calif.-based United States Cold Storage Inc. (USCS), cites the changing nature of manufacturing itself and the demands of the retail and foodservice market. “Distribution today has become regional, national and even international,” he says. “Food manufacturers need to be able to forward their production to distribution centers that are located within their target market areas and by doing so, they add the value of availability to their product while positioning it for efficient order assembly and delivery.”

That changing terrain of the cold chain is also mentioned by Kappmeier, who says distribution methods impact the choice of warehousing. “It depends on how big of an area they service and on their proximity to their marker,” he says.

Not to be discounted is the increasingly competitive environment in which dairy companies products are working.

“Consolidation in nearly every segment of the frozen-food industry is creating new competitive factors, a radically different customer landscape and the need to collaborate and work closely with customers to reduce costs,” Scherer says.

Internal factors are also influencing the decision to move inventories out of a dairy company’s own location, Scherer notes. “There are faster turning inventories and the proliferation of new SKU’s,” he says. “And accuracy is more important than ever and on time delivery of orders is a must.”

Kappmeier also points to the forces pulling on dairy manufacturers that must juggle priorities for expansion and investment. “One of the main reasons would be whether or not they want to dedicate their scarce capital to growing their business or to bricks and mortar with expensive coolers,” he says.

For whatever reason they are going with PRWs, dairies have high standards when it comes to the care of their perishable products. “Dairy manufacturers - or anyone in the food chain, for that matter - are looking for consistent temperatures and safe environments and, because products may have a short shelf life, they re looking for people with the discipline to handle first-in, first-out requirements,” Kappmeier says. “They have a very disciplined approach to the supply chain.”