Application of E-Commerce in Cold Chain Logistics

JIA Jinan1, ZHANG Wan2

1. School of Economics and Management, Hebei University of Engineering, China, 056038
2. School of Management, Hebei University, China, 071002
jiajinan1970@sina.com
Abstract: As the global financial crisis sweeps the globe and the higher standard is required for frozen
food and fresh food, by use of the e-commerce technology, cold-chain logistics service provider could
eliminate the bottleneck for food safety and environmental hygiene, and then come to a win-win
situation with seller and buyer for surviving the financial crisis. Starting with introducing the
contemporary cold chain logistics, this paper elaborates on the cold chain logistics based on e-commerce,
as well as its advantages. According to the cold chain logistics based on e-commerce, the paper
designs and analyzes an e-commerce platform for cold chain logistics service provider.
Keywords: E-Commerce, Cold Chain Logistics, Information System

1 Introduction
The global financial crisis has spilled into most industries. The negative impact is now moving in the
logistics industry and can be fully felt in the cold chain logistics industry in 2009. After all, people still
have to eat, so the business opportunities are offered at the same time. Surviving in the financial crisis
depends on the successful e-commerce applications, which can help to establish and support the cold
chain logistics well in economic fluctuations, by ensuring food hygiene, nutrition and quality assurance,
especially for the third party logistics service providers. How to design and use an e-commerce platform
for prompt attention to all links and aspects of cold chain logistics is the key to optimizing costs,
increasing efficiency, and turning a fair profit.

2 The Contemporary Cold Chain Logistics

Simply put, the contemporary cold chain logistics is a temperature-controlled supply chain for the
perishable food. The perishable food such as the frozen or fresh food usually goes bad quickly and may
be injurious to health and environment if spoiled. This is because the exposure to light and heat,
transmission of air (including humidity), mechanical stresses, and contamination by things such as
micro-organisms or bacterium always impacts on food quality. So an unbroken cold chain logistics need
to be an uninterrupted series of processing, labeling, packaging, storing, transportation, distribution and
retail activities, which maintains a given temperature range. It helps to ensure that the pharmaceutical
drugs or the perishable foods are safety and quality assurance till expiration date, when reaching their
intended consumer. In short, the cold chain logistics is used to extend and to help ensure the shelf life of
the products like primary agricultural products, processed foods and pharmaceutical drugs.
A complete cold chain logistics system is made up of low-temperature processing, cold storage or frozen
storage, low-temperature transport and refrigeration sale. The cold chain logistics contains three basic
steps: firstly, the perishable foods purchased or fished from the origin are passed by four process
called pre-cooling, processing, storage and packaging; secondly, the perishable foods are conveyed to
the retailers such as the terminal markets, stores or supermarkets from the wholesale markets or
distribution centers of the cold chain logistics service provider; at last those products will be selling to
the final consumers. Because of temperature control thoroughly, time, temperature, and tolerance are the
three principles for cold chain logistics complied with.

3 The Cold Chain Logistics Based on E-Commerce

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The E-Commerce is the online transaction of business, featuring linked computer systems of the sellers,
host, and buyers, which can realize completely information flow, capital flow and logistics by use of
Internet. A Third Party Logistics (TPL) is often a firm that provides outsourced or "third party" logistics
services to both buyers and sellers for part, or sometimes all of their supply chain management. It
performs functions such as consultation on packaging and transportation, freight quoting, financial
settlement, auditing, tracking, customer service and issue resolution. Under a difficult economic
environment, more and more companies will be forced to outsource their cold chain management in
order to reduce costs. That would create new opportunities for the cold chain logistics service provider.
As profit margins of traditional logistics services such as transportation and warehousing keep falling,
one-stop cold chain management and other high value-added services are becoming new profit engines
[1].

The Third Party Cold Chain Logistics based on E-Commerce means that the customers such as the
suppliers (including producers, wholesalers, carriers, processors and foreign importers here), distributors
and retailers relegate part or all of the cold chain logistics activities to a third party logistics provider,
who typically specializes in integrated operation, warehousing and transportation services with
professional cold chain technology, cold chain information system and refrigerated trucks or cars. It is
intended to help the rationalization of cold chain logistics and the development of the perishable food
market. Figure illustrates it well.

Cold Chain logistics

Service Provider

Supplier
Producer

Distribution
Center

Wholesaler
Carrier
Processor

E-commerce
Platform

Distributor

Retailer

Importer
Consumer

Logistics

Information Flow

Figure 1 the Third Party Cold Chain Logistics based on E-Commerce.

The main advantage of the Third Party Cold Chain Logistics based on E-Commerce is integrating
logistics and information flow effectively. By use of the professional e-commerce technology, cold
chain technology, cold chain information system and some extensive range data capture devices
(including Bar Code, RFID, and interface devices) the cold chain logistics service provider makes
resources optimize, in order to achieve information sharing with suppliers and distributors. It also
promotes to producing new profit margin with member of the cold chain logistics. It not only enable
supplier focuses on core business, core competitiveness, and monitor, improve or optimize core business
processes, but also enable cold chain logistics service provider continuously improves business
processes to reduce costs, carry on specialized operation and improve corporate image, and finally help
them maximize business efficiencies. Moreover, the retailers and consumers also can receive more
convenience, shortcut and personalized service by means of online shopping.

4 The e-commerce platform designed for cold chain logistics service provider

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Strengthening the coordination with each corporation for the cold chain logistics depends on high-class
information transmission and information sharing. The designed e-commerce platform for cold chain
logistics service provider can help each corporation promotes the realization of economic benefits.
Figure illustrates the basic technical framework, including three parts as the E-Commerce Platform
for Cold Chain Logistics Service Provider, Supplier Intranet and Distributor Intranet.

Supplier Intranet
B2B Supplier Portal

The E-Commerce Platform for

Cold Chain Logistics Service
Provider

Distributor Intranet

B2B Gateway
EDI Adapter
Web Service

EDI Gateway
Web Service

EDI Adapter
Web Service

Interaction Platform
Business Process
Messaging Engine
Directory System
Management Console

Bar Code
POS
EOS

ERP Application
Finance
Plan
Production
Storage

B2B Gateway

Figure 2 the e-commerce platform for cold chain logistics service provider.

4.1 The E-Commerce Platform for Cold Chain Logistics Service Provider
An Interaction Platform on the e-commerce platform for cold chain logistics service provider is a
network platform that delivers supply and demand messages for buyers and sellers, viz. suppliers and
distributors here, which offer the cold chain logistics service provider a most complete middleware
platform [2]. A Business Process Messaging Engine on the Interaction Platform exchanges message or
publishes product information to trading partners by use of the well-known ports, so as to make the
e-commerce activities achieve to process-orientation, information-oriented and service-oriented. A
Directory System on the Interaction Platform enables suppliers and distributors publish and refresh,
even establish their own product catalogues and manage their own marketing service system on the
e-commerce platform. A Management Console on the Interaction Platform is in charge of customers and
partners files, product catalogues, guided selling, order management, personalization, business diagnosis
and other campaign information, including pricing, marketing, advertising, promotion etc. In a word, the
Interaction platform integrates with external systems such as POS, kiosk, Enterprise Resource Planning
(ERP) and fulfillment systems for seamless orders. Hence it is the key component of the E-Commerce
Platform for Cold Chain Logistics Service Provider. It not only delivers a rich, relevant customer and
partner experience by extending a common set of business services across every point of interaction, but
also provides the rich, ready capabilities for e-marketing.
Processing order is transferred from EDI on Distributor Intranet or Supplier Intranet to cold chain
logistics service provider Web sites. According to the sale and storage information, the latter
automatically generates sales analysis. Besides, according to the order request and the prior notice of
delivery of the goods from point-of-sale, cold chain logistics service provider inspects the storage of
distribution center to select the goods and generate bill of lading reports met the needs. Notice of
accepting order will be send to the point-of-sale on the Interaction Platform, and then to the storehouse.
Afterwards the cold chain logistics service providers Web sites will analyzes storage anew, and
generates procurement notice, if the remaining inventory is less than safety stock. Because the raw and
processed materials in the cold chain logistics system are various, seasonal and widely distributed,
the seasonal procurement and the decentralized procurement need to be emphasized. It means that the

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cold chain logistics service providers Web sites need to generate data in advance for the origin, the
harvest time and the freshness date of raw materials, at customers service. For the raw materials yielded
year-round, such as dairy products and meat products, distributor can exchange information at any
moment and transfer the bill of documents with supplier online in time to achieve high growth in
procurement. For seasonal raw materials, such as finest and freshest fruits, vegetables and
aquatic products, distributor contacts with supplier in harvest season by use of Internet to complete the
procurement transaction. At last, according to the feedback, cold chain logistics service provider Web
sites generates procurement data and inventory data, and updates information rapidly [3].
4.2 Supplier Intranet
Trying to supply some products or services, a supplier will click a program on the Interaction Platform.
An optimal feasible program and details would be provided to the supplier for reference from the cold
chain logistics service provider. After decision-making by the supplier, the cooperation, interaction,
business, as well as cold chain logistics will be carried on simultaneously.
In the supplier portal, the suppliers use ERP to exchange data on finance, plan, production and storage.
Finally the whole cold chain logistics business becomes paperless, networking and real-time. Besides,
other efficient information management systems, such as Vendor Managed Inventory (VIM),
Warehouse management system (WMS), Computer Assisted Product Search (CAPS) and Digital
Picking System (DPS) are also the necessaries for supplier.
4.3 Distributor Intranet
The operational process of a distributor with the e-commerce platform above-mentioned of the cold
chain logistics service provider is similar with the supplier. When a distributor tries to demand some
products or services, he clicks a program on the Interaction Platform. An optimum feasible program
with details would be provided to the distributor for reference from cold chain logistics service provider.
After decision-making by the distributor, the cooperation, interaction, business, as well as cold chain
logistics will be carried on simultaneously.
The distributor needs to integrate with external systems such as Bar Code, Electronic Ordering System
(EOS), Point of Sale (POS) and EDI. When the collection is finished, after performing POS scanning
and barcode reading, the distributor converts the barcode into product code. At the same time he makes
the sales data accord with trade standard format, according to EDI standards, so as to create a feedback
on marketing information and storage information. After putting the information into the marketing
database, the dataset of storage can be generated. EDI transfers the order generated to the e-commerce
platform of cold chain logistics service provider, and then the order and invoice will be confirmed.

5 Conclusion
E-Commerce technology and information technology both bring market prospect for frozen or fresh
food, so cold chain will be a new source of economic growth for surviving in the financial crisis. It is
obvious that the cold chain logistics would be divided into two parts: market in action and market online,
bind by the e-commerce platform with new technologies. The fast, flexible and reliable accessing to
business information makes it easy for the cold chain logistics service provider, distributor, partner and
supplier to conduct business, so that the cold chain logistics will still develop rapidly with the
e-commerce in the economic downturn.

References
[1]. Lu Haoting. Demand slump stumps transporters. 2009(02) [Online]. Available:
http://www.chinadaily.com.cn/bizchina/2009-02/16/content_7478566.htm
[2]. Yi Famin, EC Platform and Electronic Integration of Agri-Production Supply Chain, Finance and
Trade Research, 2006: 13 18 (in Chinese)
[3]. Ruan Yanya, Study on the Application of E-commerce in the Cold Chain Logistics Construction,
China Market, No.19, 2008: 145 157 (in Chinese)

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