Fresh Factory Builds Micro Refrigeration Warehouse Network

The presence of e-commerce has also changed the logistics distribution infrastructure that can reach many areas with fast delivery. Distribution with the traditional approach is no longer relevant because digitalization has made many entrepreneurs adopt a D2C (direct-to-consumer) strategy.

Adjustment of distribution patterns to D2C patterns is a must, it just requires last mile service and infrastructure to support it. This solution is still minimally present in Indonesia and is an opportunity for Fresh Factory to work on it.

Larry Ridwan with Andre Septiano and Widijastoro Nugroho started Fresh Factory since 2020. All three have the same background, both are business people who sell products related to cold warehouses.

“We are experiencing difficulties because there is no infrastructure that is efficient and effective in distributing our products,” he continued.

Industry Demand for Refrigeration Machines is Increasing

Talking about market potential, this refrigerated warehouse is experiencing increasing demand in Indonesia. This industry contributes more than 15% of GDP in Indonesia. Industrially, in 2018, the fishing industry recorded an increase in production of up to 25 million tons.

In the same year, the agricultural industry also increased to 49 million tons. As for processed food, consumption increased by 7 million tons with business potential reaching $13.8 billion. The presence of a refrigerated warehouse is also needed by the pharmaceutical industry.

Meanwhile, the Forrester Research report revealed that the food and grocery business experienced significant growth in 2020 triggered by the pandemic, accounting for 11% of the global e-commerce market, a significant increase from only 5% in 2015.

The food and grocery industry is expected to grow further to 15% by 2025. “However, inadequate last mile solutions limit the adoption of cost (time & money) of alternative last mile services which are still high compared to the size of consumer transactions.”

Based on these needs, Fresh Factory is a startup that focuses on offering cold chain solutions, which consist of cold product storage management and procurement services (order selection, product packaging, and delivery to customers via shipping operators).

This startup takes a hyperlocal approach by creating a network of micro-cooling warehouses within affordable distances from each other, thereby creating an efficiency impact.

Fresh Factory Solution

According to Larry, most of the cold chain solutions in the industry are here to serve large corporate consumers, so that the infrastructure is more centralized.

The system used is also more directed at the warehouse management system (WMS), not the fulfillment management system (FMS). That is, WMS only provides a warehouse tracking system, precisely when goods enter and leave.

Fresh Factory Co-Founder & CMO Widijastoro Nugroho added, while the fulfillmentmanagement system added a pick and pack feature.

Thus, entrepreneurs can do product bundling, special packaging, promotional inserts, costume packaging, and so on. “So, Fresh Factory has an FMS in it as well as a WMS,” he said.

Larry continued, not only refrigeration warehouse networks that can be rented by entrepreneurs, but there are also procurement solutions. For the flow, business people can have a Fresh Factory branch warehouse location according to their online business expansion area.

Then, the products to be sold are sent to the warehouse using the delivery provided by Fresh Factory’s logistics partners to be stored in the warehouse. When an order occurs, through the Fresh Factory system, the tenant will enter order info such as product, quantity, and other info.

The Fresh Factory will process the procurement until it is sent to the buyer. “Thus, the process will be much better, faster and more efficient than before.”

As of now, Fresh Factory has 15 micro warehouses spread across Greater Jakarta, Java and Bali. Each of these warehouses is 8 km away from each other, so the procurement process will be much more efficient.

It is also equipped with FMS to help the end-to-end integration process for entrepreneurs so they can scale up faster. It is claimed, Fresh Factory currently has more than 100 tenants, including small businesses. Throughout 2020, the total transaction value of Fresh Factory reached $1.8 million or IDR 26 billion.