Fresh Factory revolutionizes the cold chain in Indonesia

Larry Ridwan, CEO and founder of Fresh Factory, is a man who had already reached the pinnacle of his career at several major companies but still dared to chart a new course in his life. Born in Ambon, Maluku, Indonesia, Larry took a leap of faith by helping expand the fisheries market in Maluku.

In early 2020, he set his sights on developing his family business in Maluku, which involved wholesaling fish from local fishermen in Maluku to markets in Muara Baru, Jakarta.

During the COVID-19 lockdown in 2020, Larry conducted research on meat and fish transactions on online marketplaces. He found that fish prices were threefold on the online platforms than the wholesale prices he offered. 

Furthermore, selling fresh meat directly to consumers from a distance was more challenging as it required maintaining the quality and freshness of the products.

According to the East Ventures – Digital Competitiveness Index (EV-DCI) 2023, the uneven transportation infrastructure and weak links in supply chains have led to high logistics costs.

The exact issue is mirrored in the cold chain infrastructure in Indonesia, which is experiencing supply shortages and requires significant improvements. According to data from the Indonesian Cold Chain Association (ARPI), the number of cold storage pallets remains deficient, at approximately 2.2 million units, despite the demand for 4 million pallets. It results in a significant amount of food waste and a decline in the quality of raw and processed foods, affecting their taste and texture.

In addition to fresh food and processed products, the cold chain industry has a broad spectrum. It is essential in various sectors, including the pharmaceutical and cosmetic industry, chemicals, and electronics.

Recognizing this issue and the immense potential of the cold chain industry in Indonesia, Larry, along with other Co-Founders, Widijastoro Nugroho, and Andre Septiano, established Fresh Factory in 2020. East Ventures led the early-stage funding for Fresh Factory in 2022.

“Fresh Factory built a network of hyperlocal cold chain fulfillment centers to support Small and Medium Enterprises (SMEs) and large companies in Indonesia that wished to expand their businesses and reach a broader consumer base,” Larry stated.

During the pandemic, Fresh Factory established 14 fulfillment centers in Greater Jakarta, each eight kilometers apart. Each fulfillment center was equipped with cold chain storage and other facilities. Currently, Fresh Factory has 45 fulfillment centers in 20 cities, including Medan, Greater Jakarta, Semarang, and Yogyakarta.

Compared to other cold chain players, Fresh Factory implemented technology and warehouse management systems aligned with most cold storage demands within its cold chain services. The customization catered to the necessities of its partners, enabling them to be served efficiently with Standard Operating Procedures (SOP) and the necessary personnel to ensure the safety and quality of the stored products.

For example, the warehousing system at Fresh Factory has been integrated with marketplaces and third-party cold chain logistics (3PL), allowing tracking and transparency for tenant partners. Tenant partners can see and monitor the quantity of goods in supply, expiration dates, warehouse inventory, and room temperatures within the warehouse via the Fresh Factory website.

Collaboration as the key to logistics issues

In addressing the high and inefficient logistic costs, the Government has developed the infrastructure and launched the National Logistics Ecosystem (NLE) platform.

The NLE initiative, originating from Indonesia’s Ministry of Finance, aims to build a digitized logistics ecosystem to enhance stakeholder collaboration. Implementing NLE enables operational improvements in the logistics sector and opens up private investment opportunities to improve efficiency.

In 2023, logistics players like Fresh Factory can develop technology adoption strategies, diversify their businesses through collaboration, and expand ESG implementation.

Fresh Factory has collaborated with various parties, including retailers, by partnering with 600 members of the Indonesian Retail Entrepreneurs Association (Aprindo). Additionally, the startup has collaborated with warehouse owners such as Perum BULOG and PLN Group to expand its warehouse reach. It also collaborated with PT Nusantara Card Semesta (NCS) to enable a holistic cold chain distribution service to partners and customers. 

With this collaboration and the technology, Fresh Factory aims to increase the number of warehouses to 100 units by the end of 2023, with access to over 50 cities and regencies.

Moreover, the company aims to improve the cold chain infrastructure in Indonesia, thereby raising the quality standards for goods that require special treatment, particularly for food, beverages, processed products, and various other items.

“With the cold chain infrastructure we are building alongside other players in this ecosystem, we hope to close the gap where every individual in Indonesia can improve their living standards by obtaining quality food at affordable prices,” concluded Larry, who dreams of having fulfillment centers in 80 cities throughout Indonesia. 

Download the EV-DCI 2023 report here.