Five predictions driving transformation in the food and beverage industry
Five predictions driving transformation in the food and beverage industry
Wed, 02/24/2021 – 02:34
- The pandemic turned the food and beverage industry on it’s head last year, but what does the future hold? Marcel Koks of Infor has five predictions for businesses to succeed
The unforeseen disruption experienced in 2020 has prompted food and beverage producers to future-proof their businesses as much as possible. While uncertainty seems set to continue for some time, by focusing on expediting time to market; food quality and safety; supply chain resilience; and the creation of omni-channel models, companies are putting themselves in the strongest position they can to embrace, and capitalize on, future opportunities.
Operational excellence is driving successful outcomes across many of these initiatives, as firms look to optimize resource efficiency, whether that’s people, energy, water, or all of these areas. In agriculture, for example, precision will become imperative. New technologies such as internet of things (IoT) will therefore become crucial in facilitating the granularity required to minimize waste, while maximizing output.
So, what does the future look like for food producers?
Prediction 1 — Cloud
There’s little doubt that cloud is set for huge growth as a means of creating robustness and agility. Frankly, there is no other way when you look at what the business is asking for. It’s crucial in fully capturing data from IoT devices and the extended supply chain. There’s little point in having temperature readings in a structured enterprise resource planning (ERP) database that sits safely within the company’s firewalls. That’s why we have a data lake in the cloud and use artificial intelligence (AI) services and computing power in the cloud to provide intelligence and make the data meaningful. This goes way beyond installing a piece of software. What is smart today will be outsmarted tomorrow with even more clever logic.
A big advantage of cloud is having this kind of technology at hand as a service instead of having to do a lengthy IT project to implement something that will not scale. Cloud also represents an opportunity to implement changes faster as opposed to having to do technical migration projects that often require teams to take a step backward before being able to move forward.
Consider the case of Norsk Kylling AS, a food company located in Støren, Norway, about 200 miles north of Oslo. Norsk Kylling aims to create the world’s best value chain for chicken production, and it is using Infor CloudSuite Food & Beverage to help provide better control, quality and efficiency through the value chain.
According to Norsk Kylling IT manager Torfinn Utne, the business is continually looking to develop, improve and adapt to new quality requirements, laws, regulations and sound production. With a new factory under construction at Orkdal, it became important to install a modern, cloud-based business system to support data capture and automation in the production facility and manage logistics, inventory and maintenance processes. Utne said:
The cloud ERP system now gives us tight control of data, materials and financials through our complex value chain. We have about 150 suppliers from three categories of farms that give us either eggs, hatching hens or broilers. The business system covers both hatchery and slaughterhouse, purchase and sale of eggs and chicken. Now, we have full control over, and can document, the product from farm to fork.
Previously, much of the information was collected and handled manually, which is time-consuming and can be a source of incorrect information. With more correct management information, Norsk Kylling has reduced waste, gained better control over inventory, and it can plan production better in relation to market needs, Utne explained.
Prediction 2 — Omni-channel
Food-producing companies have seen a huge shift in demand, with home deliveries taking precedence over restaurants and supermarkets. This trend is unlikely to snap back to pre-pandemic levels, as consumers have become more used to ordering their food on the internet. Being omni-channel makes the business less vulnerable and able to take a larger piece of the market. We will see many food producers becoming omni-channel in 2021 by implementing e-commerce, either being an online store or connecting to a digital marketplace.
Prediction 3 — Industry 4.0 technology
Despite the need to become more efficient and reduce food, water and energy waste, only 6% of food processors claim using IoT, with a further 12% stating plans to explore its role within the next two years. A staggering 82% have no plans whatsoever.
These findings could be explained by the fact that until now, we have seen some experiments in isolated domains, such as image recognition in inspection equipment, IoT devices in farming or in production lines. Yet, there appear to be few examples of IoT being used widely to drive operations. For example, production machines have sensors to capture a lot of data such as temperatures and other quality parameters, but all data remains in the machine and is lost and meaningless after the production run.
Product recalls are one of the greatest financial risks food and beverage companies face. Yet research shows that no firms claim to be completely digital for track-and-trace and quality management, with only 7% saying they are “largely” ready. Half (50%) say they are not digital yet, while 43% describe their status in this field as “limited.” The good news is that in 2021, more food producers will have paved the way by having a digital platform in place to capture data and connect this to the transactions in their ERP systems.
Prediction 4 — Data driven
A digital platform makes it possible to use IoT in a more holistic way. The first benefit of this is that faster and more targeted recalls will be possible, with the ability to identify and analyze the root cause of the issue immediately. The second is that data can be used to drive decisions and create a smarter company. A good example is having insight into the inbound overseas shipments of crops, not only with regard to their estimated time of arrival, but also the storage conditions during transportation, so that quality and use-before dates can be predicted more accurately. This extends the control of the supply chain outside of the four walls of the factory and uses data from farm to fork to increase quality and productivity, reduce food waste and minimize food safety risks. In turn, this can turn challenges into a competitive advantage.
Other applications are using image recognition and machine learning (ML) to dynamically determine the quality of received ingredients and using that to determine the purchase price. Something which would have a big impact on food safety would be the use of IoT sensors to check whether equipment is clean, with the results triggering a cleaning order to avoid contamination risks. This brings us on to the next big trend that 2021 is likely to see.
Prediction 5 — Transparency to the consumer
One such advantage is transparency. Consumers are increasingly seeking more in-depth information about products to help drive their purchasing decisions, with 67% of consumers stating they want to know everything that goes into the food they buy.
As a result, it’s important to demonstrate the efforts being generated into sustainability credentials to consumers. We are seeing a growing number of retailers putting pressure on producers to provide information.
In 2021 and beyond, we will see that this will be expanded to more product categories and used to differentiate producers and prove the sustainability of the supply chain. This means extended control of the supply chain from farm to fork and identifying whether the crop is GMO-free, what kind of crop protection has been applied, and other factors.
Register for the Infor webinar, hosted by me and my colleague Mikael Bengtsson, Industry & Solution Strategy Director for Infor Food & Beverage North America, to learn how the right technologies can help food and beverage producers:
- Reduce downtime with a proactive approach to overall equipment effectiveness
- Increase productivity, customer service and quality by improving supply chain visibility
- Ensure food safety and reduced waste with modern technologies.