Aptean Global Food and Beverage Outlook (en-US)

Aptean Global Food and Beverage Outlook 6 trends that will influence the food industry in 2023

2

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Change is the Main Constant in Food and Beverage Production The food industry has been reminded in recent years that change is inevitable. While 2022 marked a year of recovery and rebuilding from the impact of the pandemic, food producers, distributors and manufacturers were faced with new challenges: from rising inflation to supply chain bottlenecks.

How have world events in 2022 impacted food companies’ operational strategies? And how will they influence their priorities in 2023? To understand the state of the market, Aptean commissioned global analyst firm IDC to survey 650+ food and beverage companies in North America, Belgium, Germany, the Netherlands and the UK. In this paper, we’re going to analyze six trends revealed

by IDC’s research and discuss how food manufacturers, producers and distributors can prepare for these trends and adapt their business to market changes in 2023.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

3

Trend #1: Digital Transformation is Demonstrating Tangible Benefits Digital transformation (DX) is no longer just a goal for food and beverage companies; it’s a reality.

99% of organizations are now in the process of digitally transforming their operations, and almost 1 in 5 have already completed digital transformation projects and are using the data to influence their decisions.

More importantly, food manufacturers, producers and distributors that have invested in digital transformation programs are seeing tangible business benefits. According to the IDC whitepaper, Global Food and Beverage Industry Trends and Strategic Insights 2022, approximately three quarters of companies have seen KPI improvements as a result of digital optimization, and 45-55% expect even greater improvements in 2023.

The greatest returns have been experienced by food and beverage companies that invested in industry-specific software like Aptean Food & Beverage ERP. For example, those with a specialist food and beverage ERP system have increased their revenue by 5.3% and profit by 3.9% this year on average, compared to 2.9% and 3.7% for organizations using a general ERP platform.

3 out of every 4 food and beverage companies have seen KPI improvements after investing in digital transformation.

4

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

In terms of which DX initiatives are driving change, cloud migration has been (and will continue to be) critical to future-proofing food and beverage businesses.

Half of organizations say they are investigating, moving or have migrated to a cloud ERP system this year, compared to just 38% last year. Those with cloud ERP systems already in place have seen their revenue increase by 6.2% on average, compared to an average revenue increase of 2.7% among food companies with an on-prem ERP system.

Looking ahead, more than a third think cloud networks will be the most impactful technology for their business over the next five years, with a further 35% citing cloud applications as a business game-changer.

Companies investing in cloud and food industry-specific ERP systems have experienced 2.4–3.5% greater revenue increases than those using general ERP solutions.

What Does This Mean for Your 2023 Strategy?

Digital transformation is an imminent driver of change. Industry leaders are already improving their revenue and profitability through DX investments—and the gap between front-runners and laggards will only widen.

To refine your digital transformation strategy in 2023, your organization needs clear operational objectives. This will enable you to focus on which technologies will deliver rapid change and ROI by automating processes, solving problems and revealing opportunities.

Choice of vendor will be critical to your digital transformation strategy in the next 12 months.

Make sure you partner with providers that understand sector nuances and can provide specialist functionality. We’ve already noted how industry-specific ERP software yields greater returns, and this impact can be replicated across other operational solutions such as Enterprise Asset Management (EAM) and Overall Equipment Effectiveness (OEE) software.

As your DX strategy matures, it’s also vital to consider how these systems integrate. Back-end complexities cannot interfere with process automation or data intelligence. Cloud-based systems make maintenance and deployments simpler to manage, and some food companies are further lightening the load by choosing software with pre-existing integrations—like ERP with integrated EDI for digitizing documentation and retailer compliance.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

5

Trend #2: Economic Uncertainty is Increasing Focus on Efficiency After three difficult years, the food and beverage market looks no calmer in 2023, and this is weighing on the minds of producers, manufacturers and distributors.

Pandemic fears have been replaced by concerns over rising inflation, energy costs and international conflicts. In fact, 1 in 5 companies say macro-economic and geopolitical shifts will be a major concern for the next five years.

With uncontrollable factors influencing performance and profitability, food and beverage companies are looking to offset external uncertainty with internal efficiencies.

A third of organizations plan to prioritize operational improvements and waste reduction in 2023. 35% are looking to reduce supply chain waste and 30% want to reduce energy and water consumption.

Investment in enterprise technology will prove pivotal to delivering these operational efficiencies.

Despite market pressures, half of companies predict their technology spending will increase by 25% or more over the next 12 months.

How would you rate your organization’s level of concern around the following external pressures over the next year?

3.94

Rising inflation

3.74

Ongoing or future geo-political conflict

3.71

Talent / labor shortages

3.67

Changing consumer expectations / habits

3.63

Sustainability mandates / climate change

3.38

New waves / variants of COVID-19

3.1

3.2 All Respondents

6

Aptean Global Food and Beverage Outlook

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

Level of Concern (1 = Not a concern, 5 = Significant concern)

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

4 Ways Automation Can Reduce Business Costs

› › › ›

Issuing work orders on routine maintenance activities to extend equipment life Integrating OEE and shop floor level devices to understand equipment availability and speed Measuring production system inputs and outputs to identify and solve process bottlenecks Monitoring quality in real-time to catch issues early and implement corrective actions quickly

What Does This Mean for Your 2023 Strategy?

Operational efficiency and digital transformation go hand-in-hand. To run leaner in 2023, you need to benchmark your performance and establish realistic goals, and DX investment is enabling more food companies to set clear KPIs and create strategies for improvement.

Automating operations and enhancing data insight can allow your business to optimize stock, ingredient usage, quality control, distribution and product development in realtime, in line with customer demand.

In the United States, 30-40% of food supplies are wasted. These incremental improvements help to prevent the spoilage, giveaway and overproduction that make your operation less financially and materially efficient. Integrating data with production planning tools enables your company to plan more efficiently, profitably and sustainably.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

7

Trend #3: Supply Chain Resilience is Still a Work in Progress Market disruption has tested food companies’ end-to-end capabilities. However, some parts of the business—like the supply chain—have proven particularly vulnerable.

Supply chain management will continue to be a major concern for food companies in 2023, with 3 in 10 citing lack of visibility and flexibility as the most problematic gap in their digital transformation strategy. One significant reason for this is lack of system integration; less than half (46%) of organizations have integrated their supply chain management system with their ERP platform.

Producers, manufacturers and distributors recognize the role of better supply chain management in their overall business resilience. 25% of food companies believe their current supply chain set-up is affecting their development, as a lack of digital competency impacts their ability to transition their supply chain to new business models.

In terms of specific supply chain goals, 1 in 5 companies are keen to prioritize traceability over the next 12 months. This objective is especially significant for manufacturers and distributors in North America, as upcoming changes to Section 204 of the Food Safety Modernization Act (FSMA) mean every movement of 16 ‘high risk’ foods including fish, crustaceans and ready-to-eat deli salads must be captured and documented.

3 in 10 organizations say supply chain visibility and flexibility is the most problematic gap in their digital transformation strategy.

8

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

What Does This Mean for Your 2023 Strategy?

For a fully optimized operation, your supply chain technology must be integrated with other systems to leverage data and enable end-to-end transparency. Supply chain traceability is not a problem that can be ‘patched’, as we outlined in our recent whitepaper on supply chain traceability.

Connecting supply chain management software with your food ERP platform will increase your understanding of how production influences supplier demand and vice versa.

75% of food companies that have invested in the supply chain as part of their wider digital transformation strategy have already seen an improvement in KPIs. To increase supply chain resilience, your organization needs to integrate supplier data with advanced planning and demand forecasting insights to analyze your needs, facilitate transactions and intelligently manage material availability.

It’s also advantageous to use ERP software with built-in BI tools to analyze which of your suppliers are performing well in terms of ingredient quality and speed of delivery. For example, Aptean Food & Beverage ERP can track more than 300 food-specific KPIs. Working with an industry specialist vendor can generate results faster, as they understand the pressures being placed on food industry supply chains and can manage the integrations needed to run a cohesive operation.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

9

Trend #4: Automation is Addressing Labor and Skills Shortages One of the most significant challenges impacting food companies currently is a chronic shortage of people and skills. While attracting the right talent has always been a goal for manufacturers, producers and distributors, food industry workers are in chronically short supply: 35% of organizations say lack of talent and skills will be their biggest barrier to digital transformation in 2023, compared to just 20% in 2022.

As recruitment programs continue, many food and beverage organizations are looking at how infrastructural efficiencies and digital automation can offset staffing requirements and convert manual processes into machine-led operations.

We’ve already noted that 50% of companies plan to significantly increase their enterprise software investment over the next 12 months. The most-desired technologies include ERP, Business Intelligence (BI) and human capital management solutions—platforms that drive efficiency and productivity.

However, there are internal obstacles that food organizations must address to become technology led. Almost a quarter (22%) of food producers, manufacturers and distributors say resistance to change is a barrier to digital transformation within their business.

10

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Which type of systems / technologies does your organization use or plan to use?

Enterprise Resource Planning (ERP)

26.9%

Supply Chain Management (SCM)

25.3%

2.2%

70.9%

5.5% 2.4%

66.8%

Business Intelligence (BI)

24.1%

Traceability (Software / system creating end-to-end traceability)

23.3%

Electronic Data Interchange (EDI)

22.6%

65.8%

Online Payment Platform

22.4%

67.0%

4.9% 5.7%

Product Lifecycle Management (PLM)

22.4%

66.1%

6.7%

Customer Relationship Management (CRM)

21.4%

Quality Management Systems (QMS)

21.2%

Human Capital Management (HCM)

17.6%

Enterprise Asset Management (EAM)

17.2%

Overall Equipment Effectiveness (OEE) Application

10%

4.2% 7.5%

5.8% 2.7%

71.7%

7.8% 2.8%

62.8%

6.3%

64.7%

40%

50%

13.8% 11.8%

7.3%

64.4% 30%

4.8%

5.2% 0.9%

70.3%

20%

7.6% 8.1%

72.5%

14.6% 0%

8.8%

59.8%

16.1%

Manufacturing Execution Systems (MES)

6.0%

62.3%

5.4% 60%

70%

80%

Industry-specific (F&B) Software Solution

Horizontal Software Solution

Homegrown / Manual System

No System / Not Managed

15.5% 90%

100%

What Does This Mean for Your 2023 Strategy?

Smart food manufacturers, producers and distributors will turn the current labor crisis into an opportunity to reassess their infrastructure. Recruitment challenges may be frustrating, but they provide an ideal business case for automating manual tasks to improve consistency, accuracy and speed of production.

Digital optimization will reduce the headcount your organization needs to maintain output, and also make your company more attractive to tech-savvy employees.

Digital literacy is becoming a key recruitment pillar for the food industry, as the younger workforce expects a professional technology experience comparable to the personal devices that run their lives. Meanwhile, building an internal culture of optimization and innovation through operational software will complement the skills and resources your business is attracting through external recruitment.

In addition to digitizing manual processes, becoming a data-driven organization will also streamline your communications, formalize data capture and improve knowledge transfer.

This prevents critical information being held in people’s heads and mitigates the impact of retirements and people leaving your business.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

11

Trend #5: Outsourced Partnerships Will Accelerate Growth While digital transformation is enabling food and beverage companies to increase internal efficiency, many organizations acknowledge that they can only grow so far—or so fast—through in-house resources.

To combat this, industry leaders are forming outsourced partnerships to scale production capabilities and increase their speed to market.

Three quarters (74%) of food companies now outsource some element of their production, with a third anticipating their reliance on contract manufacturing or co-packing partnerships will increase in 2023.

Meeting fluctuating consumer demand is the number one reason that food companies plan to invest in an outsourced model, with cost efficiency close behind. However, producers and manufacturers recognize the potential risks associated with relying on external partners: a quarter are nervous about losing control over product quality, while 22% have traceability and compliance concerns.

What is the top reason your organization considers or utilizes contract manufacturing / outsourcing?

The need to meet fluctuating demand in a timely manner

25.3% 24.8%

Save money / costs Labor shortages / lack of production capability

20.8%

Lack of talent / expertise / core competency

14.9%

Producing pilots for new products

14.1%

0%

5% All Respondents

12

Aptean Global Food and Beverage Outlook

10%

15%

20%

25%

30%

Percentage of Respondents

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

What Does This Mean for Your 2023 Strategy?

We’ve spoken at length about the role of data visibility in achieving your 2023 goals. However, insight must be converted into action to drive profit and growth. Outsourced partnerships are an effective way to align demand planning with food and beverage production at scale, to maximize your output.

Software integration will prove critical for transitioning seamlessly to an outsourced manufacturing model, as your company can scale production in line with demand without compromising on consistency, flavor or quality control.

Choosing an industry-specific ERP platform will ensure that your recipe management and quality control documentation can be accessed and utilized by outsourced manufacturing partners, to provide a consistent consumer experience.

We’ve used contract manufacturing/co-packing as an example of how outsourcing can accelerate your business growth, but there are other partnerships to consider. For instance, third party logistics companies can scale your distribution and fulfillment capabilities.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

13

Trend #6: Sustainability Will Prove Pivotal to Connecting with Consumers Most of the trends we’ve discussed are reacting to a turbulent and challenging market. But food and beverage brands have another, proactive focus for the next 12 months: sustainability.

Becoming more sustainable is the number one objective for food producers, manufacturers and distributors in 2023, with 40% saying it will be a priority for their business. And the main engine driving sustainable change is consumer demand.

30% of food companies say customer appetite is driving their focus on eco-friendly processes and product offerings, and 28% believe sustainability will give them a competitive advantage in the marketplace. Sustainability also intersects with efficiency objectives, with 27% of organizations hoping it will reduce waste and energy consumption.

2023 will also bring significant sustainability legislation changes in some regions, which must be addressed. For example, the Supply Chain Due Diligence Act is due to launch in Germany, which will enhance environmental and human rights protection in the food supply chain. Companies are also continuing towards the UN’s 2030 Sustainable Development Goals.

40% of companies say sustainability will be a business priority in 2023.

14

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

What Does This Mean for Your 2023 Strategy?

Data analytics will be critical to the success of food sustainability strategies over the next 12 months. To achieve change, your business needs to benchmark your current capabilities before setting and tracking progress towards sustainability goals.

Even if your software investment is driven by other objectives, incorporating sustainability KPIs will increase the value of your digital transformation strategy and help to drive higher ROI, quicker.

Investing in operational technology with business intelligence (BI) tools will enable you to not only make sustainable changes, but also prove to customers that your sustainability strategy is working.

Providing accurate, quantifiable information on how you’re improving practices and lowering your climate footprint is more compelling than publishing a set of sustainable values on your website.

For more on this subject, read Aptean’s sustainable production and distribution playbook for the food industry.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

15

Maintaining Momentum in an Ever-Moving Sector After several years of turbulence, food industry organizations are used to being in a state of perpetual change. The challenge is no longer how to stand still in an ever-moving environment, but how to become more agile, adaptable and resilient.

Digital transformation is the key to unlocking greater business agility, and the insights we’ve shared show that food producers, manufacturers and distributors recognize the need to keep investing in their digital infrastructure, even during challenging market conditions.

The key to success is understanding those technology needs holistically, as part of a complete digital transformation strategy. Food companies that invest in flexible, scalable and fully integrated industry-specific solutions will be well-positioned to extract value quickly and continue extracting value from this investment well beyond 2023.

Aptean Food Industry Solutions ERP In this competitive industry, you can’t settle for cookie-cutter solutions. Aptean Food & Beverage ERP automates processes and streamlines operations to connect your departments and production activities.

Our award-winning cloud-based ERP solution can manage your supply chain, analyze waste, boost process efficiency and forecast future sales, while meeting quality control requirements.

Key benefits and features include:

› › ›

Enable full end-to-end traceability down to component level – use detailed lot profiles to define and number lot records according to a wide range of criteria Manage your trade agreements with ease – incorporate details on each trade plan within every trade agreement and even specify different rate configurations by defining terms on rebates, royalties, billbacks and payables Ensure your supply chain is balanced to avoid inventory excess or shortage - manage your inbound and outbound shipments with a consolidated view and link warehouse receipts to purchase orders

Aptean Food & Beverage ERP has been named North American Food and Beverage ERP Product Leader of the Year by Frost and Sullivan and a ‘Major Player’ in Two Separate IDC MarketScape Reports for Worldwide SaaS and cloud-enabled ERP applications.

16

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

EDI

EAM

EDI (electronic data interchange) digitizes and organizes paper-based business communications and exchanges. Aptean EDI is integrated with Aptean Food & Beverage ERP software to work seamlessly in streamlining and automating your data transfers.

Investing in a real-time enterprise asset management (EAM) solution will enable your business to maximize reliability, de-risking production and preventing wastage caused by technical downtime. With an advanced system like Aptean EAM, you’ll be able to optimize the performance of your equipment, cutting down on malfunctions that result in rework and scrap while lowering the total cost of ownership for your assets.

Business Intelligence (BI) and Analytics BI software integrates critical data to provide crystal-clear operational information for making quick, accurate, sustainable decisions. Aptean Business Intelligence tracks more than 300+ KPIs out of the box, helping you to predict how process changes will affect your bottom line.

Routing and Scheduling Route optimization software gives your private fleet, agency or dedicated 3PL a way to plan and optimize routes for each vehicle in a way that reduces overall costs, increases drops per day and enhances customer satisfaction. An established solution like Aptean Routing & Scheduling Paragon Edition leverages decades of transportation and optimization experience via advanced, proprietary algorithms to reduce fleet costs up to 30% and even decrease total miles driven by 5%. Plus, your transportation scheduling team will be freed up to work on more pressing issues facing your company.

OEE Overall equipment effectiveness (OEE) technology provides full visibility into production processes, allowing you to implement changes that directly impact plant profitability. Integrate Aptean OEE into your shop floor level devices to understand how fast your production lines are running, track downtime, and measure product quality trends in real-time. Use this information to drive continuous improvement.

PLM Aptean PLM Lascom Edition accelerates timeto-market for product development within the framework of evolving regulatory standards governing ingredients, packaging, labelling and product claims, and facilitates collaboration across your organization.

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

17

Useful Resources

Global Food and Beverage Industry Trends and Strategic Insights 2022 Read the full IDC whitepaper analyzing international research commissioned by Aptean.

Download your copy

Modernize, Optimize, Strategize: How to Thrive During Food and Beverage Market Turbulence A strategic guide to increasing your operational agility in a continually changing (and often unpredictable) manufacturing landscape.

Download your copy

18

Aptean Global Food and Beverage Outlook

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Traceability: The Importance of Supply Chain Visibility and the Technologies that Power It Practical steps for increasing traceability throughout your business operations.

Download your copy

Sustainable Production and Distribution: A Food Industry Playbook

How a Food Production ERP Facilitates the 6 Key Steps in Product Manufacturing

Step-by-step guidance for improving business sustainability, from sourcing to sales.

A high-level overview of how industry-specific ERP technology supports each stage of food production.

Download your copy

Read the blog

All statistics featured in this report are from a 2022 IDC research study commissioned by Aptean and summarized in the whitepaper: Global Food and Beverage Industry Trends and Strategic Insights 2022.

Aptean Global Food and Beverage Outlook

19

Aptean: Ready for What’s Next, Now® Aptean specializes in empowering food and beverage companies to establish a “single source of truth” and get Ready for What’s Next, Now. By leveraging the best technological innovation, we provide companies with a strong foundation to grow your food and beverage operations, and give you a digital platform for greater success.

With decades of collective industry experience, our dedicated professionals “speak your language” and understand the specific challenges that food and beverage companies like yours face, as well as how to best overcome them and succeed in a dynamic marketplace.

Are You Ready to Learn More?

Discover how Aptean Food & Beverage software can drive your digital transformation strategy and help your business grow profitably.

Contact us at info@aptean.com or request a software demo.

About Aptean

Aptean is one of the world’s leading providers of purpose-built, industry-specific software that helps manufacturers and distributors effectively run and grow their businesses. With both cloud and on-premise deployment options, Aptean’s products, services and unmatched expertise help businesses of all sizes to be Ready for What’s Next, Now®. Aptean is headquartered in Alpharetta, Georgia and has offices in North America, Europe and Asia-Pacific.

To learn more about Aptean and the markets we serve, visit www.aptean.com.

Copyright @ Aptean 2022. All rights reserved.