Digital Transformation in the Food & Beverage Industry

DIGITAL TRANSFORMATION - IN THE -

FOOD & BEVERAGE

INDUSTRY

Table of Contents I.

Introduction

II.

State of Digitalization Up to Now

III.

Checklist for Successful Digital Transformation 1. Clear Mission 2. Data-Driven Decisions 3. Business Models 4. Cross-Functional Team 5. Co-Innovation

IV.

Brand Delivery: The Way to Success

V.

ERP in Food & Beverage Industry

VI.

Effect of AI, VR, and AR on Food & Beverage Company

VII. Benefits of Big Data in Food & Beverage Industry 1. Customer Behavior Analysis 2. Improved Efficiency 3. Deeper Insights 4. Quality Control 5. Enhanced Sales Tactics VIII. Future of Block Chain in Food & Beverage Space IX.

Top Trends to Follow in 2019

X.

Conclusion

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Introduction The era of technologies we breathe in is bringing massive changes in every sector. Being on the edge of a generation that is led by digitalization, even the professionals from Manufacturing Industry have also started adapting digitalized techniques for their lead generation strategies. They do, now, not only understand but also have begun believing that competition in manufacturing industry has gone to extreme heights. And thus, not actively participating in online marketing is something they can't afford.

Cost

Quality

Sustainability

Safety

From the past decades or so, the marketplace has become highly competitive, and the F&B industries are experiencing sharp changes in the way they do business. The increased commoditization, as well as diversification of food and beverage products, has paved the way for this extreme variation that made food and beverage companies differentiate themselves, their produces and also their brand.

Besides, highly fluctuating needs of the present day consumers such as higher levels of service for their money, and exceptional product variety adds to it. Heightened global competition and these escalating pressure are making it harder for F&B industries to see the desired outcome. Not to forget, these industries are also facing fundamental challenges in the food safety and regulatory fields that are set to change how they operate beyond comprehension.

The industries have to explicitly monitor and track every phase of action right from raw components, finished stock, packaging, storage as well as distribution to ensure agreement with the newest safety rules. Driven by these challenges, the F&B industries are looking for a digital transformation in manufacturing and supply chain management to reduce operational costs, upsurge production efficiency, and better overall service to achieve desired levels of profitability.

State of Digitalization Up to Now Generally, we can see a lot of confrontation to technology in the F&B industry. In most of these industries, automation is limited to specific processes such as bottling, canning, and packaging whereas, the information technology (IT) is narrowed to corporate finance, accounting, and HR. Many still rely on paper production schedules and spreadsheets. Despite the bulk of information flowing through the separate chains of food & beverage systems, integration of the automation or digital technologies across the enterprise is rare.

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As a result, these industries lack timely information both from a production and financial point of view. In today's rapidly evolving technology space and fast-paced economy, the lack of real-time data for decision support and business analysis is hampering the growth of such companies.

Also, food and beverage executives are struggling to survive today’s unmatched industry disturbance. They are pressurized continuously from new, digital competitors who pull the power of digital technologies to launch innovative products and get closer to customers rapidly.

From the next chapter, we will explain how F&B Industry can fundamentally change this deep-rooted sphere by digitalizing R&D, production, and letting the industries utilize analytics to create a competitive goal.

Checklist for Successful Digital Transformation Various sectors under the food and beverage spectrum are working towards reaching the peak of growth scale. They started embracing innovation and accepting digital strategies by exploring a wide range of opportunities in the internet world. These new changes are offering exciting ways to leverage the information, automate specific manual processes, and thereby focus on engaging the consumers.

Digitalization of F&B Industry

+

New Business Models, New Products, New Services

+

Disruptive Services & Business

=

Increased Effeciency & Productivity

While the impact of this transformation is favorable for the F&B industry, it can also be unapproachable at some point in time. So, to help you with these critical questions, we provided a highly verified checklist that guides your digital transformation journey.

1.

Clear Mission

Industries must have a fundamental mission for every digital plan. It can either be related to the core of their organization’s existence or experiences their services offer to the customers; your goal should always be clear at the beginning of the project. If you are unable to express your mission, your customer’s decision will also be tangled, and thereby they hesitate to buy from you.

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2.

Data-Driven Decisions

Data forms a crucial element of any digital transformation. To take the maximum advantage of modern tools and processes, you need to have accurate, and real-time data along with systems to gather, store, and share it with the users. Access to these data helps F&B executives to make timely decisions and craft the right strategies based on facts, not on unreliable comments. One need to have large chunks of data to reach this level of sophistication. The F&B industries can opt for cloud deployment for economical storage of these data.

3.

Business Models

Understand your business model ďŹ rst before executing it in real-time. You can begin with identifying the core objective of your company and then determining the type of technologies, systems and people you need to support the drafted business model. You can also involve ingredients, suppliers, packagers, partner networks, and processors to manage the variables. Please note that you can have multiple business model and numerous revenue streams.

4. Cross-Functional Team It is always better to have a cross-functional team in your enterprise. Instead of including only IT team to plan and execute digital agenda by themselves, you can also include personnel from other levels of the organization to set the company culture, commercializing data, risk tolerance, regulation compliance, investment priorities, new revenue streams creation, and many more. You must make sure that your team includes people from diverse backgrounds and multiple areas to get a broad perspective. Besides, there must be a method to share ideas and ensure it is well-matched with the members of other teams.

5.

Co-Innovation

Co-innovation goes well with the cross-functional concept in almost every business scenario. Especially, working with partners on new products or services is becoming extremely important in the F&B industry because of the continuous evolution of customer trends. These developments make way for new production or delivery mechanisms. More important, it lets the consumers make personalized choices based on various factors, including taste preferences, diet restrictions, number of servings, or preparation skills. So, industries must think beyond traditional approaches to transform the way they do business.

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Brand Delivery: The Way to Success Food & Beverage industry consists of multiple segments each dealing with its challenges to create brand value in local, national or global markets. However, to grow their business, every F&B manufacturers or distributors must include greater elasticity, agility, and increased delivery speed to answer the safety regulations, rapidly changing customer expectations or instabilities in the market.

To advance their procurement and inventory control management tasks, they must track fresh supplies and ďŹ nished goods precisely. Besides, they have to bring in tools and automation to synchronize their production competencies and enhance their capability to handle diverse resources and product lines concurrently.

Notably, they must ensure quality consistency across product lines to build their brand value among consumers.

CONSUMER

MANUFACTURER

MARKETERS

Bringing the manufacturer closer to the consumer The F&B industries can also simplify complexity and manage cash ows better by optimizing plant operations and strictly controlling key production elements such as labors, materials, and equipment.

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INTEGRATION FINANCE & ACCOUNTING

MANUFACTRUING

DELIVERY METHODS

SALES MANAGEMENT

ERP SYSTEM

INTEROPERABILITY

INVENTORY MANAGEMENT

HR MANAGEMENT

SUPPLY CHAIN MANAGEMENT MOBILE FUNCTIONALITY

Food & Beverage industry should implement Enterprise Resource Planning (ERP) systems to control their internal operations as well as manage the supply chain right from suppliers to retailers, distributors, and customers. Moreover, the right ERP system for an enterprise provides you with a wide range of benefits.

Increased responsiveness to customer and market changes.

Easy monitoring of key HACCP (Hazard Analysis Critical Control Points) and General Manufacturing Practices (GMP) actions.

Improved order management and customer satisfaction.

Improved real-time business intelligence to aid strategic decisions and growth plans.

Decreased response time, lead times, and thereby enriched logistics flow.

Optimized quality and scheduling resulting in better cash flow and increased ROI. More efficient procurement, more accurate forecasting, and distribution Improved management of supply chain and synchronization to align production better.

Better utilization of labors and capital equipment.

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RP has several gains when appropriately implemented. But, before applying you have to consider the following key factors:

ERP system with features intended to fit any particular business processes will speed the implementation process as well as ROI. As some ERP systems are built for discrete manufacturing operations and not processing, and thereby do not function at the plant level. For instance, you can measure the throughput time in hours or days in food and beverage manufacturers rather than taking weeks or months to do the same task.

Interface competences with prevailing data capture, warehouse management systems, and MES.

You need to identify the core functionality of the ERP system. You should look for financial applications, procurement, technology platform, order entry, inventory management, optimization, planning, scheduling, product configuration, manufacturing, complex distribution system, EDI capabilities, flexible product costing, and many more.

Implementation methodology and tools for rapid ROI, quick deliverables, implementation, and critical benefits that helps F&B industries to achieve a successful outcome in a short period.

Capturing customer information and business chain management to deliver business intelligence solutions and help the decision-making process of the marketing and sales team.

Effect of AI, VR, and AR on Food & Beverage Company Technology has brought a remarkable improvement in the F&B industry today. It not only supports the company but also aids the consumers by providing the best user experience. Researchers have revealed that 38% of consumers have faith in artificial intelligence (AI) as it improves customer services in the future. The survey by ISACA says 64% of US consumers trust that augmented reality (AR) enhancements will help the workplace. Besides, Adobe survey states that 47% of organizations are already using AI strategy in their business operation. These stats show the importance of these emerging trends in F&B and other segments.

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VR Global Market Size

AR Global Market Size

Al Global Market Size

$161bn $25bn $17.8bn

44.5% CAGR

2016

85.44% CAGR

($ billions)

2022

2016

48% CAGR

($ billions)

2016

($ billions)

2023

There are various ways in which AI, AR, and VR tools can be handy to the F&B industry. Hence, invest in these technologies to stay ahead in the highly competitive business race.

PlanningArtificial intelligence tools help F&B executives to strategize their business operations carefully. AI is capable of tracking consumer’s behavior, including eating, drinking, food-related internet surfing, food chains they visit regularly, and many more.

The AI tools helps you in identifying every minute detail of your consumers such as what exactly they desire to eat. Based on this analysis, F&B industries can make changes in their existing products or launch the latest products to get the attention of a large number of audience.

Sorting ProcessBe it any F&B industry; the food items requires sorting. This process used to be manual before a decade. Now one can do it with the help of AI tools and automation quickly. Since food items must be of standard quality, manufacturers rely on AI to sort food items. These new technology does sorting based on shape, size, weight, and also the quality of the food items.

Friendly AssistanceApart from helping companies, AI tools can also help consumers based on their eating habits. That is, it guides them to the restaurants that serve similar food they are fond of or the food they like to try out. Further, AI tools will also keep track of a user’s data and suggests healthy meals based on their health condition.

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Better VisualizationWith the help of virtual reality (VR), you can offer an excellent experience for the customers. You can let them wear VR gadgets and show them the videos of making tasty food items along with aromas, and giving them a virtual feel of the ambiance of the place. This visualization technique automatically enhances the taste buds of customers. Research reveals that customers promote places with a good ambiance, food presentation, and music, although the food is of average taste.

Brand PromotionNo businesses can benefit without proper implementation of marketing. According to some studies, a company must spend at least 30% of the total capital in marketing on an average. AR and VR can help you with this aspect by bringing innovative and engaging approaches to promote brands. AR and VR campaigns take your content beyond physical space. You can attract potential buyers and also educate them on the nutritional value of food.

Benefits of Big Data in Food & Beverage Industry

Big data has taken the Food & Beverage industry one step forward. The advancement in the technology along with the big data is allowing F&B sectors to improve their marketing campaigns, data insights capability, develop a highly interactive and innovative product to please the customers.

In the past few decades, these industries relied on reporting format instead of data. However, as the customer’s preference and technological trends differ with time, it became challenging for the F&B executives to keep up with it. These intricacies paved the way for the emergence of big data in this segment. It helped the firms in analyzing both the structured and unstructured data from various sources.

The F&B industries can use this data for multiple purposes, including market development identification, determining shopping trends, and consumer behavior. It has helped companies to come up with a new form of marketing to attract a global audience. Many big players in this segment are reaping maximum benefit out of this strategy. You can also implement the same in your company, and take your business to a whole new level.

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1.

Customer Behavior Analysis

The F&B industries are finding it difficult to keep up with the changing demands of a consumer. But, the appropriate analysis of customer data will provide a clear insight into their changing behavior and also helps the companies to improve the marketing strategies. Besides, the development in the smartphone and online technology offers a wide choice for the customers to meet their necessities.

The F&B industries can make the best use of these technologies by collecting maximum data of the customer’s choice of food at a specific time and place. This technique helps in gaining the potential value to the business and also immensely improves the outcome of marketing campaigns.

2.

Improved Efficiency

Big data lets F&B industries to explore a wide range of new opportunities in the local and global market. The data-driven approach allows companies to embrace the latest trends in the market by efficiently analyzing the data. The industries might take some time to analyze the data, but it will give them the proper information and guide them towards reaching the goals when appropriately implemented. It helps them in understanding the customers better and thereby automatically improves the quality of their service.

Besides, the companies can also understand their competition better and gain a competitive edge to improvise their way of marketing the products. Therefore, enhance your sales and business efficiency by taking advantage of big data in your F&B firm.

3.

Deeper Insights

Most of the F&B industries are working towards a customer-centric approach and improving the quality of the data they possess. The in-depth study of this data helps the enterprises to fine-tune their product based on customers demand and keep them happy. This changes created a technically innovative space for data analytics in the food and beverage segment.

Data analytics can have a significant impact on companies when the data quality and effectiveness produces desirable results. Although it remains a challenge at present, the upcoming innovations in F&B industries are expected to deal with these intricacies effectively.

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4.

Quality Control

The quality of products in F&B businesses are highly dependent on the quality of the big data. The industries can meet the expectation of customers, and they can easily maintain the stability of the food supply with the help of this rich data. So, the firms have to invest in maintaining the hygiene of big data by performing strict quality control operations and providing the expected taste to the consumers as before. Otherwise, customers may repel immediately, and you may end up losing them for your competitors.

A right data analysis plan will help you in such cases. It will provide an insight into the variations so that you can cover them up as early as possible. Hence maintain the quality of the data and ensure that the taste of food is not lowered any time.There are various quality control tools online that simplifies the process of maintaining data cleanliness.

5.

Enhanced Sales Tactics

Big data lets F&B industries to explore a wide range of new opportunities in the local and global market. The data-driven approach allows companies to embrace the latest trends in the market by efficiently analyzing the data. The industries might take some time to analyze the data, but it will give them the proper information and guide them towards reaching the goals when appropriately implemented. It helps them in understanding the customers better and thereby automatically improves the quality of their service.

Besides, the companies can also understand their competition better and gain a competitive edge to improvise their way of marketing the products. Therefore, enhance your sales and business efficiency by taking advantage of big data in your F&B firm.

Benefits of Big Data in Food & Beverage Industry The blockchain is capable of creating a significant impact on the food and beverage industry. Most of the organizations started realizing its importance in the business operation. As a support to this statement, the 2018 RSM Digital Transformation Survey reveals exciting information about the heightened interest in blockchain strategy. This report says that only 12 percent of middle-market food and beverage industry is currently using blockchain whereas 95 percent knew the importance of blockchain. However, 28 percent are planning to use it in the next 12 months, and 53 percent may deploy it in the coming 13 to 36 months. Clearly, this shows how industries are planning to use this technology by the end of 2020.

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Here are the five main ways in which F&B industries can use blockchain technology to simplify their task.

1.

Traceability

Through this blockchain technology, industries can easily track various information such as the source of food, including country, region and the grower’s field. For instance, imagine the food you purchase comes with a QR or barcode. When you scan the tag with your smartphone, you could see where the food was grown initially, when it was picked, where it was processed and how long it was resting on the shelf.

This systemized way of understanding traceability is sufficient to validate the safety of food. Besides, it also lets the companies interact directly with the customers and provide additional branding.

2.

Marketplace Formation

Most of the F&B industries find it challenging to source quality ingredients in an adequate amount. As farmers don’t know about the end consumers or their preference, the intermediaries gain a significant amount of profits. But, the introduction of blockchain technology lets both the buyers and growers to connect directly, with an increased percentage of profits directed straight to the farmers. Also, investors can invest directly into farms producing supplies and then trade on that deal.

3.

Commodity Controlling

Since agricultural commodities are a huge business, the commodity managers are usually overwhelmed by various challenges, including payment time lags and data management. With the help of blockchain technology, they can address such issues by enabling innovation in this area.

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4.

Capitalization

Most of the smallholder farmers struggle to get bank loans because of various reasons. It includes land ownership documentation, lack of credit histories, and other issues. All these make small farmers borrow funds from money lenders at higher rates. But the tech-savvy agricultural entrepreneurs are using blockchain to make this process easy. Now they can create investment tokens and thereby raise funds for farming businesses without depending on others.

5.

Data Sharing:

Most of the smallholder farmers struggle to get bank loans because of various reasons. It includes land ownership documentation, lack of credit histories, and other issues. All these make small farmers borrow funds from money lenders at higher rates. But the tech-savvy agricultural entrepreneurs are using blockchain to make this process easy. Now they can create investment tokens and thereby raise funds for farming businesses without depending on others.

Certain companies who invest or buy the F&B products wants to learn more about it before purchasing. It can include everything ranging from crop health information to salt and sugar levels in products. Blockchain helps you in this aspect by providing all the essential information along the supply chain to the buyers. The operators can enter data points such as salt and sugar content, humidity, light, air temperature, pH levels, color, and other details into the blockchain for easier access.

Other potential beneďŹ ts of blockchain for F&B industry include: Improved data

Increased food safety

Reduced food fraud

Increased proďŹ tability

Reduced cost

Cut food waste

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Most of the smallholder farmers struggle to get bank loans because of various reasons. It includes land ownership documentation, lack of credit histories, and other issues. All these make small farmers borrow funds from money lenders at higher rates. But the tech-savvy agricultural entrepreneurs are using blockchain to make this process easy. Now they can create investment tokens and thereby raise funds for farming businesses without depending on others.

Top Trends to Follow in 2019 2019 turns out to be the prime year for the F&B industry. This year offers a wide array of opportunities along with the influential aspects of the emerging trends like blockchain, AI, IoT, and many more on this area. Besides, the changing buyer’s preferences and increasing costs will have a significant impact on this business in today’s world. With so much happening here, the F&B companies must focus on key business trends to stay ahead in the competitive market place.

Innovation and Differentiation Through this blockchain technology, industries can easily track various information such as the source of food, including country, region and the grower’s field. For instance, imagine the food you purchase comes with a QR or barcode. When you scan the tag with your smartphone, you could see where the food was grown initially, when it was picked, where it was processed and how long it was resting on the shelf. This systemized way of understanding traceability is sufficient to validate the safety of food. Besides, it also lets the companies interact directly with the customers and provide additional branding.

Transparency and Food Safety In today’s world, consumers are showing their interest to know more about the food they consume. So, F&B industries should give higher importance to food safety issues more than ever to reduce the wastage amount. Technologies like blockchain can help the industries in this aspect. So, companies must try to figure out how to be a part of such technology in 2019.

Varying Preferences Consumer preferences keep changing rapidly than any other factor in the F&B segment. Their demand for exotic flavors that promote health and wellness or the food that fuels their brains capability is still at the forefront. They always wish for the products that provide additional benefits to their mind and bodies. Besides, some consumers prefer buying the foods that are good for them as well as others such as the food they eat are faux meat, plant-based, or packaged in an environment-friendly material. Transparency into the food preparation process helps the companies in this aspect.

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Rising Imprecision The F&B companies are facing rising uncertainties in the market. The tariff and global trade tensions may continue this year. Other risks include the interest rate hikes, shrinking labor market, growing labor costs, and many more. Some industries are facing issues regarding on-time delivery because of shortage of the truck driver. Companies will have to look to emerging technology trends or innovative business solutions to control these issues this year.

Mergers and acquisitions Many companies in this segment are expected to work on enhancing the brand value by adding new product lines and investing in their R&D to save money and time. Also, there are a few companies who may acquire other segments with better prospects, even if that area is outside their traditional business. So, pick the one that pairs well with your financial terms while meeting consumer needs.

Conclusion 2019 turns out to be the prime year for the F&B industry. This year offers a wide array of opportunities along with the influential aspects of the emerging trends like blockchain, AI, IoT, and many more on this area. Besides, the changing buyer’s preferences and increasing costs will have a significant impact on this business in today’s world. With so much happening here, the F&B companies must focus on key business trends to stay ahead in the competitive market place.

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