F&B Manufacturing in an Uncertain Time: Staying Ahead of the Curve

Industrial Internet of Things (IIoT) is not a new concept for Food & Beverage manufacturers. In fact, when IIoT first became a buzzword, many manufacturers in the F&B space yawned at the conversations. Using technology to monitor processing and filling equipment so operators know when a piece of machinery needs maintenance or if it’s operating safely has always been a critical piece to a modern food plant.

F&B

However, what many companies are
understanding now is how IIoT can help increase the overall operational
efficiency, and not just within the plant, but from the farm all the way to store
shelves. With IIoT, it’s possible to have a holistic view of the operation, monitor
how the product was packed, where the product is on the delivery truck, even
what temperature the product is being stored in. This full view of operations
can impact business in a big way. This includes ongoing data that can be
analyzed for efficiency, predictive maintenance, and more.

It’s no secret the state of the industry is in flux. And with the
lingering uncertainty brought about by COVID-19, F&B companies are
prioritizing IIoT and other tools for digital transformation to keep their business
attuned to changing expectations, regulations, and new business models. When it
comes to digital transformation, understanding how new expectations and ways of
working can impact existing operating models is essential to successful
implementation.

A New World of Expectations

COVID-19 has, without question, transformed
the way the world operates. For F&B manufacturers, in particular, changing channels
to market, uncertain demands, and unexpected plant shutdowns are not the only
areas disrupting typical operational processes: vendor expectations are also
forcing F&B companies to rethink their operations.

What does the food industry look like when
human interaction is decreasing? In the restaurant business, there has been an
obvious impact on how restaurant owners continue to serve customers and drive
revenue. Yet, how does this shift translate into the retail environment? Will
we see more cases of check-in lines without cashiers, or touch screens that no
one wants to touch, or an increase in Amazon Go-type shops?  Will we see businesses completely changing
their models to support this shift, and how will this impact the supply chain
for manufacturers?

Typically, F&B manufacturers ship their
goods directly to a distributor or manage distribution themselves through
direct store delivery, and the process from farm to the manufacturer to the customer
has been pretty straight forward – until now. New COVID-19-related changes in
the channels to market have created an urgency to revisit business models and
expand servitization.  Foodservice
suppliers have been particularly hard hit while some typical CPG companies have
found themselves unable to meet demand. All of this is creating an evolution of
expectations and needs from distributors, customers, and vendors. Some firms
have been moving towards a full-service approach. These kinds of changes amidst
an outdated ERP system can be dire for business and lead to a lack of
efficiencies. IDC’s report also stated that at least 40% of companies worldwide
are stuck in heavily customized ERP systems. This can work in certain niche
micro-verticals; within F&B, however, amidst this pandemic, businesses that
are quickly changing operations must have the capability to change the way that
they work and fast. With outdated systems or a matrix of excel sheets, some are
struggling.

Adopting Automation: A Balancing Act

Without question, a company with an
integrated, modern cloud-based ERP that leverages IIoT will give truly
actionable insights for faster response to a changing environment, help cut
costs, and raise margins. In the post-COVID world, F&B manufacturers must
be more flexible and agile than ever before.

To date, F&B companies have prioritized
efficiency above all else to stay ahead of the competition. The ability to
operate quicker and more accurately remains key. Yet, with market fluctuations
from Covid-19 and impending uncertainty, F&B manufacturers must also
balance between efficiency and agility. A business operation that can easily
pivot to support vendors changing expectations, such as manufacturing
ventilators in the face of social need and lower business demand for their own
products, has become critical to keep the business going amidst uncertainty.
Understanding what the future holds from a regulatory perspective also has
become important. These regulations oftentimes add additional, unforeseen layers
for certain manufacturers that they had otherwise not accounted for; their
digital operating and tracking procedures have to temporarily adjust to new policies
and must be able to do so quickly.

As businesses start to adapt existing
operations around such sudden changes, they must determine the correct balance
between flexibility and efficiency. As a first step, manufacturers should ask
themselves: Do I need to have multiple channels to market? How many different
suppliers do I need so as to reduce the risk of shortages?  What do I do when my employees can no longer
report to work? Some may decide there are certain parts of the business that
are straightforward, while other parts of the business that need to be flexible
to the market, vendor, and regulatory changes. 

As manufacturers move further towards
automation, IIoT will be vital to predictively maintain equipment and utilizing
data gathered from operations to make sure that the business is operating at
peak efficiency. Yet manufacturers need to understand – fundamentally – what is
the balance between efficient automation for processes that are not expected to
change and automated business operations that may need to be adjusted to meet
new expectations and policies. 

The Ideal Business Environment, Now

The Food & Beverage industry is said to be the only industry poised for growth in 2020, but that doesn’t mean F&B manufacturers that are doing well can rest on their laurels. The barriers to entry can be small in the F&B space, so it is very likely that new competitors jump into space, as investors keep their eyes on opportunistic growth.

There’s no denying that COVID-19 has in some cases completely changed the way that manufacturers are looking at how they operate. Many are speeding up their investment into IIOT, ERP, and other digital technologies. These technologies may prove paramount during this time to give facilities the ability to quickly shift focus, while still maintaining maximum productivity. Machine Learning in particular can use AI to optimize processes from top to bottom. One thing is certain in the modern age of digital transformation: the F&B manufacturing sector is speeding up even as it becomes more agile, data-driven, and efficient.

To keep ahead of increasing competition, F&B
manufacturers must ensure their business models can adapt to the changing
expectations unfolding, while also continue on their digital journey towards
operational efficiency.