By FABIO TIVITI
The unforeseen disruption experienced in 2020 has prompted food and beverage producers to futureproof their businesses as far as is possible. While uncertainty seems set to continue for some time, through focusing on expediting time to market; food quality and safety; supply chain resilience; and the creation of omni-channel models, companies are placing themselves in the strongest position they can in order to embrace and capitalise on future opportunities.
Operational excellence is driving successful outcomes across many of these initiatives, as firms look to optimise resource efficiency, whether that’s people, energy, water or all of the above. In agriculture for example, precision will become imperative. New technologies such as the Internet of Things (IoT) will therefore become crucial in facilitating the granularity required to minimise waste while maximising output.
So, with this in mind, what does the future look like for food producers?
Prediction 1: Cloud
There is little doubt that cloud is set for huge growth as a mean of creating robustness and agility. Frankly, there is no other way when you look at what the business is asking for. It is crucial in capturing data from IoT devices and the extended supply chain. There is little point in having temperature readings in a structure enterprise resource planning (ERP) database that sits safely within the company’s firewalls. Beyond simply installing a piece of software, having a data link in the cloud and using artificial intelligence (AI) service and computing power in the cloud provides intelligence and makes the data meaningful.
An advantage of cloud is having this technology as a service. Cloud also represents an opportunity to implement changes faster opposed to having to do technical migration projects.
Many of Infor’s customers have already moved to the cloud or have stipulated their journey to the cloud. I believe that 2021 will see many more food firms go to the cloud as they seek to drive operational excellence and futureproof their businesses in what look set to be uncertain few years ahead.
Prediction 2: Omni-channel
Food producing companies have seen a 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 simply become more used to ordering their food in the Internet. Being omni-channel makes the business less vulnerable and able to take a larger piece of the market. We will definitely see many food producers becoming omni-channel in 2021 by implementing e-commerce, either being a webshop or connecting to a digital marketplace like Amazon.
Another important shift is brand awareness. The brand is more powerful if a relationship exists directly with the consumer, not via the retailer. Today, consumers are not calling the customer service number on the packaging when they have a question. The new generation is impatient and they want to place orders, and have questions answered at the time that suits them, even if it is in the middle of the night. An example of how this is being address is via chatbots which can provide ingredient information or food preparation recommendations to the consumer. This also provide data about how the food is being used and appreciated by consumers, which can drive product innovation.
Prediction 3: Industry 4.0 tech
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.
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 data like 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. The recall process in the food manufacturing industry is costly, averaging more than US$10 million in costs to cover activities such as communicating the recall across the supply chain, retrieving and handling the recalled product, investigating the event, and implementing corrective actions to prevent reoccurrence.
Yet research shows that no firms claim to be completely digital for track and trace and quality management, with only 7% indicating they are “largely” ready. Half expressed they are not digital yet, while 43% described their status in this field as “limited”.
This highlights even more that data resides in unconnected systems such as spreadsheets, disparate quality systems, supplier systems, and IoT devices within isolated applications.
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 system.
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 analyse the root cause of the issue immediately. The second is that data can be sued to drive decisions and create a smarter company. A good example is having insight into the inbound overseas shipments of crops, not only with regards 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 minimise 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. An Infor customer is already using image recognition and ML to determine fat and muscle grades of carcasses, which sets the price for the farmer.
Something which would have an 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, which brings us to the next big trend 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 that they want to know everything that goes into the food they buy. 46% of Americans say that claims on food products have a direct influence on their purchase decisions.
In response to this, 23% plans to provide origin and other product information via a digital platform to the consumer in the next two years, with 15% claiming to already have one in use.
For the remaining 62%, it is 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, with Tesco for instance, asking for food waste reports from the supply chain, and Aldi introducing its Aldi Transparency Code to restore trust in food categories such as meat which mandates that meat processors have to provide origin information to Aldi, so that the consumer can see which farm the meat is sourced from.
In 2020, we saw also GS1 Digital Link, Walmart and Carrefour piloting with IBM Food Trust for some food categories and GlobalGAP opening up to consumers. In 2021 and beyond, we will see that this will be expanded to more product categories and used as a way 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 really GMO-free, what kind of crop protection has been applied, and other factors.
Fabio Tiviti is vice-president of ASEAN at Infor.