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QAD 2019 Predictions: Digitizing will Reinvent the Food and Beverage Industry

Industry executives and experts share their predictions for 2019.  Read them in this 11th annual VMblog.com series exclusive.

Contributed by Stephen Dombroski, senior manager, QAD

In 2019, Digitizing will Reinvent the Food and Beverage Industry

Manufacturers in many industries have gained tremendous benefits with digitization and automation. The domestic food sector is starting to catch up, but worldwide, many food producers still rely on manual processes. This needs to change and I believe we will begin to see this transformation globally in 2019. It is beginning now, but it will speed up because the industry realizes it no longer has a choice.

Food and beverage manufacturers can benefit from industry 4.0 and advanced technologies. With the rapid changes in the industry, the current food supply chain is simply not agile enough to respond to the growing needs of the marketplace. Manufacturers are now realizing that in a low margin industry, investment in the future has to be made.

There are a number of factors driving this change:

  • Next Day Delivery of Food and Beverage Products - Consumers want the same service they get when purchasing other consumer products. They want to order food products online and they want them to arrive now.
  • Increasing Consumer Demands-Consumer preferences have changed, and manufacturers now provide an infinite amount of product choices in new and evolving segments. Consumers dictate the path of the industry in ways ranging from price to quality to product specifications and customizations. Consumers want healthier products that can be prepared quickly.
  • Expanding Value Chain-There are more venues than ever before for consumers to purchase food products. Because the market for online food buying will continue to grow, manufacturers need to ship more products to more places. Item location planning accuracy is critical to getting inventory where it needs to be at the correct time.
  • Food Safety-The pressure to produce safe and quality food is increasing. Consumers want to know what they are eating, and governments are enforcing stricter rules. The ability to track the lifecycle of a product and quickly identify the source of food safety issues is not just a legal responsibility for food producers, it's also a social and ethical obligation to their consumers.
  • Pressures to Improve Margins-Food manufacturing is historically a low margin business, so managing costs is a major priority. However, increasing transportation and inventory costs, combined with shorter product lifecycles, make this difficult.

Consumers are changing their eating habits and not eating the traditional three meals a day. If they want a big meal, they go to a restaurant. But for cook-at-home meals, it is fresh, healthy convenient food. During the day, it is snacking. They want to customize their food and know the origin of all foods from finished products to ingredients. This is changing how manufacturers produce their products and what they produce.

All aspects of food production can benefit from advanced technologies. For example, farmers are experimenting with sensors to monitor soil, pests and other environmental issues and to assist in proper irrigation and fertilization, which improves crop yields and quality while minimizing costs. These kinds of technologies can also be used to provide manufacturers, distributors and sellers with important information that can help to streamline the supply chain and maximize manufacturing and distribution efficiencies.

Another promising Industry 4.0 technology is blockchain. Food and beverage products move through many touch points and are handled by many people, and blockchain can assist in tracking food origins. Many Industry 4.0 technologies can also track who touches the product, monitor temperature regulations and provide critical pieces of data. Machine learning can enable manufacturers to incorporate demand in real time to improve efficiencies, and robots help streamline manufacturing and warehouse operations.

IoT is also being explored in the areas of smart labeling where RFID can be used to track food movement, locations, temperatures and chemical properties. Fresh food supply chains are becoming shorter and faster in a bid to retain product life. Innovations now abound, including intelligent packaging with biosensors indicating freshness. The aim is to reduce waste and provide usable data. Many manufacturers should and will be digitizing in 2019, especially if they want to participate in 2020.

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About the Author

 

Stephen Dombroski is QAD's senior manager for the consumer products and food and beverage vertical markets. He has over 30 years experience in manufacturing and supply chain and has helped multiple companies in a number of industries to implement S&OP concepts and processes.
Published Friday, January 25, 2019 9:02 AM by David Marshall
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