How Digitization Accelerates Agility and Transparency in Food and Beverage Next-Generation Industries By Keith Chambers is Responsible for Strategic Direction, Commercialization and Development for Schneider Electric
How Digitization Accelerates Agility and Transparency in Food and Beverage Next-Generation Industries
By Keith Chambers is Responsible for Strategic Direction, Commercialization and Development for Schneider Electric
Digitization is reshaping the Food and Beverage business. Given current supply chain disruptions, as well as economic and environmental challenges, companies will remain competitive only by accelerating their digital transformation. In doing so, they can achieve a “Net Positive Impact,” which will enable both supply chains to become more resilient as the company makes more profitable business decisions based on high-quality data.
Digital acceleration not only tackles efficiency but also resiliency, which includes sustainability programs within an enterprise. It enables companies to efficiently manage their entire supply and value chains, to better interact with their key stakeholders, and to differentiate their brand throughout the process. Such an approach involves the entire ecosystem of the business, and selecting the right technological partners is key.
Technological solutions are here to enable sustainability efficiency and business resiliency, empowering workforce and simplifying operations to master market complexity.
The Food Revolution
By 2010, the Food & Beverage industry had created 23 of the world’s top 100 brands, and had grown total return to shareholders (TRS) almost 15 percent a year for 45 years, based on the following key pillars. These included mass market brand building, distribution relationships with retail grocery, shaping developing marketing, consistent execution and cost reduction, and M&A that increased the benefits of scale. Across that time period, F&B was th most successful industrial segment.
Now, F&B companies realize there are multiple stakeholders involved: customers, employees, communities in which they operate, and their shareholders, with the definition of “Value” being different for each of them. Before COVID, there was a fundamental change of thinking in F&B CPG industry around aligning with the value that these different stakeholders place on the products that they produce.
Then COVID happened, ushering in a new normal. The pandemic added further disruption to supply chains that were already challenged with variety and velocity, amplifying the need for resilience and increased control in manufacturing supply chains. Further complicating the issue, worker safety and social distancing becomes key, along with remote workers who would previously be in-plant, additional shifts, and the need for increased cleaning of equipment. Some products come “In Demand,” with companies scrambling to make enough to meet customer needs.
Quote: “In the downstream of what’s happening, these changes are persisting, and they’re not going to go away for a while.” (Keith Chambers)
4 Things to do to Build Resilience and Agility
- Empower employees: Companies need to transform the way work is executed across a team of roles, while enabling collaboration between teams and roles to occur naturally.
- Optimize operations: Manufacturers need to be able to measure and improve process and operations performance, while developing the ability to continuously improve efficiency and adopt change.
- Engage customers: Food and beverage industry members
need to comply with safety and regulation, offer farm-to-fork traceability, and introduce new products faster.
- Transform offerings: Businesses need to recognize that offers need to be demand-driven, and supply chains need to support those demand increases as part of the company’s overall resilience, resulting in increased services and new business models.
Reducing Quality and Food Safety Risks through Traceability
End-to-end traceability is a critical tool to safeguard food safety. End consumers are demanding more information and increased transparencies when it comes to the food and beverage products they buy. Sustainability is also directly linked to end-to-end traceability by World food organizations As perfect examples to illustrate this point, we have been able to see the European Union publishing the “Farm to Fork Strategy” in May 2020 and the Food and Drug Administration (FDA) releasing its “New Traceability Rule Proposal” in September 2020. These are major steps for the Food and Beverage industry! “This is the new reality, asking for traceability. Not only at the plant level, but of our supply chain.” (Marilidia Clotteau)
What Is End-to-End Traceability
End-to-end traceability is the ability to identify, collect, and verify siloed data at various stages of the food chain from raw materials to Point of Sales. It involves mapping all suppliers, to collect information such as the origin of the ingredients and to check the certificates of compliance. This is becoming a prerequisite – building traceability and transparency into the entire food system, from the very beginning, and it involves 4 pillars.
First, what is the scope?
A supply chain-wide data collection and storage solution that captures the entire history of finished goods from origin to the point of sale. Data can be accessed anywhere along the supply chain by batch, by date, or where available, by unique identifier.
Next, what are the data sources? This includes master data such as recipe and label data, origin certificates, events, any traceability data from manufacturing such as batch, calibration of devices, cleaning data, unique identifiers at each packaging level, and shipping data among others.
Third, who are the users? Consumers, supply chain partners such as transporters and warehouse management stakeholders, regulators, and manufacturers, all being pushed by the end-consumer and the need to go beyond safety.
Finally, key use cases must take into account end- consumers, who are demanding transparency and ethical sourcing; the supply chain, which must be visible and authentic; regulators, who will be in charge of recalls, taxes, and excise; and manufacturers, overseeing food safety investigations, recalls and KPIs, compliance, scorecards, and risk management.
As you can see, end-to-end traceability is mandatory if a company is going to build a credible, sustainable and resilient supply chain, while differentiating their brand from among the competition.
To put it simply, this is the goal: to collect the critical data at different stages of your value chain that starts with the plant. This process also involves integrating data from upstream, including information about the quality of raw materials or certificates of compliance, as well as collecting data downstream from the supply chain and concentrating or aggregating all of the data into what is known as a data lake. Upon this pool or hub of data, you can begin to build your intelligence.