Why Digital Transformation in the Food & Beverage Industry Is Imperative
The food and beverage industry underwent rapid changes during and after the covid lockdown to cope up with the increasing demand and supply bottlenecks. The preference of the new-age customers have gradually shifted towards health-first foods as the fitness awareness took centre-stage after the global pandemic.
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The food industry is no stranger to innovation. From molecular gastronomy to plant-based meats, chefs and entrepreneurs are always pushing boundaries to create new taste experiences. However, the digital transformation of the food industry has been more gradual, with many businesses still relying on traditional practices.
Food companies have embraced digital transformation in a more aggressive manner compared to the rest of the industry not only to tackle covid disruption but also to meet rapidly growing demand. Digital technology can transform the food and beverage industry by improving operational efficiency, enhancing customer experience, and increasing transparency. It can automate processes, optimize supply chain management, and provide data insights for better decision-making.
Digital technology also allows for personalized marketing and convenient ordering and delivery options. Here are some of the top trends in digital transformation that are shaping up the new food industry business.
Cloud: Food companies were one of the first to migrate to cloud in order to be more efficient and meet the growing business demand.
AI: Food companies used artificial intelligence to understand the customer behaviour and requirements better and also helped them reduce food wastage.
Omnichannel: Food companies understood the importance of online and social media presence to engage with customers directly and there was a shift from restaurants to retail customers.
Sustainability: The modern-day customers were eager to know more about the quality of food they buy and consume, this forced the food companies to offer supply chain visibility using IoT.
Why Is Digital Transformation Critical for Success in the Food Industry?
More Accurate and Immediate Data Collection
The underlying principle of digital transformation is to replace outdated analog processes with fully integrated and digital processes. Modern Food industry ERP platforms integrated with smart sensors, scales, meters and thermometers that automatically monitored product quality throughout the lifecycle and thus reducing errors and avoiding data loss.
Safer Products and Procedures
The 2020 pandemic has forced both the customers and the regulators to focus more on safety and hygiene of foods they consume. With digital transformation the food industry is able to automatically track expiration management, perform automated compliance checks, isolate and fast track recall process, etc. This has ensured not only safe food products but also safer employee working conditions.
Greater Efficiency and Profitability
The primary reason why any business opt for digital transformation is to increase their efficiency and operating margins. Digital transformation provided the much needed information for the food companies that helped them identify areas that they can improve on.
The importance of digital technology in the food and beverage industry extends to all parts of the production process.
Equipment supply and integration
Digital transformation enabled the food industry to integrate and fully connect with their manufacturing process and equipment. This helped them to reduce downtime, increase productivity and optimize asset usage.
Food processing
Digital transformation in food processing not only increases efficiency but also reduces energy usage and improves overall product quality which is the need of the hour.
Filling and packaging
When the food industry connected and automated production and packaging assembly lines using software, their efficiency went up and the production cost got reduced. Digital transformation in the packaging process also enabled them to scale up quickly.
Exploring the Benefits of Digital Transformation in the Food Industry
Enhanced Food and Beverage Quality
In the food industry, quality assurance plays a vital role in determining food safety and quality. Data becomes significant for quality assurance and when the food industry opted for digital transformation, data of all types are made readily available. Since all the data is stored in the cloud in real-time, it helped the food industry to identify and track if and when an error occurred. Data analytics also helped the companies to improve the overall food quality and strictly adhere to the safety regulations.
Improved Recipe Agility
Digital recipe management allowed food companies to respond in real-time to ever changing customer needs. This enabled them to launch new products and take it to the market in a shorter period of time.
Integrated functions and asset management
Food and beverage production involves multiple phases of manufacturing, equipment and people. Digital transformation enabled these food companies to get a top-level view of all the processes in a single view. Since each and every process of food manufacturing got fully connected with software, it offered an overall view to the leadership. Now you can control or modify a process without even going to that physical location. This real-time data enabled higher equipment efficiency and reduced manufacturing errors.
Minimized energy consumption
Digital transformation enabled the food companies to automatically record energy data in real time. While tracking the energy data, the companies were able to identify processes that were consuming more energy than they should normally do. It also showed them equipment causing energy spikes. With such energy recording and tracking, these companies have reduced energy consumption which not only increases their profitability but also reduces environmental impact.
Increased flexibility in production
One of the key benefits of digital transformation in the food industry is the flexibility it offers in the production process. Such high-level flexibility and integration in the production process enables the companies to be more creative and launch new products and take it to market in a quick period of time. Recipe control systems are a boon to the food industry that makes them experiment with new products easily and more efficiently.
More Accurate Supply And Demand Forecasts
Proper Inventory management is critical for any food industry since foods come with an expiration date. Significant investment is required to properly store them in a high quality and safe storage facility. With data analytics companies can easily predict the demand ahead and streamline their storage capacity accordingly.
Enhanced Customer Experience
The modern-day customer is flooded with multiple brands offering the same food product. Customers prefer brands that offer a better customer experience and food safety. Digital transformation in the food industry offers the business owners with vital customer insights that enable them to deliver more customized user experiences.
Better Work Environment
Digital transformation is not only for the end users but also benefits a lot of employees in the food industry. Since the complete manufacturing process is fully connected, employees can function in a safer environment where the risk of errors are reduced.
Digital Transformation in Food Industry
Case Study #1
Company: Dohler is a global producer, marketer and provider of technology-based natural ingredients, ingredient systems and integrated solutions for the food and beverage industry.
Challenges faced: During the Covid-19 lockdown, the company faced severe supply disruptions. It took them days if not weeks to identify which suppliers or ports were affected. This resulted in a loss of business.
Implementation: They implemented digital transformation in their logistics operations with 2 primary objectives namely increase efficiency and grow a competitive advantage over others.
Benefits: Since their logistics were fully interconnected, they were able to detect which suppliers were affected and re-routed shipments immediately to avoid delays. This resulted in cost savings, higher productivity and over customer satisfaction.
Case Study #2
Domino’s Pizza is a great example of a company that has successfully implemented digital transformation in the food industry. In fact, the pizza chain is often cited as a leader in digital innovation among fast-food chains.
Some of the digital tools and initiatives that Domino’s has implemented include:
- Online ordering and delivery through their website and app
- AI-powered chatbot for customer service
- GPS tracking of delivery drivers
- Voice-activated ordering through Amazon Alexa and Google Assistant
- Augmented reality (AR) technology for virtual pizza building and customization
Thanks to these changes, Domino’s has seen significant growth in sales and customer satisfaction. In 2019, the company reported $3.6 billion in global digital sales, accounting for more than 65% of total sales.
The Bottom Line
Digital transformation is imperative for business growth and profitability not only for the food industry but for any business. From automated implementations to seamless mobile and web experiences, there are numerous opportunities in this landscape. Hence, evaluate the inefficiencies in your business processes, explore the right technology for your business, and move towards this implementation. Integration and automation through technologies like ERP, SCM, AI, Cloud will improve the efficiency of business. Get it in touch with us for implementing digital transformation and stay ahead of the competition
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