Technology / Smart Industry

Digitalization: The Future of Food and Beverage

Recognize that in digitalization, process and organizational changes are equal parts of the transformation.

By Chris McNamara, Smart Industry Content Director

Digitalization changes all areas of life: the way we stay informed, the way we travel, the way we buy things and the way we manufacture products, from cars to cookies to cream. The massive power of digitalization – the great opportunities and great risks – is changing business models daily. As such, the pace of an enterprise’s innovation and the willingness and ability to change are key success factors.

To capitalize on this revolutionary period in manufacturing, food and beverage companies must leverage digitalization advantages in everything from restructuring the value chain to embracing virtualization to capitalizing on the full breadth and power of the Internet of Things (IoT). The digital twin – a digital representation of a system, which you can use to test scenarios without any downtime or damage in the real world – must be employed by companies looking to make themselves smarter.

Likewise, companies must recognize the value in the mountains of new data they are producing and position themselves to properly analyze this data to drive faster, more-informed business decisions. Data analytics as a field is maturing – more decision-makers are aware of the value here and recognize the competitive advantage for their companies – but it is still hard. Companies are struggling with master data and data governance, trying to avoid garbage-in/garbage-out scenarios. The most advanced companies will drive improvement with prescriptive analytics and artificial intelligence.

This much is obvious: Tools employed for digitalization differ by business and vary from one type of manufacturer to another. But another differentiator is how well enterprises process the data about their operations. Data is only valuable when it is actionable, just as digital transformation is only realized by taking the first step into Industry 4.0.

Do it differently, do it better

Digitalization, in short, means optimizing business processes through the adoption of a host of new digital technologies – big data analytics, IT/OT convergence, digital twin, artificial intelligence, even 3D printing and robotics. Elements of digitalization (or digital transformation or Industry 4.0) are applicable across industry and manufacturing, including food & beverage.

Because the food and beverage industry faces unique challenges (seasonal changes, demand for differentiated SKUs, increasing regulatory/quality restrictions, complicated production planning and the sheer scale of production), it is uniquely situated to take advantage of the benefits of digitalization. Consider these examples:

  • Online grocery sales are booming in North America and western Europe; big data analytics affords the food industry deep insights into shopping trends and the ability to predict (rather than react to) customer needs.
  • There’s an increased demand for variety in food & beverage products; smart factories enable greater, cheaper customization than has ever been possible.
  • Seasonal demands require food processors to pivot quickly; IT/OT convergence enables plant operators to fully understand how their facilities are responding to changes in production.

The concept of digitalization can seem daunting, but it needn’t be, particularly in the world of food and beverage, which is accustomed to frequent change. Digital tools are at the ready for players in this space, with early adopters already reaping real rewards. But a mindset of change – a willingness to re-imagine longstanding approaches to business – must be adopted across the enterprise, from the decision-makers in the C-suite to the machine operators on the floor.

Specifically in the food & beverage field, approaches to adopting digitalization play particularly important roles in a program’s success.

First, the digitalization program must be implemented in a strategic, holistic manner, supported by properly trained, fully engaged stakeholders with business-driven key performance indicators (KPIs) for success. All parties should recognize that, in digitalization, process and organizational change are equal parts of the transformation.

Next is prioritizing which parts of the enterprise to go after first. No one can do this all at once. Enterprises must determine where value will be delivered first, which is dictated by clear business imperatives and KPIs that engage all stakeholders who drive this vision. Stages are prioritized and sequenced to build a foundation onto which additional capabilities can be layered. A time-to-value mindset should inform these strategic decisions.

It is critical to partner and communicate with everyone throughout every step (though consensus, which can paralyze progress, isn’t always the goal).

Digitalization offers a different, faster, better approach, but be mindful of the pitfall of trying to digitize or automate current work rather than creating new ways of business.

Consider developing a digital twin of the value chain, including manufacturing operations management and automation. This is a key part of the overall digital thread, and one that should be aligned with the broader master data-management scheme, which is critical in supporting the digital twin. Likewise, prioritizing the creation of data, and maintaining and making actionable all analytics is critical. The main focus of this effort is transparency and driving better decisions across the enterprise.

In order for digitalization to impart real change in an enterprise, it must be considered more than just another way to increase efficiency. Digitalization must be launched strategically, supported fully by all stakeholders and viewed as an upgrade to the entire business model.