The acceleration of digital technology in recent years has been extraordinary. Now, we think nothing of virtually calling a colleague 4,000 miles away in crystal-clear high definition. Home assistants like Alexa allow us to order a sofa to our home, simply via voice command. Meanwhile, AI is already advanced enough to write code for a full video game — and growing in computing power by the day. 

But as we become more and more connected, with rapid access to information anywhere in the world, the development of food and beverage production lines has not been anywhere near as rapid. In fact, they’re still largely operating as they did in the previous millennium.

This deficiency is the result of food and beverage companies improving their operations with a focus on local optimization. But some food and beverage manufacturers have now hit a wall. To unlock the next level of process improvements, food producers need to leverage the technology revolution that is well underway to simplify their operations, deploy smarter machinery, attain connectivity on the production line and integrate the entire production process. 

Improving business outcomes through digital transformation

Food and beverage production will require ever greater efficiency in the future, both to feed a burgeoning world population and to fight climate change. But the required gains in efficiency cannot be achieved without digital transformation of every process involved, from sourcing and procurement to manufacturing and distribution.

Crucial elements of this are the ability to collect data and analyze it in a manner that improves efficiency and sustainability. The more data is collected, the easier it becomes to run things efficiently. Advanced analytics allow food and beverage manufacturers to increase operational performance across indicators like productivity, cost, agility, speed to market, quality and convenience. 

Efficiency gains derived from improved information flows are also intertwined with sustainability — a cause that’s only becoming more important to food and beverage manufacturers. Nearly 40% of industry respondents to an International Data Corporation (IDC) survey said their organizations anticipate prioritizing sustainability over the following year — the top answer — while almost 34% said efficiency and waste reduction would be a paramount priority. Ultimately, a more efficient production facility means you use less energy and other precious resources. 

Those food and beverage operators that are well into their digital transformation journeys are already seeing concrete change, with three-quarters of the food and beverage industry decision-makers surveyed by IDC experiencing improvements in KPIs across all areas of their businesses, and approximately half expect to see even more. But undertaking the digital transformation needed to make food and beverage production more efficient and sustainable involves not just having the right talent, but also the correct technology and a mindset conducive to change. 

Must-have digital tools

Food and beverage manufacturers are currently beset by several pain points that digital transformation can go a long way to address, including global supply chain disruptions; rising inflation and interest rates; constantly evolving consumer habits and regulatory requirements; heightened competition; and rising demand for sustainability and sustainable products.

Solutions to these challenges reflect many facets. Among them is the general movement of enterprise resource planning (ERP) away from on-premises systems to the cloud. A quarter of the respondents to the IDC survey are amid this process or have already done so, with another 25% of respondents currently investigating a move. ERP in the cloud doesn’t just save on cost: by replacing legacy systems that haven’t kept pace with technological change, cloud ERP also plugs serious gaps in data collection that hamper decision-making about the products that should and shouldn’t be manufactured and in what quantities. Cloud-based systems are also more effective than on-premises systems at gathering information from up and down the supply chain. 

Digitizing operations on the factory floor make the factory more efficient and cost effective. The use of artificial intelligence (AI) was cited by most IDC survey respondents — 39% — as having the greatest potential impact on their organisations in the following five years. Digital twins and the internet of things (IoT) can also play a huge role, with machines and equipment connected via sensors that can send a mass of data — everything from temperatures to production cycle times — for visibility across all levels of the plant.

This traceability allows food and beverage manufacturers to deliver on claims that may appeal to their consumer base, such as ethical and low-carbon production practices. Meanwhile, robotics is already an example of factory floor digital transformation that is common throughout the food and beverage industry, with its role only set to increase.

Five best practices for digitalization

For food and beverage producers looking to start digital transformation efforts to achieve more efficient and sustainable operations, or to reinforce and expand those activities, there are benchmarks that can be translated into practice, involving everything from attracting and retaining necessary talent, to developing and sustaining a transformative culture, and employing governance and partnerships to support success.

1. Develop the right talent

To equip workforces with the necessary skills for digital transformation, companies often need to engage in training efforts such as reskilling and upskilling around data and analytics and new ways of working. Out of 12 skill types assessed in a report by Deloitte and FMI, The Food Industry Association, digital skills were found to be the ones most likely to increase in value over the next few years, even for the non-managerial, frontline workforce. As the industry evolves, people are moving from repetitive manual factory floor duties to higher-level, value-added tasks that involve making data-driven decisions and leveraging automated technology. 

2. Implement a long-term strategy and roadmap

Companies should plan how digitalization and data management will evolve at their plant over the following ten or twenty years, as it’s impossible to transform an entire company and its production facilities in a short time. The plan must explain how digitization and data management aligns with an organizations’ business strategy and the steps needed to ensure it is done correctly. 

3. Embed and support a culture of continuous learning

Creating a culture that encourages and values experimentation is imperative to successful digital transformation. Executives and leaders need to make it easier and safer for people to try things and fail, as well as succeed. Such cultural change requires workers and customers to be a company’s focal point. Start with the problem in the context of a persona that you want to influence and then start figuring out the data needed to solve that problem. You can then build a solution with an eye on execution. 

4. Establish and adhere to priorities

Effective prioritization and crafting a set of objectives tailored to a specific company are also crucial. What do you want to improve most? Employee experience? Issues with suppliers? Sourcing and procurement? The prioritization of where you should start your efforts of transforming the business with data and technology is key. Then, tracking whether resulting digital transformation projects are realizing their intended goals and bringing tangible value to the organisation is highly recommended. 

5. Seek and develop partnerships 

Partnerships across the entire food and beverage sector, such as the Consumer Goods Forum, are an effective way to combat the inertia that holds companies back from adopting new technologies. These partners collaborate across the industry to set standards, priorities, and goals. When manufacturers and retailers unite, they can ultimately conserve energy and reduce food losses.

Future-proofing the food and beverage industry

Digital transformation in the food and beverage sector is critical to both its increased efficiency and its sustainability. Digitalization provides benefits throughout manufacturers’ processes, from sourcing and procurement to production and distribution. The challenges involved with achieving this digital transformation include developing the right workforce skills, culture, strategy, priorities and governance, as well as the right automation systems. But by following best practices for digitalization, transformation efforts can help produce a more efficient industry that provides an increasingly sustainable food and beverage supply.