Digital Transformation in the Food and Beverage Industry: Q&A with Aptean’s Jack Payne – Part 1

A top quality supervisor or a meals or pharmaceutical technician inspects the standard of meals and medicines earlier than sending the product to the client. Staff are in an industrial water containment chamber.

That is your third 12 months of doing this survey. What have been you hoping to uncover?

Jack Payne: The pandemic introduced an entire new set of challenges for the meals and beverage business. For instance, previous to the pandemic, I believe the typical particular person had by no means heard the phrase provide chain. Now, it’s frequent information.

We began doing these studies in 2020 with the aim of understanding how the pandemic modified what was taking place within the meals and beverage business. How did it affect present challenges? What new challenges have arisen? How are firms coping with these challenges? Particularly, what’s the position of know-how? We needed to listen to immediately from our prospects about their challenges in order that we might present options to fulfill their present wants.

That is the third 12 months that we’ve completed the survey. Among the outcomes have been what we anticipated and a few have been eye-opening. One of many stunning outcomes is how a lot a few of the traits and challenges have modified since 2020.

What’s the overarching theme from this 12 months’s report?

JP: The most important is resiliency. There are at all times going to be challenges, however firms should be resilient. In addition they want to know their metrics – one advantage of digital transformation is having predictive analytics and knowledge so that you may be resilient in instances of uncertainty.

What predominant challenges are the meals and beverage business going through proper now, and what pressures may have the largest affect within the close to future?

JP: There are three issues I like to take a look at: the challenges the business is going through right this moment, the traits individuals see coming within the subsequent 5 years, and the methods firms are prioritizing to handle these traits and challenges.

So, speaking about challenges – the previous two years, we noticed sustainability and client calls for as the highest two, and earlier than the pandemic, price strain / sustaining profitability was at all times within the high three.

Final 12 months, price pressures dropped all the way down to #4, however this 12 months it’s again. With what’s taking place in Jap Europe on high of the availability chain challenges, the shortages, and the modifications in demand, inflation is now hitting the meals business exhausting. Shoppers are seeing inflation in all places, not simply in meals and beverage, and their pocketbooks are a little bit bit smaller, which makes them involved about costs.

The labor scarcity can be one of many high challenges now, and I believe that is one thing that we’ve been ignoring the previous couple of years as a result of we thought it could deal with itself. Labor shortages have been a priority throughout the pandemic as a result of individuals have been getting sick, significantly in meat processing factories the place social distancing wasn’t typical. Then, individuals thought, “Okay, give it 12 or 18 months and it’ll work itself out.” However as an alternative what’s occurred is that we now have an entire totally different tradition round work, and individuals are discovering jobs in different industries.

What I’ve heard is that for youthful employees, meals and beverage isn’t an interesting business. We’ll discuss extra about digital transformation, however I believe that digital transformation is without doubt one of the issues we will do to make the business extra interesting to the workforce. I’ve at all times believed that if we will use know-how to enhance the atmosphere for workers, they’ll wish to be there.

Twenty years in the past, individuals have been afraid that know-how would displace employees, and I believe for essentially the most half that worry has gone away. Now we all know we now have to make use of know-how to complement the employees. Understand that know-how helps extra than simply front-line employees – it could actually profit workplace employees all the way in which to the boardroom.

Let’s dive into digital transformation. The place do you see the business proper now by way of digital transformation maturity, and the way do you anticipate that can change within the subsequent three to 5 years?

JP: Meals and beverage has sometimes been a laggard in digital transformation. Going again to take a look at our outcomes from 2020, I used to be a little bit bit shocked to do not forget that a full 10% of firms stated they have been not planning on becoming a member of the digital transformation journey. Now, that’s all the way down to about 1%, so individuals are understanding that digital transformation will assist them tackle their challenges.

Two years in the past, solely 2% of respondents stated that they had reached their digital transformation vacation spot. I don’t suppose you ever really attain that vacation spot – it’s a steady enchancment venture that you simply’re at all times going to be engaged on – however that they had completed the primary a part of their journey and have been able to embark on the second. Now, greater than 17% say they’ve reached that first vacation spot. Additionally, in 2020, 75% have been simply starting their journey, and now that quantity has gone all the way down to 55%. And one-quarter say that they’re already getting advantages despite the fact that they haven’t reached a vacation spot, up from lower than 15%. So, we’ve seen quite a lot of progress in a short while.

For firms that haven’t but begun their digital transformation journey, the place’s one of the best place to start out?

JP: There are three parts to contemplate:

Do you will have a enterprise system?
Is that system capable of acquire the knowledge you want?
Can you use that data?

The muse of any digital transformation is the enterprise system. That is sometimes an ERP. In case you don’t have an ERP, or your ERP is outdated, it may be a one- or two-year course of to evaluate and buy or change your present system. However that’s the start line – your system of report.

The second piece is figuring out how you’ll acquire data. This depends upon your objectives; it’s not at all times about putting in sensors. It might be so simple as doing barcoding knowledge assortment to get real-time, correct data.

After which the third key part is analytics – having the knowledge offered as actionable alerts you’ll be able to work with.

Within the survey, about 75% of respondents reported seeing KPI enhancements on account of their digital transformation initiatives. Are you able to discuss a little bit about these advantages?

JP: I wish to equate digital transformation to taking a visit. Lots of instances the journey is extra enjoyable than really attending to the vacation spot. That’s what I see within the digital transformation journey as properly – firms will see advantages all alongside the way in which.

There are two areas of quantifiable advantages from the digital transformation. One is enhancements in varied enterprise processes, whether or not it’s the gross sales course of, OEE, provide chain, or logistics. Of the ten or 12 key enterprise processes, everyone studies seeing enchancment, whether or not that’s subjective measures of enchancment or precise metrics resembling shorter lead instances, extra on-time shipments, better efficiencies, and so forth. Once we break it down and have a look at these key areas, those which have proven one of the best enchancment are those which were highlighted due to the pandemic, resembling provide chain, logistics, manufacturing efficiencies, and downtime.

The opposite space is the underside line on the monetary assertion. What the digital transformation means that you can do is unlock the capability that you’ve got, so that you’re capable of produce extra and serve your prospects higher, and do all of it extra effectively. So, firms are seeing elevated income and profitability.

Do you see any areas the place the advantages of digital transformation nonetheless stay largely untapped?

JP: Perhaps that is simply because I’m with a software program supplier, however I discover that quite a lot of instances individuals take into consideration digital transformation as all about software program. However it’s extra than simply software program. It might embrace different issues, like automation throughout the manufacturing facility. So, I believe generally individuals overlook that true digital transformation is a whole method, with automation alongside software program.

What are the present obstacles to digital transformation within the meals and beverage business?

Once we requested individuals about this, the reply wasn’t normally about price. It was about both not having the assets, the individuals, or the information to implement it. Many firms additionally don’t have a central system or they’ve silos of knowledge, which I interpret as that means that they don’t have an ERP in any respect or that they don’t have one which spans a number of areas. Lots of meals and beverage firms have grown by acquisition, and consequently they’ve totally different ERPs in several components of the enterprise. Shifting to a single system is a part of getting ready on your digital transformation journey.

The most important factor we haven’t talked about but is that firms want to know that digital transformation is about extra than simply know-how. It’s about altering your corporation processes. Typically, the mindset is “that is an IT venture,” however to achieve success it must be approached as a enterprise transformation venture supported by know-how.

As a easy instance, think about you will have an individual whose main position is to gather data to organize a report. Perhaps they spend 35 hours every week gathering the knowledge, 4 hours getting ready the report, and one hour taking a look at it. Effectively, digital transformation can eradicate the 35 hours of gathering data, and likewise a lot of the 4 hours getting ready the report. Now, that particular person can spend their time wanting on the data and studying methods to make the system higher. If that particular person’s position within the group doesn’t change, they haven’t actually been profitable with digital transformation.

It feels like there must be quite a lot of change administration throughout the firm.

JP: Sure. Lots of instances, individuals worry change or are proof against it. However change administration is a key a part of digital transformation.

The report notes that one of many key questions we have to reply is, “What’s the position of know-how in combating rising abilities gaps?” How would you reply that query?

JP: I believe there are two solutions right here. One is that know-how can complement abilities. We’re by no means going to eradicate individuals, however we will eradicate menial and repetitive duties. Going again to the instance above, if it’s my job to gather the info and put together the report, and thru know-how we eradicate the work of gathering knowledge and placing it right into a spreadsheet, then I can spend my time wanting on the knowledge and enhancing processes on a real-time foundation. I can implement change now, moderately than getting the knowledge subsequent week when it’s too late, and I’ll really feel like I’m making an affect on the enterprise.

The opposite facet is that know-how helps firms appeal to and retain staff. Folks wish to know that they make a distinction. They wish to see that what they’re doing is constructive and useful. If I’m simply making a spreadsheet, what worth is that in comparison with if I’m utilizing data to take motion? The best know-how empowers employees and might make them really feel higher about their job.

Digital transformation might help fight the talents scarcity. However, on the similar time, the survey revealed {that a} lack of abilities is the highest barrier to digital transformation. What does Aptean do to assist firms bridge this hole?

JP: First, we offer options past ERP. Now we have various complementary options to make it straightforward for our prospects to get the know-how they want. Now we have options like a PLM system to assist with product growth and an EAM system to assist with productiveness and tools downtime. These options are nearly plug-and-play, so that they’re straightforward for customers.

We additionally present a full set of alerts and analytics particular to meals and beverage KPIs. Corporations don’t must develop these items themselves – they’ll use those we’ve already developed to higher perceive their knowledge and what must be completed to enhance their processes.

It feels like this additionally speaks to the second greatest barrier to digital transformation, which is proscribed visibility throughout operations.

JP: Sure, a part of having the ERP, or the system of report, in place is in order that whether or not you’re taking a look at stock, price, and so forth., you will have the flexibility to view that throughout the group and never have silos of knowledge.

This looks like a superb place to cease now. Subsequent time, we’ll dig extra into ERP options and what meals and beverage firms want to contemplate when choosing a system of report. Thanks, Jack!

JP: Thanks.

Wish to hear extra insights? Register for Aptean’s December fifteenth webinar, 2022 International Meals and Beverage Business Developments Report.

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