Digital Transformation in the Food and Beverage Industry

The rise and penetration of internet, the advent of the new-age smartphones and other digital devices, and different technological advancements have digitally transformed almost all the major industries across the world. Additionally, what the collaboration of all these elements has essentially done is that it has also brought about a significant change in the attitudes and behaviors of the consumers by giving them a voice. Thanks to all this, the consumers now feel more empowered with access to virtually every minute aspect of the products they consume, and a platform to talk about their concerns, if any.

Talking specifically about the food products, the consumers today are very particular about what they eat, where it comes from, how it is made, what it contains, etc. This new-found consumer empowerment has forced the food and beverage industry operators — namely the manufacturers — to maintain greater supply chain transparency. In a bid to keep up with this tech-savvy generation of consumers, to stay abreast of the latest consumer trends, and to deal with other industry challenges, many food manufacturers are adopting the strategy of going digital. They are employing digital initiatives, and digitizing their processes, so that they not only meet their customers’ expectations, but also exceed them.

The key to succeed for the food manufacturers in this era is clearly to have a comprehensive digital strategy in place which transforms their food and beverage business. However, while most of the food manufacturers have got the right blocks for building the apt digital strategy, there are quite a few out there who have either not made their first move yet, or have misconceptions about their digital strategy efforts. Through this blog, we take a look at some of those popular myths, and aim at providing some helpful insights on the reality.

Myth #1- Digital transformation is all about ‘disruptive’ digital technologies, which aren’t good for my business

There is a common misconception regarding the new-age technologies such as the Artificial Intelligence (AI), Machine Learning, Big Data, advanced analytics, & Internet of Things (IoT), that they are disruptive in nature and have a negative impact on the different business activities. Businesses have this notion that these technologies create chaos and confusion by bringing the processes or machines to a halt, and are risky as they invite security breaches.

Reality-check

The only way digital strategies disrupt a food and beverage manufacturing business is by bringing in a breath of fresh air in terms of thinking, allowing room for bold innovations, and breaking all the shackles of the old system. These strategies are all about visibility, communication and data-sharing. Today, thanks to the connected devices facilitated by the technologies, the level of communication have enhanced, with all the food industry stakeholders such as farmers, suppliers, processors, and retailers being able to share among themselves the data about demand and consumer feedback.

We also read above how the consumers are more and keener on knowing where their food originates. Digital technologies allow maintaining complete transparency in the data about ingredients and batches from farm to table. Also, the digital strategies can be deployed in a methodic, step-by-step, and controlled manner, thus giving the manufacturers enough time to train their staff and prepare their customers for the new offerings. As a matter of fact, these are all positives, which are duly embraced by the forward-looking businesses.

Myth #2- All food and beverage manufacturers have made the digital move, and it’s too late for us now

This is a popular misconception, as a lot of industry operators and even outsiders have this notion that all the food and beverage manufacturers have taken the digital plunge, and have a fully developed digital strategy in place. There is also this general sense among the food manufacturers that if they do not have a digital plan ready, they are too late.

Reality-check

The reality, however, is completely different. Many food manufacturing businesses are yet to adopt a digital strategy. Majority of these businesses lack the right digital transformation tools. For ex: they either don’t have an enterprise resource planning (ERP) system, or have got one but it is antiquated. They also struggle at the cybersecurity front, haven’t added technologies like AI, Big Data, & IoT to their repertoire, lack advanced analytics & Business Intelligence (BI) tools, traceability functionality, and don’t have a presence on different social media channels. All these tools collectively form the basis of a strong digital strategy.

So while this myth stands busted, there’s a tip for all those who are still pondering over making the digital transformation efforts. Get your digital transformation strategy in place now, as it’s never too late. Keep pace with the current market trends, or be prepared to lag behind your competitors.

Myth #3- Digital technologies are only for large enterprises

This is yet another famous myth surrounding the food and beverages manufacturing industry. Many industry players are of the opinion that digital technologies are only for large-scale businesses with deep pockets, and not for the small & mid-size businesses.

Reality-check

As a matter of fact, small & mid-size enterprises are more suited to adopt digital technologies and digital transformation initiatives. Due to their business size, they are likely to respond to any market change in a quick, agile manner. Decision-making is multi-layered in larger enterprises, and hence slow. That’s not the case with small/mid-size businesses. And as far as budget is concerned, the monthly subscription model of a Cloud ERP lends flexibility to such enterprises, and allows them to push forward their digital transformation initiatives by investing in other technologies.

Myth #4- The top-management owns & controls the digital strategy

This is another popular industry myth, that the top-management owns & controls the digital strategy. It is the Managing Director (MD), or the Chief Executive Officer (CEO) who call the shots as far as digital strategy is concerned.

Reality-check

In most cases, the MDs and the CEOs leave it to the Chief Information Officer (CIO), Chief Digital Information Officer (CDIO) or Information Technology (IT) Director (whichever applicable in that particular organization) to formulate & lead the digital strategy, and excuse themselves out of it citing their busyness with other important tasks. So, another myth stands busted, and there’s another tip for the food manufacturing businesses. They should have a top-down approach to drive the digital strategy, and the top management should be completely aligned to it. That is where the success of the digital transformation efforts lies.

Myth #5- Supply chain tracking is the most implemented technology

We read above how maintaining the supply chain transparency is an absolute necessity for the food and beverage manufacturers, considering the serious consequences its absence can have. This perhaps makes people wonder that supply chain tracking is the most implemented technology.

Reality-check

Being aware of something, and actually doing it are two different things. While the majority of the food manufacturing businesses are aware of the importance of supply chain tracking in their digital strategy, only a few actually get it implemented. Here’s another tip: the food safety concerns are constantly on the rise. And if you want to keep your food manufacturing business away from the claws of the law for not meeting any regulatory requirement, get the traceability functionality by getting the supply chain tracking technology implemented now.

To sum up

To stay in the game, food and beverage manufacturers must leverage the digital transformation opportunities now, and the sooner they realize it, the better for them. This includes using a combination of different tools, technologies, and approaches. To begin with, they need to deploy a modern food ERP software, or modernize their existing IT infrastructure, for their ERP system is the best foundation for digital transformation.