Key points
The food industry has experienced the highest level of inflation for 45 years, as prices shot up by 19.2% at the beginning of 2023. 2023 has been challenging for the food and beverage industry as the price of energy, raw materials, and transport increased – and a major industry skill shortage and geopolitical issues have only added to logistical headaches.
In response, process industry professionals are turning to digital transformation as they look to gain a competitive advantage in their value chains. Here, Andrew Newton, Business Central Consultant at Columbus UK, highlights the importance of not just changing for change’s sake but implementing change that brings people into the new digital processes to reduce costs, waste, and supply chain risk.
Increasing business agility with advanced technologies is a priority for 63% of manufacturers over the next 12-24 months, according to a recent report from the Manufacturer. However, only 30% of digital transformation project succeed – so what is holding process manufacturers back? One of the biggest restrains according to 33% of manufacturers is their lack of ability to manage change.
The true meaning of business value
Having a clear view of the value that the business wants to gain from the project is a standout feature of any successful business projects. Process manufacturers should have a ‘value-first’ approach and align everyone within the business with the values they’ll achieve from their processes.
A holistic approach towards the human side of operations should be at the centre of the transformation process and paired with the business values strategy.
But how exactly can businesses achieve value? Value can be gained through addressing business challenges including the “what’s in it for me?” question. Firstly, it’s important not to change for the sake of changing.
There are both financial and non-financial benefits to be gained from value and simply put it can be anything internal or external stakeholders view as an improvement. This can very much differ from stakeholder to stakeholder. ‘New value’ is all about finding value in areas that the business currently doesn’t enable.
People are the heartbeat of manufacturing businesses – prioritise them before the project
Employees are one of the most valuable stakeholders, yet over 77% of food and drink manufacturers are struggling with staff shortages, especially when it comes to skilled work. So, finding ways to retain employees and attract a more digital workforce can help to address some labour concerns – but there’s still a catch.
People are often, in fact usually, the first make-or-break factor when businesses implement digital transformation projects. This is because change usually means employees must learn new processes, techniques, and systems, which can cause disruption and confusion. So how can process industry professionals avoid this outcome?
A change management plan will ensure a smooth transformation
Process manufacturers that have a change management plan in place before starting a digital transformation project can ensure success from the get-go. Putting value first, such as addressing that “what’s in it for me?” question, ensures that organisations address employees' initial concerns and that business values are aligned with employee priorities. This unmissable step can increase the chances of buy-in, transformation success, and ROI.
Reduce supply chain delays by automating monotonous tasks
According to a recent report, 59% of UK manufacturers are currently experiencing supply chain challenges, of which human error plays a part. Automation can turn the tide here and help minimise supply chain delays and defects. For instance, lot tracking technology tracks a product in real-time from raw ingredients to final product, which can reduce product recalls by between 50% and 95%, according to the International Trade Centre.
Automation can replace and take away monotonous jobs that may take employees longer to do and allow them to instead focus on more business-critical tasks, which can boost efficiency. In the food and beverage industry, where time is money, businesses that automate monotonous tasks traditionally performed by humans can also reduce the time that food spends on the production line.
This strategy will only be successful if process manufacturers have a change management plan to inform the employees whose jobs are being subsidised by autonomous machines about the value it will bring to them and the business.
Automation can also bring value to health and safety procedures. For instance, automating certain processes along the supply chain can remove employees from working with or manning dangerous machinery, which has been the cause for over 30% of fatal injuries in the food and drinking industry in 2023 alone.
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During this period of economic uncertainty, finding ways to reduce operational cost is paramount to protecting profit – and good data hygiene can be key to address this concern. Many traditional manufacturers working in the food and beverage industry rely on several separate business systems and can get caught up in spending too much time gathering, analysing, and processing customer data.
These systems often don’t work in parallel with each other, resulting in many forms of similar data being scattered across networks. This makes it harder for manufacturers to determine the most relevant, up-to-date, or even correct data, which can have costly implications – so how can a digital shift resolve this?
The integration of a food-specific ERP can be the most invaluable piece of technology for many process manufacturing companies due to the system’s ability to unify processes and operations in one location. For instance, if customer data is modified in one subsystem, it’s automatically updated for all other systems, saving employees valuable time and effort.
To take this one step further, businesses that can connect data and actions will be able to drive smarter decisions that improve the accuracy, efficiency, and speed of food production along the supply chain. But the benefits don’t end there!
An advanced ERP can also improve back-office efficiency by accurately tracking sales, purchases, and inventory, which can help businesses reveal sources of waste and make better buying decisions.
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It is estimated that the UK wastes around 9.52 million tonnes of food every year and the food manufacturing industry alone accounts for 16% (1.5 million tonnes) of this waste. With the UK Government aiming to reduce food wastage by 20% by 2025, process manufacturers need to find ways to reduce their waste percentage but still add value to the business.
Time is a crucial factor in the food and beverage industry and there is not a lot of it when dealing with perishable goods as products need to be delivered within specific timeframes. Lean manufacturing techniques can trim processes that add little value to operations but can significantly help to save time and reduce costs by up to 50%. The changes introduced by lean manufacturing will impact each level of the business so every employee must be educated as part of the change management plan.
Eliminate spot market purchases with advanced analytics
Advanced analytics have become integral to the inventory management and planning stages. In the produce industry for instance, planning can be difficult because most items have a short shelf life. This is especially true when you take into consideration the impact of weather and yields.
Industry experts plan to the best of their ability to forecast and meet demand, but often have to resort to spot market purchases to reconcile the difference between product availability and actual supply and demand.
Now with advanced analytics, process manufacturers can model processes and automate decisions along the product line to increase efficiency and help reduce production failures and refine the process, no matter the product – reducing downtime and boosting the bottom line!
Digital success is not built in a day – remember to take it one digital step at a time!
The process manufacturers who take their digital transformation one step at a time with a value-first mindset will be the ones to reap long-term benefits. The first step should be informing all stakeholders of the changes and what value they will gain from it. Then the next step is when the transformation pays off as manufacturers can introduce new technologies and see the real value of digital transformation projects for many years to come!
