Failing to invest in the future? Digitization of food & beverage industry underfunded, survey finds

22 Jan 2019 --- The 2018 CSB-System survey has found that decision makers within the food and beverage sector believe that digitization will have a “huge role to play” in the future of the industry. This is despite several challenges, including lack of employee skills and low awareness of what solutions are available on the market. Investment in IT also remains significantly low, the survey finds.

Decision makers from 29 countries identified increasing retailer requirements, strict international legislation on food safety and traceability, and growing consumer demand for quality and freshness as key challenges that digitization could help to solve.

The potential benefits of digitization outlined in the survey included networked production becoming the standard, which will bring producers and consumers much closer together. Producers will be able to create increasingly personalized products cost-effectively while placing orders directly with the manufacturer will become more commonplace.

Although these factors mean that twice as many respondents than in the 2017 CSB survey rated IT as “very important,” the figure was still only 17 percent. Furthermore, only 15 percent of respondents spend more than 1.5 percent of their turnover on IT, while nearly 70 percent do not invest more than 1 percent in digitization. This compares to medium-size US enterprises which, according to Forrester analysts, spend 4.3 percent of their turnover on IT.

The survey identified the main barriers to digitization to be a lack of employee skills and low awareness of what solutions are available on the market. CSB says working with a suitable IT partner can help companies tackle the four major issues that enable companies to move towards achieving a Smart Food Factory. These are a need for increased transparency; enhanced digitization in marketing and sales; additional digitization of factory processes; and improvements in quality and traceability.

Enterprise Resource Planning (ERP) systems will likely play a critical role in this and will remain the focal point of many processes in food enterprises. This is because most companies are familiar with these systems and respondents note many benefits. However, the survey found that they also think the demands on the systems can be too high and they would like to see greater user-friendliness, advanced documentation capabilities and more analysis options for their existing systems.

In terms of the latest technologies that may have an impact on the food industry, collaborative robots and artificial intelligence were rated the most highly. Much less is expected of 3D printing and blockchain, with investment in 3D printing losing momentum after a promising start.

Decision-makers do not currently see blockchain gaining a foothold in the food industry in the near future, according to the survey, although its adoption by large retail players such as Walmart and Carrefour may change this.

Ramesh Gopinath, Vice President at Blockchain Solutions at IBM, who spoke to FoodIngredientsFirst at the Future Food Tech Summit in London last November, believes that blockchain technology has the potential to revolutionize the food supply chain. This is because manufacturers will be forced to respond to consumer pressure around transparency of sourcing and the supply chain in general.

“Our survey demonstrated that there is a strong recognition among food manufacturers of the benefits of creating a Smart Food Factory, but there is still a lack of knowledge and understanding that is preventing many companies from investing heavily in IT and digitization,” comments Frank Braun, Head of Marketing, CSB.

“For many companies, therefore, selecting a suitable external supplier may provide the necessary support and guidance to maximize the many opportunities that digitization offers, in particular, in improving business performance and profitability,” Braun concludes.

By Joshua Poole