January has always been the slowest month for Australian manufacturing due to factory closures during the summer holidays, but the start to the new decade for the sector overall has also been impacted by adverse weather, drought, bushfires and Coronavirus, according to Australian Industry Group. The Australian Performance of Manufacturing Index (Australian PMI®) fell 2.9 points to 45.4 from December 2019 to January 2020. Of seven manufacturing sectors, only food and beverage manufacturing grew in the last month of 2019 and in fact it saw a healthy expansion to a PMI of 60.3.
So why is the food and drink processing sector able to “buck the trend” in manufacturing, despite the impact of the drought, fire, floods and COVID-19 clearly affecting the supply of the raw materials they use to produce their products? Drought, floods and fire have inevitably disrupted activity for many agricultural growers and suppliers, which has caused an increase in prices for key inputs for food processors for several months now.
The sector’s growth during this period despite all the odds could be attributed to the earlier-than-usual pre-Christmas boom in the food and beverage sector, as reported by AI Group, which helped its producers “weather the storm” that was to come. However, I truly believe its resilience is due to its level of innovation and ability to adapt very quickly that has enabled its operators to manoeuvre their way through these difficult market conditions.
Innovation is the key to its success
By fully embracing technology, the food and beverage sector has remained innovative through the delivery of personalised insights. This has allowed them to predict trends, identify potential issues and to discover innovation opportunities for entirely new products.
Transformative technologies used by the food and beverage sector have expanded to include planning, forecasting and analysis tools. Industry-specific solutions provide features and benefits built specifically for this sector, which can mean no more expensive modifications to the software which can complicate things. These solutions also provide the all-important agility and added insights from the built-in analytics they provide.
Internet of Things (IoT)
The combination of a solution to manage the life cycle of plant machinery and IoT sensor technology can give a food and beverage company a competitive advantage. These systems can enable a plant to keep running without any unplanned downtime. The embedded sensors monitor for early warning signs that identify required maintenance.
Product life cycle management
Consumers now want to see new products pretty regularly; increased offerings, new product choices, innovative taste combinations and new packaging and cooking methods. This means the food and beverage sector needs to be continually researching and innovating with new products.
Supply chain management
Modern companies in food and beverage production typically need to leverage complex supply chains and an international network of suppliers. Complete visibility to location and status of shipments is essential for freshness and just-in-time-arrival of ingredients needed for the processing schedule. An advanced supply chain system which allows you to make real-time adjustments can be a clear advantage.
Traceability is a key trend
There is growing consumer demand for sustenance that is healthy, convenient and more importantly traceable right back to its original source. As traceability becomes mandatory in the food and beverage sector, it’s time for manufacturers to see if they have the right processes and technology in place to handle these new challenges. Automated systems and sensors can help to improve inventory management systems, allowing producers to better monitor supplier ingredients, warehouses, logistics and retail points.
Tracking the movement of food and ingredients has always been a time-consuming task and it’s becoming increasingly difficult as food supply continues to globalise. A traceability plan is an essential first step towards developing an effective recall strategy. No manufacturer wants to consider that their products may be recalled for any reason, but when a recall happens it’s vital that it is conducted quickly and efficiently, both for public safety and for the reputation of the business.
Continuing to buck the trend
Additional factors the food and drink sector must contend with include a highly competitive market with many food manufacturers offering similar products. Therefore, continually improving products is crucial to the success of this sector because excellent quality and great service results in repeat business. Innovation is at the heart of what makes the Australian food and beverage sector keep on growing despite the challenging conditions.
