The third study by CSB-System on digitisation in the food and beverage industry has shown the food industry is in a phase of digital optimisation. A digital transformation, however, only rarely takes place. This digitisation is based in the ERP system, but its potential is not yet fully exploited.
New competitors, new technologies, and new consumer demands: the food and beverage industry experiences a dynamic change in its market structures. Digitisation offers the opportunity to master this change, but how do companies assess the individual digital technologies? Which digitisation topics are relevant? This and further questions were answered by more than 100 decision-makers from Africa, Asia, Australia, Europe, South and North America.
Five key findings
1. Digitisation is directed inwards
The majority of the decision-makers rely on a strategy of digital optimisation. The surveyed companies are dealing closely with digitisation in individual, isolated solutions. Digital consistency or the integration of partners and customers in digital ecosystems do not yet play an important role.
2. Many changes in internal processes
As in the CSB studies of 2017 and 2018, digital technologies are mainly used for the flexibility of the organisation, for the optimisation of management processes, and for the improvement of procedures in production and logistics. A digital transformation offering new products or services or implementing new business models only rarely takes place.
3. Digital product innovations are rare
People recognise the opportunities of digitisation, but do not take advantage of them. Almost 30 per cent of the survey participants do not use digitisation at all to create new products or services. Only 2.5 percent currently generate a sales share of 20 percent with digital products and services.
4. Skills are missing
Furthermore, missing skills and inefficient structures within the organisation make the digitisation process more difficult. In many places, the missing knowledge of how new technologies could be used adequately and the need for development of the employees' digital competencies are particularly large obstacles.
5. Existing technologies offer opportunities
In the maturity of existing technologies, the ERP system stands out as the central nervous system of digital infrastructures. Yet the potential of the business software still is substantially underutilised. For example, more than two thirds of the companies continue to use paper when working with their ERP systems.
Strategies are different
In the third study of the industry specialist CSB, three different decision-maker types, each with different digitisation strategies, emerged: Relations optimisers, ecosystem builders and process engineers.
Process engineers are the biggest group in the survey. They use digitisation measures mainly to further improve efficient processes through new structures.
The strategy of the relations engineers is primarily based on good customer relations. The existing relations network should be strengthened and continuously optimised through personalisation. In addition, the communication with the customers and the awareness of their needs play an important role for this group.
Ecosystem builders favour a strategy of new partnerships. They see their strategic strength in a mix of an excellent product and good customer relations. However, they prefer new cooperation models and partnerships much more than the other participants.
Digitisation is an important strategic factor
Overall, as in the two previous years, the study shows that digitisation is an important strategic factor to be able to respond to the current challenges of the industry despite all obstacles such as the lack of skill workers.
The pricing pressure remains the biggest challenge for the enterprises, reported by 68 percent of the respondents. The situation is getting worse since the majority of companies position themselves by the quality and the image of their products.
In order to reduce costs, 64 percent concentrate on the internal processes and operating procedures, especially in production, stock on hand and logistics. In addition, 65 percent focus on purchasing, while only 36 percent consider the recipe as cost reducing instrument.
Focus shifting towards the consumers
What is striking is the increasing focus on the consumers. In terms of challenges, their demands outranked the strict requirements of the food retail trade, and those of the law. The publishers of the study are of the opinion that this has to be considered in the context of the growing end customer business, also via the web, and the increased availability of market data.
By better understanding the end consumers, food producers enhance their competitive edge over their competitors as well as their bargaining position with the trade. Accordingly, the importance of the digitisation in Sales, Marketing and CRM was underlined by the respondents: 73 percent state that they are using solutions or are planning to do so.
The ERP system is set
An essential characteristic of decision-makers in food companies is their practice orientation. This also becomes evident in the maturity of different technologies: Digital solutions are used where they are advantageous in daily business.
The ERP system, cloud solutions and predictive maintenance show a high degree of maturity. 58 percent are using an ERP system; for another 31 percent, its implementation is planned or at least of great interest. The study also shows that the opportunities of the ERP system for digitisation are not utilised in an optimal way or not yet recognised. Besides the classic application fields in controlling, for calculations and for planning processes, there are many more application possibilities on the top floor as well as on the shop floor.
Of the less “mature” technologies, the respondents are primarily interested in artificial intelligence and the internet of things. In daily practice, these technologies hardly play a role yet. The same applies to the blockchain, which ranks last in the list of technologies. Obviously, the blockchain still is not relevant enough for the companies. The study of 2018 showed a similar result.
Study identifies trends
The CSB digitisation study is the only international survey on the status and the future of digitisation in the food and beverage industry. The survey, conducted for the first time in 2017, is meant to provide great insights over time. In this year's study, we found out that the percentage of participants investing more in IT and new technologies is increasing compared to the previous years.
The companies might see that especially those food producers have the opportunity to achieve profitable growth which combine good products with digitised processes, independent of whether they are process engineers, relations optimisers or ecosystem builders.