Roadmap to Transformation in Food & Beverage

Roadmap to Transformation in Food & Beverage Contents What does digital transformation really mean for the Food & Beverage industry? 03 05 Transformation journey Warehouse of for food and beverage the future 07 09 Digital strategy should be Restaurant renaissance: everyone’s responsibility how to revive an ailing industry 3 ROADMAP TO TRANSFORMATION IN FOOD & BEVERAGE CHANGE Transformation journey for food and beverage With thousands of new products launched each year, UK food and drink companies are seasoned innovators, fearless in adapting to change. Now, with shifting consumer trends, tougher regulations and rising costs, businesses must do more than simply adapt, they need to transform Alison Coleman Bahige El-Rayes, partner and leader in consumer and retail practice at A.T. Kearney, ome sectors in food and beverage are explains: “After years of weak growth, many S feeling the pressure more than oth- food and beverage companies are using the ers. Restaurants have had a particu- pretext of digital transformation as a tool to larly tough time, with big brand names suc- buy more time,” he says. “If they want to sur- cumbing to market pressures. Insolvencies vive in the current climate, their focus must rose by 25 per cent in the last year, according be on how they transform and innovate their to accountancy firm UHY Hacker Young. core business models.” In warehousing, a cornerstone of the food In food retail, the biggest challenge to and drink business, traditional manual han- successful transformation is disruption dling processes can no longer meet consumer within the industry. Discounters such demand for faster service, greater transpar- as Lidl and Aldi are continuing to grow ency and better accountability. market share with their low-cost, high- At the same time as these challenges are quality private-label offerings, while the emerging, new digital solutions are being likes of Amazon and Ocado continue to developed to help firms achieve the transfor- drive the UK online market. This leaves mation they need. But to succeed, digitalisa- many retailers trying to invest in price, tion needs business buy-in across the board drive new product innovation and launch with a clear understanding of digital strategy. into digital transformation. 4 ROADMAP TO TRANSFORMATION IN FOOD & BEVERAGE In the consumer packaged goods (CPG) world, by no means redundant. “These technologies by contrast, big brands are losing their market enable people to focus on the more complex share to smaller ones. A.T. Kearney’s research tasks where human judgment cannot be sub- expects the top 25 brands to lose $50 billion of stituted or the personal touch enhances cus- growth to smaller brands that are more nimble tomer experience,” Mr Truman adds. and resonate better with consumers. Brexit effect Mutual understanding Failure in the restaurant sector is a perennial “Digital transformation offers a new tool for risk and can happen for many reasons, from CPG companies to listen to consumers and 25% over expansion to a lack of quality control. build a sense of mutual understanding,” says rise in restaurant Current market forces have also helped drive Mr El-Rayes. “Ultimately, in any transforma- insolvencies in the up failure rates, with constant cost hikes influ- last 12 months tion of a food and beverage company, the key is enced by property prices, business rates and to be consumer centric, and building intimacy UHY Hacker Young 2019 the cost of raw materials. The Brexit effect has and credibility should be the main focus.” also negatively impacted the restaurant sector. In warehousing, digital transformation is Phil Hails-Smith, corporate and commercial already impacting virtually every supply chain, partner at law firm Joelson, says: “The restau- with experts predicting widespread adoption rant market is highly competitive and subject of automation, and more employees focused on to the vagaries of taste and fashion. Disruptive maintaining automation and robots. forces in the shape of brands such as Deliveroo Marlow Truman, director at Deloitte Consult- and HelloFresh are adding to the challenges of ing Retail Practice, says: “In future, we are also getting customers to keep eating out.” likely to see significant growth in direct-to-con- Here, technology is helping businesses to sumer fulfilment to pick, pack and ship singles improve performance and gain a competitive and multi-packs. At the same time, as consumers edge. “If restaurants can reduce customer expect a reduction in packaging, we can expect dwell-time without eroding the experience, more use of reusable totes, packs and containers.” they can get more customers through the Rollout of 5G connectivity, along with bet- door with the same or a smaller footprint,” ter sharing and integration of data between says Adam Walford, partner and food and suppliers and retailers, should also improve drink specialist at law firm Howard Kennedy. real-time visibility and availability, while “Companies like Livit, for example, are using reducing waste. In response to changing con- data to help restaurants determine which sumer sentiment, many warehouses will look music results in customers spending less time to increase their use of renewable energy and over their meal without even realising it and so be far more energy efficient or carbon neutral. freeing up the table sooner for the next taker.” “We are seeing innovation around direct-to- Technology can also improve staffing -effi consumer models in beers, wines and spirits, ciencies. Coople improves staffing flexibility by such as the rise of wine and gin clubs,” says employing people on flexible contracts and using Mr Truman. “Elsewhere, there is innovation an algorithm to match and place those employ- in reducing packaging and waste by shipping ees with restaurant businesses in shorter-term and selling in bulk and, at the consumer end, need of their skills when they are available. items being collected in their own containers.” Once a restaurant has begun to struggle, the While technology is the predominant fea- prospects of a turnaround are limited. Chains, ture of this transformation, the human role is in particular, find it tough to recover once they start to experience financial difficulties. While transformational technology can drive customer engagement and encourage loyalty and repeat business, the fundamentals of restaurant success haven’t changed. Mr Hails-Smith concludes: “The focus In any transformation of a food and beverage should be on delivering a quality customer company, the key is to be consumer centric, experience, increasing customer loyalty and generating repeat bookings. Successful oper- and building intimacy and credibility should ators in food and drink have to keep pace with be the main focus changing consumer trends. In this market, you evolve or you die.” 5 ROADMAP TO TRANSFORMATION IN FOOD & BEVERAGE TECHNOLOGY Warehouse of the future Robots, drones and algorithms are radically altering the way warehouses operate, increasing efficiency and reducing risk for F&B companies around the world Duncan Jefferies arehouses have always been the W heart of the supply chain in F&B, taking in items from suppliers and pumping them out. Over the past few dec- ades, retailers have tried to make this oper- ational heart beat a little faster with productivity and efficiency improvements. But the competitive demands of ecommerce have taken things to a whole new level. Rather than transporting pallets to bricks- and-mortar stores, many businesses are now sending individual items to individual customers and they’re overhauling their warehouse operations to ensure items arrive as quickly as possible. “Automation will bring many benefits to the supply chain, such as easing the pressures caused by a lack of workforce and promoting higher productivity,” says Rebecca Green, head of insight at Wincanton. “It can either substi- tute workers by undertaking some of the sim- pler, more repetitive tasks or augment workers’ efforts, expanding their capability and allow- ing them to achieve more and produce better quality work in a shorter space of time.” Modern automated storage and retrieval systems, for example, allow for much better height utilisation within the warehouse. The accuracy of these systems can also greatly reduce the time it takes to retrieve a pallet. In the most cutting-edge warehouses, algorithms often determine where items should be stored and augmented reality smartglasses guide picking personnel to them. In fact, robots increasingly bring crates of items to picking stations, mini- mising the amount of walking and lifting picking personnel have to do. Pioneering solutions The online-only supermarket Ocado has built its entire operations around highly automated warehouses, the most advanced of which features more than a thousand 6 ROADMAP TO TRANSFORMATION IN FOOD & BEVERAGE cube-shaped robots that pick and pack gro- cery items. The company is now building automated warehouses for other retailers 638k too, many of which are keen to stay one step square footage of The future of many ahead of Amazon, which has also deployed the futuristic Nestlé companies will depend fleets of robots in its vast warehouses. and XPO Logistics warehouse Technologies pioneered by these compa- on how well they nies are now beginning to spread through- XPO Logistics organise and manage out the logistics industry. But given the cost and complexity of installing some of these interactions between solutions, it’s important to identify whether humans and automation they’re truly a good fit for the business. “The key thing for us is to make sure we’re spending on the right technologies,” says Richard Cawston, managing director of the sites and customers across the country. European supply chain at XPO Logistics. “We “We call it the warehouse of the future for con- look at technology and automation that can sumer-packaged goods,” says Mr Cawston. improve productivity, but also quality and The facility, which is scheduled to open in accuracy.

Load more