The Food & Beverage industry has huge potential for optimising its operations with digitalisation.

With global operations in trillions of dollars, the Food & Beverage (F&B) industry has huge potential for optimising its operations with Digitalisation, using technology to improve business processes. With its fast-paced operations, ever-changing consumer demands, and intricate supply chains, this sector stands to reap immense benefits from the adoption of innovative digital solutions. According to Invest India portal, implementation of PLI scheme is likely to facilitate expansion of food processing capacity by nearly INR 30,000 crore and create additional direct and indirect employment opportunities for about 2.5 lakh persons by the year 2026-27. So what are the most significant trends driving digitalisation in the Food & Beverage industry?

“Digital transformation and productivity improvements are the main drivers for the Food & Beverage industry’s digitalisation of operations, along with the many sub trends we are seeing in this industry. Population growth and consumer preferences for types of food are also strong drivers because digitalisation can enforce modifications and increase volume,” says Janice Abel, Principal Consultant, ARC Advisory Group. A consultant and lead analyst, she is also helping companies with digital transformation and digital changes. “Digital transformation enables a host of technologies that can help F&B manufacturers enhance safety and quality, as well as reduce energy, carbon, waste and packaging material. Simulation technology and digital twins can be used to help design, control and operate complex processes. Companies can use simulation and digital twin technology to efficiently model complex processes, validate design performance, and train operators. The result is reduced product variability, improved performance, and reduced production risks and downtime, while increasing sustainability and operational resilience,” she elaborates.

“Digitalisation in the Food & Beverage (F&B) manufacturing industry in India is being driven by several significant trends which are transforming the industry in India, making it more efficient, transparent, and customer-centric, e.g., utilisation of robotics. Its inclusion at the shop floors is increasing to enhance efficiency and reduce human error in production processes. The use of Artificial Intelligence (AI) and Machine Learning is also on the rise. These technologies are being used for predictive analytics, quality control, and to optimise supply chain management. IoT devices are helping to monitor and manage production processes in real-time, improving traceability and reducing waste,” says Sameer Gandhi, Managing Director, OMRON Automation, India. Omron has significant presence in automation in the food and beverage industry, and is a trusted global partner in F&B packaging automation solutions. Mr Gandhi also draws attention to the growing focus on sustainability, with digital tools being used to reduce energy consumption, minimise waste, and improve resource efficiency. “Enhanced data analytics allows companies to create more personalised experiences for customers, improving satisfaction and loyalty,” he notes.

According to Ajey Phatak, Head of Marketing and Business Development, Beckhoff Automation Pvt Ltd, the F&B industry is rapidly following the significant general industry trend of driving digitisation of supply chains, consumer interactions and digitisation of shop floors. “The use of Automation & Robotics is getting higher attention as the product manufacturers are seeing and experiencing the direct benefits, e.g., higher efficiency and consistency, safety, customisation, etc. Software driven product transport technologies that are necessary for such results are achievable with new automation technology products like Beckhoff, which enable perfect customisation in sorting, packaging, cartoning, etc. Due to the advantages of data driven decision making, big data analytics is also on the agenda of the decision makers. The artificial intelligence (AI) and machine learning (ML) applications, which are very easily achieved with PC-based control systems, EtherCAT and TwinCAT software is also a trend,” he says. 

At a time when the advantages of digitalisation are all too obvious, what are the biggest challenges that Food & Beverage companies face when implementing digital transformation?

“Implementing digital transformation in the F&B industry comes with several challenges,” says Sunil David, Digital Technology Consultant, and then proceeds to highlight some of the biggest ones:

• High Initial Costs: Significant investment is required initially for the adoption of new technologies such as automation, IoT, analytics and AI tools. It can be challenging to predict and achieve a quick RoI on digital investments and hence F&B companies have to prioritise their digital investments which can realise faster business value.

• Integration with Legacy Systems: Compatibility issues arise because of difficulty in integrating new digital solutions with existing legacy systems. There is also the issue where data resides in silos thus preventing seamless data flow across different systems and platforms.

There are also cybersecurity threats with data breaches and compliance issues; and resistance to change from employees accustomed to traditional processes and need for comprehensive training programs to upskill the workforce for new technologies. Besides, there are the supply chain complexities and difficulty in coordinating digital transformation efforts across a complex and often global supply chain, as well as the need to ensure end-to-end visibility and traceability in the supply chain.

“Addressing these challenges requires a strategic approach, including careful planning, stakeholder engagement, continuous monitoring, and a willingness to adapt and learn throughout the digital transformation journey,” says Sunil David.

Janice Abel agrees about the high cost, which, according to her, is the biggest challenge that F&B companies face when deploying digital transformation technologies, as also the uncertainty in predicting the benefits in terms of RoI. “The other challenges are corporate culture and acceptance of digital technologies including the fear of the replacement of some jobs. Advanced analytics, AI and robotics are often seen as human replacements when in most cases today they are assisting humans,” she says.

Apart from high initial cost, Sameer Gandhi also highlights a few other challenges which crop up during implementation of digital transformation. These are: seamless integration of legacy systems; data security and privacy; workforce upskilling; change management, especially the cultural and organisational changes that come with digital transformation; and regulatory compliances that can be challenging to follow when adopting new technologies.

According to a 2021 United Nations Environment Program (UNEP) report, one third of all food produced is lost or wasted – around 1.3 billion tonnes of food – costing the global economy close to US$940 billion each year. In what ways is digitalisation contributing to waste reduction in the F&B industry?

“Yes, digitisation is significantly contributing to waste reduction in the F&B industry by improving efficiency, enhancing supply chain transparency, and enabling better decision-making, e.g., improved inventory management – demand forecasting, real time inventory management, enhanced supply chain efficiency, advanced packaging and logistic optimisation, smart farming or precision agriculture, predictive analytics, automated quality control, AI-driven vision inspection, etc.,” says Ajey Phatak, who also feels consumer engagement and knowledge sharing about storage and disposal also helps reduce wastages.

Sunil David believes digitalisation is contributing significantly to waste reduction. “One specific area where waste is being reduced is having better visibility of the food supply chain through IoT and secondly by having a much better understanding of customer demand through analytics and thereby having much better control of the inventory so that there is no over stocking of food raw material that can lead to food wastage,” he states. Sunil David also cites a use case of a solution that Emerson has built jointly with a partner, leveraging the power of IoT, called Grind2Energy (G2E). The food waste is sent to an industrial grinder with smart controller logic which creates food waste slurry which can be used to produce renewable energy through anaerobic digestion at waste management facilities. According to him, a very similar solution can be emulated in India and other countries to manage food wastage using the power of digital technologies.

“Digitalisation, including automation, helps reduce product waste from raw material variations because technologies can make adjustments to the process that account for variations and improve quality and lead to zero waste,” says Janice Abel. “New technologies can also improve overall waste by enforcing product consistency and reducing human errors. Newer technologies can help account for temperature, volume, and other product modifications and changes to reduce waste. Additionally, newer technologies can help enforce energy efficiency in the process and ensure that manufacturing is done sustainably,” she adds.

According to Sameer Gandhi, one of the most significant ways with which digitalisation contributes towards waste reduction and improving overall sustainability in the F&B industry is its role in deploying preventive maintenance, which leads to  prevention of mistakes, failures, and inefficiencies throughout the packaging line leading to reducing waste in manufacturing and distribution. “Smart cameras and sensors ensure quality control for processes like filling, and labelling, which leads to reduction of waste by decreasing errors and rework,” he says. 

One of the major byproducts of digitalisation is the massive amount of data generated in the process that yields many valuable insights if analysed properly. How is data analytics being used to optimise supply chain management and inventory control in the Food & Beverage sector?

“Data analytics can play a pivotal role in optimising supply chain management and inventory control in the F&B sector. Demand forecasting, predictive analytics, seasonal and event linked consumption analytics and consumer behavior analytics, etc., can help inventory and production optimisation. Supply chain visibility and transparency can increase efficiency and brand equity,” says Ajey Phatak.

“Data analytics is revolutionising supply chain management and inventory control in the F&B sector by enabling more precise and efficient operations,” says Sunil David. He elaborates it further at some length:

• Predictive Analytics: By analysing historical sales data, weather patterns, and market trends, companies can forecast demand more accurately.
• Seasonal Trends: F&B companies use analytics to identify and predict seasonal trends, which allows for better inventory planning around holidays, special events, and seasonal changes in consumer preferences.
• Real-time Monitoring: Sensors and IoT devices provide real-time data on inventory levels. Analytics platforms process this data to provide insights on when to reorder stock, preventing both shortages and excess inventory.
• Shelf-life Management: Perishable goods require careful monitoring. Data analytics helps track the age of inventory and predicts the shelf life, ensuring that products are sold or used before they spoil.

How has digitalisation impacted the operational efficiency and profitability of Food & Beverage businesses?

Janice Abel asserts that digitalisation has significantly impacted the operational efficiency and profitability of F&B businesses. “The adoption of digital technologies has enabled companies to optimise their processes for maximum efficiency, build resiliency into their supply chains, and respond rapidly to market trends. Key trends include the migration to the cloud, the use of AI and real-time analytics, omnichannel customer engagement, sustainability efforts. Digital investments have been shown to positively impact both revenue and profit performance of F&B manufacturers,” she maintains. According to her, companies with a digital-native culture, tools, and processes are achieving closer customer connections and higher productivity. It has led to improved operational efficiency, profitability, and customer engagement, while also fostering innovation and sustainability.

“Digitalisation delivers enhanced operational efficiency, predictive maintenance; optimisation of supply chains through reducing waste and lowering inventory costs; improved product quality owing to deployment of solutions like traceability; more agility and flexibility; personalised and customised customer engagements, etc.,” says Sameer Gandhi. “All this leads to an increase in the growth of revenue and higher levels of profitability. It also opens up new revenue streams through e-commerce and direct-to-consumer sales channels,” he adds.

According to Ajey Phatak, digitisation has driven improvements in the following areas: 

• Enhanced operational efficiency – automation and robotics has streamlined production processes, maintained consistent quality, packaging, and reduced cost of goods sold (COGS). 
• IoT and real time monitoring has helped reduce machine down time, improved equipment maintenance, optimised processes, brought supply chain visibility, etc. 
• Improved profitability has come due to cost reduction, efficient resource management and waste reduction; also increased revenue due to premiumisation in product pricing using smart and attractive packaging, faster time to market, quick response to market feedbacks and demands, efficient logistics, etc.

Sunil David concurs with these observations. “Digitalisation has significantly impacted the operational efficiency and profitability of F&B businesses worldwide. By leveraging digital technologies, these businesses have streamlined their operations, improved customer experiences, and boosted profitability,” he states.

Finally, the most important aspect is safety. So what role does digitalisation play in enhancing food safety and quality assurance?

“Digitalisation and the implementation of technologies play a huge role in food safety and quality assurance, not only because of their ability to enforce operations and reduce human error and improve quality, but because some newer technologies enable tracking and tracing products throughout the manufacturing process to the consumer. This helps ensure product efficacy and safety in manufacturing and in the supply chain,” says Janice Abel. “Digital transformation in the food industry is enhancing food safety and quality by enabling informed decision-making and quantitative risk assessment. It facilitates improved traceability, audit readiness, and adaptation to regulatory changes, contributing to overall profitability and sustainability,” she adds. 

For Sameer Gandhi digitalisaton plays a pivotal role in enhancing food safety and quality assurance. “Talking from OMRON’s perspective, our end-to-end traceability solutions play a great role in ensuring that every step of the production process is monitored and recorded, making it easier to identify and address any issues that may arise. Our range of smart cameras and sensors perform real-time quality checks and detect defects and inconsistencies in products, ensuring that only high-quality items reach consumers. Precise temperature control systems solutions ensure that products are processed at the correct temperatures, reducing the risk of contamination and our automated inspection systems verify the integrity of packaging and labeling, ensuring that products are correctly packaged and labeled before they leave the production facility. By using AI and machine learning, OMRON’s solutions deploy proactive maintenance. This minimises downtime and ensures that production processes continue to be safe,” he elaborates.

“By leveraging advanced technologies such as IoT, blockchain, AI, ML and data analytics, companies can improve their ability to monitor, trace, and manage food quality and safety throughout the supply chain. Use of traceability and transparency, use of machine vision systems, artificial intelligence and machine learning can enhance and maintain product quality,’ says Ajey Phatak.

“Digitalisation plays a crucial role in enhancing food safety and quality assurance by enabling more precise tracking, monitoring, and management throughout the food supply chain,” says Sunil David, and as is his wont, cites a few examples:

• IBM Food Trust uses blockchain technology to enhance traceability in the food supply chain. By providing a transparent and immutable ledger of food production, processing, and distribution, it helps ensure food safety and quality. 
• Nestlé uses IoT devices and data analytics to monitor the quality of raw materials and finished products. Sensors in production facilities track temperature, humidity, and other critical parameters. Nestlé's Quality Assurance Centres use real-time data to ensure compliance with safety standards and to rapidly address any quality issues, maintaining high standards for their products globally.
• Danone employs AI to predict and mitigate risks in the supply chain. AI models analyse data from various sources to identify potential contamination risks and quality issues before they occur. AI-driven predictive analytics help Danone optimise their production processes, ensuring consistent quality and safety of their dairy products.
• Amul, one of India’s largest dairy cooperatives, uses blockchain technology to enhance traceability and IoT devices to monitor the quality of milk from collection centres to processing plants. Blockchain ensures that each batch of milk can be traced back to its source, ensuring transparency and accountability, while IoT sensors monitor temperature and quality during transportation and storage.
• Mother Dairy uses IoT sensors to monitor the cold chain for its milk and dairy products. Mobile applications called ‘Mobile First’ are used to track delivery and ensure that products remain within safe temperature ranges. Real-time monitoring and data analytics help Mother Dairy maintain the quality and safety of its milk products.

“By leveraging advanced technologies, F&B businesses can ensure that products meet safety standards and maintain high quality,” Sunil David concludes.