Digitalisation plays a crucial role in enhancing food safety and quality assurance
Published on : Thursday 08-08-2024
Sunil David, Digital Technology Consultant.
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What are the most significant trends driving digitalisation in the Food & Beverage industry?
There are several key technologies that are increasingly being adopted by the F&B industry globally as well as in India. A few of these key trends that we are seeing being played out:
IoT – The need to monitor the entire cold chain especially for temperature and humidity sensitive raw materials used by the food and beverage industry, real time tracking of vehicles carrying raw materials for food, vegetables, fruits and meats, etc., monitoring and control of HVAC and Standard Operating Procedure (SOP) compliances within Cloud Kitchens.
Cloud – F&B companies accelerated their migration of their application to the cloud in order to be more quick, nimble and responsive to rapidly changing market conditions.
AI – AI and real-time analytics play key roles in helping F&B companies understand consumer food preferences; demand forecasting, avoiding food waste and optimising energy usage.
Blockchain Technology – For traceability to ensure food safety and quality by tracking products from farm to table. Secondly, transparency by providing consumers with detailed information about the origin and journey of their food.
Omnichannel – The ability to serve customers directly through online digital channels that enhanced reach and accessibility for F&B companies.
Sustainability – A growing number of environmentally and health conscious consumers want to know more about the food they buy, putting pressure on F&B companies to provide better visibility of their supply chain.
Automation – The use of automation in the F&B has seen an upward trend – for example, restaurant chains are increasingly deploying automation in cooking and meal-preparation. This increasing prevalence of autonomous food service in the name of labour cost and efficiency is shaping a future with less or no human-led culinary experiences.
Personalised Customer Engagement – Better availability of authentic data and robust data analytical tools are helping the F&B create more personalised digital experiences for their customers. Companies are poised to revolutionise their ordering experience across a number of digital touchpoints, in order to cater to specific individual preferences and behaviours delivering a truly omnichannel experience.
Digital Twin Technology
· Process Optimisation: Creating virtual models of production processes to optimise operations and improve efficiency, and
· Quality Control: Using digital twins to simulate and monitor product quality.
Use cases of F&B companies leveraging Digital Technologies
1. A large cloud kitchen in India has been leveraging the power of IoT, Analytics, AI and Cloud for monitoring kitchen quality and monitoring of asset health. The key business goals were creating a Digital Twin of the kitchen for remote monitoring of quality and operations, improving food quality through better temperature compliance and traceability of material and cooked food. The solution included sensors and energy meters to extract energy data from industrial assets, an ERP and WareHouse Management System for batch identification and enabling local alarms for immediate actions at every kitchen. Post implementation of the solution the cloud kitchen have seen a 60% improvement in temperature compliance across kitchen and assets, 10% decrease in energy bill through better uptime management and reduced variability in supplier product quality
2. A very large online grocery company in India has used a complete Digital solution encompassing IoT, Analytics and AI, Cloud integration and back end integration into ERP systems for use cases around temperature compliance and inventory management. The company wanted to create a digital cold chain to enable higher quality and operational efficiency, improve temperature compliance of cold chain orders to enhance customer trust and to reduce cold box losses. The solution required using rugged sensors with high durability that could withstand intensive operations including high pressure washing, integration into ERP to enable real time association of order temperature and enabling pre-conditioning alerts to solve temperature risks at source. After the implementation of the solution, they experienced a 2x Improvement in order temperature compliance, improvement in SOP compliance, 20% reduction in missing boxes and end to end traceability of SKUs (from cold room to customer door step).
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. Here are 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.
Cybersecurity Threats:
· Data Breaches: Increased risk of cyberattacks targeting sensitive customer and operational data.
· Compliance: Adhering to stringent data protection regulations and standards.
Change Management:
· Employee Resistance: Resistance to change from employees accustomed to traditional processes.
· Training Needs: Need for comprehensive training programs to upskill the workforce for new technologies.
Supply Chain Complexity:
· Coordination: Difficulty in coordinating digital transformation efforts across a complex and often global supply chain.
· Visibility: Ensuring end-to-end visibility and traceability in the supply chain.
Regulatory Compliance:
· Food Safety Standards: Adhering to strict food safety and quality regulations which can vary by region. For example, in India we have the FSSAI.
· Traceability Requirements: Meeting the demands for traceability and transparency in the food supply chain.
Cultural Shift:
· Digital Culture: Fostering a culture that embraces innovation and digital transformation.
· Leadership: Ensuring strong leadership and commitment from top management to drive digital initiatives.
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.
In what ways is digitalisation contributing to waste reduction in the Food & Beverage industry?
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.
We however do encounter food wastage from restaurants and malls and large business campuses housing 1000s of employees.
A good use case of how food wastage issue can be addressed
As per studies, approximately 1/3rd of all food produced for human consumption worldwide is lost or wasted and 95% of that waste ends up in a landfill or incinerator creating methane, a potential greenhouse gas. Average price to haul waste to landfills has increased year on year.
Emerson in partnership has built a solution leveraging the power of IoT and its 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.
IoT-powered solution makes it possible to:
· Optimise slurry quality and system uptime
· Utilise data for predictive maintenance
· Improve tank monitoring and pump-out scheduling, and
· Provide customers with near real-time usage and sustainability reports.
Impact of the solution
· 7,400 tonnes of food waste not dumped in landfills
· 420 tonnes of fertilizer generated, and
· 5000 metric tonnes CO2 emissions avoided.
A very similar solution can be emulated in India and other countries to manage food wastage using the power of digital technologies.
How is data analytics being used to optimise supply chain management and inventory control in the Food & Beverage sector?
Data analytics is revolutionising supply chain management and inventory control in the F&B sector by enabling more precise and efficient operations. Here's a detailed look at how data analytics is being applied:
1. Demand Forecasting
Predictive Analytics: By analysing historical sales data, weather patterns, and market trends, companies can forecast demand more accurately. This helps in reducing overstocking and stockouts, ensuring that supply matches consumer demand.
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.
2. Inventory Management
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.
3. Supply Chain Optimisation
Route Optimisation: Using GPS and real-time traffic data, analytics can optimise delivery routes to reduce transportation costs and ensure timely deliveries.
Supplier Performance: Data on supplier performance, including delivery times and quality, is analysed to identify the best suppliers and negotiate better terms. This also helps in identifying potential risks in the supply chain.
4. Quality Control and Compliance
Traceability: Data analytics enables end-to-end traceability of food products, ensuring that any issues can be quickly identified and addressed. This is crucial for maintaining quality and meeting regulatory requirements.
Predictive Maintenance: For equipment used in the supply chain, predictive maintenance analytics can forecast when equipment is likely to fail, allowing for proactive maintenance and reducing downtime.
How has digitalisation impacted the operational efficiency and profitability of Food & Beverage businesses?
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. Here are some detailed examples, both globally and from India, illustrating these impacts:
Global examples of improved operational efficiency
McDonald's has implemented digital kiosks and mobile ordering systems in its restaurants. These technologies reduce wait times, streamline order processing, and allow for better customisation of orders. The introduction of the McDonald's mobile app has also driven higher average order values through personalised promotions and upselling techniques, leading to increased revenue.
Starbucks has integrated its mobile app with its loyalty program, enabling customers to order and pay ahead, reducing in-store wait times and enhancing customer experience. The app collects customer data, allowing Starbucks to personalise marketing efforts and promotions, driving higher sales and customer retention.
Domino's Pizza
Domino's uses a digital order management system called ‘Domino's Pulse’ to streamline order processing, kitchen operations, and delivery logistics. Their innovative ‘Domino's Tracker’ provides real-time updates to customers, improving customer satisfaction and loyalty, which in turn boosts repeat business and sales.
Coca-Cola has adopted IoT and AI for predictive maintenance of its bottling plants, reducing downtime and operational disruptions. By using big data analytics, Coca-Cola optimises its supply chain, reducing costs and improving inventory management, contributing to higher profit margins.
Indian examples
Zomato
Zomato's digital platform connects restaurants with customers through an app, streamlining the food ordering and delivery process. It also provides restaurants with data analytics to optimise their menus and operations. The platform's targeted marketing and promotions help increase order frequency and customer retention, driving higher revenues for both Zomato and its partner restaurants.
ITC Limited
ITC has integrated digital solutions in its supply chain management, utilising IoT and data analytics to enhance inventory control and logistics. These digital initiatives have led to cost savings and improved product availability, contributing to higher sales and margins.
Digitalisation has brought about transformative changes in the F&B sector, enhancing operational efficiency and profitability through better inventory management, optimised supply chains, improved customer experiences, and effective marketing strategies. Both global and Indian examples illustrate how leveraging digital technologies can lead to significant business improvements and competitive advantages.
What role does digitalisation play in enhancing food safety and quality assurance?
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. By leveraging advanced technologies, F&B businesses can ensure that products meet safety standards and maintain high quality. Here are some detailed examples, both globally and from India:
Global examples
IBM Food Trust
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. For example, Walmart uses IBM Food Trust to track leafy greens from farm to store, reducing the time needed to trace the origin of contaminated products from days to seconds, thereby improving food safety.
Nestlé
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
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.
Indian examples
Amul
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
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, ensuring they meet stringent safety standards from farm to consumer.
(The views expressed in interviews are personal, not necessarily of the organisations represented.)
Sunil David is an Independent Digital Technology Consultant with 30 years of experience in the IT and Telecom Industry. He is currently empanelled as an Independent Consultant in the Manufacturing and Process Control Practice Area with Frost and Sullivan India, one of the top Global 10 Research, Consulting and Strategy firms. He also consults an IoT and AI based Technology solutions firm, Flamenco Technologies in their Go to Market strategy, Branding initiatives and building of their partner ecosystem. Flamenco solutions address use cases around Connected Manufacturing, Digital Supply Chain and Technology Enabled Sustainability solutions. Sunil is also a Mentor to T-Hub (Telangana Hub), one of the largest startup Incubators in India supporting some of the most innovative startups.
Sunil, an alumnus of Symbiosis Institute of Management Studies, Pune (Post Graduate Diploma in Business Administration with specialisation in Marketing) spent almost 20 years with AT&T India. In his last stint with AT&T, Sunil was the Regional Director – IoT (India and ASEAN). Sunil has had extensive experience in Business Strategy, Sales, Business Development and Alliance & Partnership building during his AT&T stints.
He is a very frequent speaker having spoken at more than 300 Industry forums both in India and abroad (organised CII, NASSCOM, ASSOCHAM, IET, PHD Chamber of Commerce, The Economic Times, etc), and leading Educational Institutions (IIT Madras, IIT Delhi, IIM Shillong, IIT Jammu, Symbiosis Institute of Telecom Management, ISB Hyderabad, etc., to name a few) on topics related to IoT, AI, 5G, Digital Transformation, Industry 4.0, Gen AI, Metaverse, Future of
Work, Cybersecurity, etc. Sunil also has been invited by leading business TV channels ET NOW and CNBC TV 18 to comment on topics related to India’s 5G rollout and adoption, the Telecom Act 2023, etc. He has been a recipient of a number of Awards and Recognitions (17 in total) from various Industry bodies and Media conglomerates in recognition for his work in Digital Technology Advocacy, Digital Skilling initiatives for Women and Startup Corporate connect (notable among them being – AsiaOne, one of Asia’s largest media conglomerates – India’s Fastest Growing Leader given in Bangkok in 2020, India’s Fastest Growing Digital Evangelist in 2021 and India's Fastest Growing Technology for Change Champion Award in 2023. Some of the other notable awards won being Top 50 Most Influential Digital Marketing Leaders in 2017 and India’s Most Influential Digital Marketing Leaders in 2022 conferred by World Marketing Congress and India’s Most Dynamic Leader given by Global Triumph Foundation in 2023.
NASSCOM Foundation and IBM India have planted trees in Sunil’s name for his contribution towards Digital skilling of women and efforts to advocate AI importance in India. He has also written a number of articles on topics related to Cybersecurity, Digital Transformation, Metaverse, IoT, 5G, etc., for leading business publications and technology focused websites.
Sunil is also affiliated with a number of Industry bodies and is a key member of the CII CTO Forum, CII National AI Forum, CII Northern Region Digital Transformation Committee, CII Southern Region Taskforce for Technology and Digital Transformation, CII Inst of Logistics, NASSCOM Foundation, IET Digital Communications Working group, Indo American Chamber of Commerce, etc., working on a number of National initiatives around Digital Skilling, Digital Technology awareness and advocacy, MSME Digital Transformation, Sustainability and ESG, Startup – Corporate Connect, etc.
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