Surviving the ‘ new normal ’: investing in agile technologies is key to a resilient food and beverage industry
Brian Foster , Head of Industry Finance , at Siemens Financial Services , UK
The economic impact of the current pandemic is expected to be significant and prolonged . Last year , the food and beverage industry has had to rapidly adapt to changing circumstances and patterns of consumption – be it suppressed or increased demand . Some businesses have even had to reduce their food product ranges just to keep pace with surging demands . While most businesses in the industry were able to escape the threat of temporary shutdown , many are also coming to the realization that supply patterns , ways of working and labour practices are likely to be fundamentally and permanently changed . The industry will be reshaped in the medium- to long-term and companies that are unable to adapt
56 FDPP - www . fdpp . co . uk quick enough to the ‘ new normal ’ will run the risk of getting left behind .
Unsurprisingly then , companies who had invested in agile technologies and machinery were best placed to react to shifting market demands with optimal flexibility when the crisis hit . Companies with automated and digitalised production units were less affected by the lockdown-induced staff shortages , for instance , making them more resilient . Surviving recent disruptions required business agility on all fronts – and companies that weren ’ t sufficiently equipped for a drop in demand were faced with a lack of cold storage for perishables , for instance . Conversely , manufacturers equipped with ‘ digital twins ’ were able to simulate coronavirus impact scenarios and react quickly and effectively in volatile situations .
The challenges inhibiting investment , however , are considerable . Our latest report “ Rising to the new challenge : the role of Smart Finance in helping navigate the economic ‘ new normal ’” conservatively estimates that over the next five years $ 567 billion in investment funds are needed for digital transformation alone in the global food and beverage industry . Nonetheless , the incremental increase in annual revenue that manufacturers can stand to gain from digitalising their processes is significant .
Research from Siemens Financial Services ( SFS ) has shown that manufacturers can stand to gain an additional 6.3 – 9.8 % of their annual revenues from bringing digitalization into their manufacturing operations .