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Finance 4.0!

28 April 2018

Brian Foster offers advice for those looking to invest in Industry 4.0 solutions. 

The food and drink sector in the UK has grown steadily over the past few years. According to the EEF, output has grown by 21% between 1990 and 2017. Despite this, the Department for Environment, Food and Rural Affairs (DEFRA), food manufacturers has stated that industry still faces a number of key challenges in the coming years, including the need to boost productivity, responding to consumers’ changing demands, delivering export-led growth and responding to the impact of Brexit.

Digitalised technology can help tackle these challenges and is already helping food and drink manufacturers improve performance and boost productivity. For example, information relating to the expected quality of an ingredient can now be made available even before harvest. This information will be relevant for adapting manufacturing processes or sourcing other ingredients.

Digitalisation can also help with food quality. Shelf life is undeniably a real issue for many food manufacturers and for businesses that make fresh products the same day they are shipped. Digital information flowing up and down the distribution and supply chains improves coordination of supply and demand, which may fluctuate as frequently as each day, to guard against over-ordering and overproducing. Electronic traceability allows producers to track items from delivery to the supermarket shelf. This connects engineering to production to IT in order to support joint systems and more efficient demand and production planning.

Other benefits from digital supply-chain integration include connecting communities and technology through a cloud-based platform. This allows businesses to take a product to market more quickly by connecting the supply chain to the production facility through interoperability. Uncovering patterns in data also allows businesses to more accurately anticipate customer demand.

Digitalisation also permits the optimisation of preventive maintenance programs so costly and delay-inducing machine failures are all but designed out.

Driving financial sustainability
While digitalisation helps to drive financial sustainability, gaining access to a range of smart and appropriate financing solutions is also critical to a company’s ability to sustainably invest in digitalised technology and automation equipment. In the same way that moving towards digitalisation requires a new ‘digital mindset’, financing requires a similar change of mindset to provide effective, sustainable ways of implementing digitalisation – a specialised portfolio of financing techniques that Siemens is referring to as ‘Industry 4.0 Finance’.

Finance requirements might range from the acquisition of a single digitalised piece of equipment, right through to financing a whole new factory. This requires the financial provider to have it can be practically implemented.

Food and beverage industry customers of TRAKRAP, for example, are already benefiting from a vendor financing arrangement which allows them to access specialist machinery providing energy-efficient packaging solutions. - Siemens Financial Services is providing financing solutions for the equipment for TRAKRAP customers, which enables them to spread the costs for the use of the machinery over the contractual period on a ‘pay per wrap’ basis. By taking the time to understand the technology and by working in partnership with TRAKRAP, Siemens Financial Services is providing a financing solution that meets the needs of food and beverage processors, enabling them to benefit from the use of the system without a large up-front capital expenditure.

Industry 4.0 raises a number of challenges and opportunities for food processing companies. Working with a financier that understands the most sustainable ways to invest in Industry 4.0 technology can help overcome the challenges to benefit from the opportunities.

Brian Foster is head of industry finance at Siemens Financial Services in the UK.

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