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Digitisation: moving from hype to implementation

28 October 2019

The third CSB study into digitisation in the food and beverage industry highlighted that the food industry is moving into in a phase of digital optimisation. However, a digital transformation is only rarely taking place. 

Five key findings from the latest CSB survey include: 

1. Digitisation is directed inwards: The majority of the decision-makers rely on a strategy of digital optimisation. The surveyed companies are dealing closely with digitisation in individual, isolated solutions. Digital consistency or the integration of partners and customers in digital ecosystems do not yet play an important role.

2. Many changes in internal processes: As in previous CSB studies, digital technologies are mainly used for the flexibilisation of the organisation, for the optimisation of management processes, and for the improvement of procedures in production and logistics. A digital transformation offering new products or services or implementing new business models only rarely takes place.

3. Digital product innovations are rare: People recognise the opportunities of digitisation, but do not take advantage of them. Almost 30% of the survey participants do not use digitisation at all to create new products or services. Only 2.5% currently generate a sales share of 20% with digital products and services.

4. Skills are missing: Missing skills and inefficient structures within the organisation make the digitisation process more difficult. In many places, the missing knowledge of how new technologies could be used adequately and the need for development of the employees' digital competencies are particularly large obstacles.

5. Existing technologies offer opportunities: In the maturity of existing technologies, the ERP system stands out as the central nervous system of digital infrastructures. Yet the potential of the business software still is substantially under utilised. For example, over two-thirds of survey respondents continue to use paper when working with their ERP systems. 

Different strategies
Three different decision-maker types, each with different digitisation strategies, emerged from the study Relations optimisers, ecosystem builders and process engineers. 

Process engineers were the biggest group in the survey. They use digitisation measures mainly to further improve efficient processes through new structures. The strategy of the relations engineers is based primarily on good customer relations. The existing relations network should be strengthened and continuously optimised through personalisation. In addition, communication with customers and an awareness of their needs play an important role for this group. Ecosystem builders favour a strategy of new partnerships. They see their strategic strength in a mix of an excellent product and good customer relations. However, they prefer new cooperation models and partnerships much more than the other participants. 

Overall, as in the two previous years, the study shows that digitisation is an important strategic factor to be able to respond to the current challenges of the industry despite all obstacles such as the lack of skill workers. The pricing pressure remains the biggest challenge for the enterprises, reported by 68% of respondents. The situation is getting worse as the majority of companies position themselves by the quality and the image of their products. In order to reduce costs, 64% concentrate on the internal processes and operating procedures, especially in production, stock-on-hand and logistics. In addition, 65% focus on purchasing, while only 36% consider the recipe as a cost-reducing instrument.

A shifting focus
What is striking is the increasing focus on the consumers. In terms of challenges, their demands outranked the strict requirements of the food retail trade, and those of the law. The publishers of the study are of the opinion that this has to be considered in the context of the growing end customer business, also via the web, and the increased availability of market data. By better understanding the end consumers, food producers are able to enhance their competitive edge as well as their bargaining position with the trade. Accordingly, the importance of the digitisation in sales, marketing and CRM was underlined by the respondents: 73% state that they are using solutions or are planning to do so.

An essential characteristic of decision-makers in food companies is their practice orientation. This also becomes evident in the maturity of different technologies: Digital solutions are used where they are advantageous in daily business. The ERP system, cloud solutions and predictive maintenance show a high degree of maturity. 58% are using an ERP system; for another 31%, its implementation is planned or at least of great interest. The study also shows that the opportunities of the ERP system for digitisation are not utilised in an optimal way or not yet recognised. Besides the classic application fields in controlling, for calculations and for planning processes, there are many more application possibilities on the top floor as well as on the shop floor.

Of the less ‘mature’ technologies, the respondents are primarily interested in artificial intelligence and the internet of things. In daily practice, these technologies hardly play a role yet. The same applies to the blockchain, which ranks last in the list of technologies. 
The results of this year’s survey showed that the percentage of participants investing more in IT and new technologies is increasing compared to the previous years. Are they seeing that the combination of consistent product quality with digitised processes offers an opportunity to achieve profitable growth?

The full study is now available for download from www.csb.com


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