The agricultural sector is vital for the growth of our nation. Despite South Africa’s massive agricultural potential, we do not have enough local production to meet local demand, relying on importers to fill this gap, writes Mark Wilson, Chief Executive Officer, SYSPRO EMEA .Local Food and Beverage (F&B) manufacturers and distributors are becoming increasingly important to reduce this shortage, which will not only ensure food security, but provide a much-needed economic boost within the country.
At the same time, they have a role to play as a powerful driver of enterprise development, job creation and a more productive economy. But to do so, the F&B industry requires innovation and technological solutions to assist them in finding new ways to unlock efficiencies and ensure that our F&B manufacturers can future-proof our food production.
Examining the challenges the F&B industry face
2022 finds us recovering from a global pandemic, conflict, a climate that won’t stop warming, rising prices and international tensions, seriously affecting global food security. However, over the past three years, we have seen many challenges to the availability of F&B products. PwC’s latest South African Economic Outlook has attributed the accelerated loadshedding, the impact of COVID-19 on production, unrest and looting in July 2021 as well as flooding in April May of 2022 had massive impacts on business activity within South African ports. Apart from the existing challenges at land and seaports, there have been several other factors leading to disruption in both producer and consumer challenges.
Inflation is a global phenomenon at the moment, spurred by a range of factors including Russia’s invasion of Ukraine as both countries are major grain producers. The Russian invasion of Ukraine shifting global trade patterns and increasing soft commodity prices has continued to impact F&B manufacturers. While the price of grain has come down in recent weeks, fertiliser prices remain high, causing some farmers to use them sparingly as grain commodity prices show signs of contraction.
With shrinking profits, increasing raw material costs, consumers changing the product mix they buy, plus spending a smaller portion of their income on F&B products, companies need to re-evaluate their business plans and use advanced data analytics to make informed decisions.
Increasing efficiency through technology
Efficiency is vital to any industry to keep costs low, protect profit margins, and compete in globalised markets. F&B manufacturers and distributors have entered the digital age with access to information and resources they need to sustain their agricultural output. With the right systems and technology in place, F&B manufacturers and distributors will be well placed to embrace the new technologies that can improve visibility and performance in their business, managing changing demand and recipes, while improving yields and stabilising an essential industry for South Africa.
SYSPRO’s research survey, Realigning the links of the disconnected supply chain, showed us that throughout the pandemic, 65% of F&B businesses invested in IoT or IIoT (Industrial Internet of Things), while 55% of F&B businesses invested in cloud computing. While cloud is a positive step in the right direction, data analytics is still an area of improvement with only 23% of F&B businesses investing in analytics tools to mine Big Data to get at real business insights.
By using AI (Artificial Intelligence) alongside modern, cutting-edge technologies, we are able to take advantage of ML (Machine Learning) which mines Big Data constantly into one common language, making it possible to gather and process vast quantities of data from a range of sources.
AI/ML seeks patterns of performance/meaning in the data scrutinising the performance and other metrics of each of your organisation’s manufacturing lines, customers, and suppliers to predict and identify the business processes (in procurement, manufacture, distribution, and finance) that are working well and those that may require intervention in order to avoid disruptions and so achieve better results. Organisations can also dig into the effectiveness teams and adjust as necessary should manufacturers find that their shifts need to be re-optimised.
Reducing wastage with data analytics
Waste may always be a drain on food and beverage businesses – such is the current nature of a market dealing in many perishable and processed goods. Waste comes from food trimming, poor planning, exceeding “safe” shelf life, perishing, and even late logistics/delivery. It should not be a foregone conclusion, though, that the amount of waste organisations is currently generating is unavoidable, and data can give insight into how to improve in this regard.
A purpose-built ERP platform can have a significant impact on reducing food waste by maintaining and tracking your expiration dates in a fully digital database and helping to guide a “first-expiry, first-out” (FEFO) picking method. Previous data from either food manufacturers’ product portfolio or similar product lines, enables product sales figures to be estimated before goods have even been transported to the shop. This is revolutionary for food manufacturers, as they can use this data to produce and transport only what is needed.
Now more than ever, for F&B organisations to remain relevant, and thrive in the future, they need to roll up their sleeves and tackle the digital transformation challenge head-on so they can create real-world impact and take manufacturing and distribution with more appropriate and effective service delivery to the next level.
South African F&B manufacturers must begin to re-evaluate the processes they have in place and innovate new business models/processes to unlock efficiencies. With economic inflation adding to the challenges facing SME F&B manufacturers, the pressure is on them to gain the visibility and control they need. ERP can be applied to manufacturers and distributors of any size, giving them the tools, they need to support vital decisions, and more efficient processes and ensure food security for the future.