Original article promoted on CNBC on August 2, 2018
With the global population expected to reach 9 billion by 2050, the United Nation’s Food and Agriculture Organization (FAO) estimates that world food production needs to increase by 60-70 percent to meet demand. Add to this increasing regulation and consumer need for product traceability, and the food and beverage sector is at a crunch point.
So how can the sector face these pressures and protect brand reputation, employee safety and profitability? The answer lies in digital transformation – enabled by the Industrial Internet of Things (IIoT), the latest in edge computing and predictive analytics. And the most agile, productive firms embrace transformation in four key ways.
- Smart Manufacturing – real-time response across the supply chain
Smart Manufacturing integrates devices, machines and processes with innovative software so that employees can operate a more efficient production floor, backed by real-time data, which has the ability to respond to evolving customer needs. In short, Smart Manufacturing means systems that are smart enough to tackle the fast-moving consumer goods (FMCG) manufacturing challenges of the 21st century.
U.S.-based New Belgium Brewing Company — the country’s fourth-largest craft brewer with global export operations — identified gaps in its production chain caused by legacy systems and a lack of end-to-end connectivity.
Joe Herrick, Packaging Systems Manager, said: “With operations rapidly reaching capacity, we needed to address inefficiencies in our bottling lines to meet operating schedules. Transformation at low cost was the most viable option.”
The brewery collaborated with Schneider Electric to install MES/Performance, an ecosystem software that extracts data across the entire production chain. The results were impressive. Herrick said: “We have extended our packaging area capacity to about 1.3 million barrels each year.” This was possible without installing any new equipment. The software increased equipment effectiveness, reduced downtime by 50 percent and created annual savings of $400,000.
- Smart Facilities – optimizing sustainability and profitability
Safe, efficient processing facilities with sufficient storage help reduce a firm’s carbon footprint — which can boost productivity and profitability. This is because smart facilities enable real-time assessment of equipment, predictive maintenance and power consumption to ensure efficient supply.
Dairy producer Fonterra is one of the world’s leading milk suppliers. Based in Darfield on New Zealand’s South Island, the firm’s milk production is time-critical and subject to strict safety standards. The plant faced a key challenge: to increase and ensure consistent production – not easy in an industry subject to natural interruptions.
“Fonterra is pushing the limits of scale and what’s possible, and that requires a lot of engineering input and knowledge,” said Glen Sullivan, Group Manager of Electrical Engineering at Fonterra.
Fonterra partnered with Schneider Electric and installed a solution based on EcoStruxure, its open, interoperable, IoT-enabled system architecture and platform that delivers enhanced value around safety, reliability, efficiency, sustainability and connectivity, along with a holistic power management system. This enabled a more streamlined supply with significant results, allowing Fonterra to process an additional 1.2 million gallons (4.4 million liters) of milk a day and produce 30 tons of milk powder every hour.
- Smart Food Safety – an effective protector of brand reputation
As more processed food is consumed and production facilities expand to accommodate growing demand, food safety accidents due to contamination or mislabeling can have far reaching and deleterious effects, both on consumer health and on brand trust.
“Recalls, even successful ones, have become extremely costly. They can put companies out of business in weeks because of adverse publicity, government fines, production downtime and class-action lawsuits,” said Gene Grabowski, Partner of the Public Relations Agency Kglobal.
How can firms mitigate the effects of a product recall? By employing smart and automated food safety strategies that reduce the chances of contamination, human error and production disruption.
Traceability is the key to avoiding recalls due to mislabeling. In the U.S., up to 40 percent of products lack any indication of the presence of allergens. The recall of such a product can cost a company up to $10 million. With a traceability solution, 100 percent of labels are checked.
When vegetable oil producer Oleificio San Giorgio decided to offer its customers 100 percent confidence in production traceability, partner Schneider Electric was able to create a complete solution that manages the vegetable oil production unit. This system provided a food defense system, truck and manufacturing traceability and even the GMO-free certification of its brand lines.
“To build a plant capable of processing 1,000 tons of seed an hour, 24 hours a day; by totally automating the arrival of raw material and output of finished product in less than a year and a half; we have found in Schneider Electric the right partner for our challenge,” said Nicola Tesser, Plant Manager at Oleificio San Giorgio.
- Smart Supply Chain – end-to-end visibility that boosts supply
Against the backdrop of increasingly strict regulation and traceability, an economical supply chain is paramount. Producers need more ways to streamline end-to-end production while remaining responsive to external factors and legislation changes.
In the water sector, 70 percent of all fresh water usage is by the agriculture sector. Water supply management is therefore critical and technology is being deployed by farmers worldwide to reduce costs, stay sustainable and improve production.
Thanks to cloud technologies, New Zealand-based WaterForce can more effectively assist its farming customers to manage water usage, reduce wastage, and ultimately improve crop yield. The company partnered with Microsoft, Schneider Electric and AVEVA to develop SCADAfarm, a cloud-based water management solution that supports smart agriculture initiatives.
Farmers access SCADAfarm remotely so they can make real-time adjustments to irrigation that cater for weather observations and forecasts. “The machine might be saving up to 50 percent of its allocated water use, and I can contribute that to the efficient use of SCADAfarm,” said Craig Blackburn, Director and Farm Manager at Black Hills Farm. “I wouldn’t go back without it.”
The future is smart – and transparent
As customers demand more environmentally-friendly sourcing and supply, food and beverage manufacturers must work smarter to deliver the most premium service and product. Smart technology enables end-to-end production visibility — which, in turn, results in tangible benefits to employees, customers and corporations. As food and beverage firms embrace transformation, it’s clear only the smartest firms will enjoy growth.