Business 4.0: Digitization and Optimization in the Food Industry

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Many experts in the industry have identified Industry 4.0 as the next phase in the digitization of the manufacturing sector, propelled by the rapid rise in data volumes, increased computational power, and connectivity and the emergence of advanced business-intelligence analytics to interpret this data.

The food industry is changing.  President Obama signed the FDA Food Safety Modernization Act (FSMA) on January 4, 2011.  The purpose was to ensure the safety of U.S. food by focusing on preventing contamination. With FSMA, collecting, classifying and analyzing data on product temperature, to ensure that food remains fresh and safe is a key for FDA compliance. The constant pressure on cost without sacrificing on quality and safety enhances the need for the food industry to embrace Business 4.0.

Business 4.0 in the food industry

The “food industry” is one of the largest and most complicated sectors in the American economy. It involves a set of interconnected industries which encapsulates various functions via cultivating, processing and distributing products from the farm to the ultimate end consumer. Transportation plays a big role in this industry, since food is often shipped over long distances from farm to customer.  It has been estimated that on average, produce in North America travels 2,000 km from source to final destination. Automated temperature monitoring and control is important to avoid spoilage and monitor quality.  Currently, data is captured, but not necessarily shared between the various players.   Business 4.0 will lead to the entire food supply chain being tightly integrated resulting in product getting to market quickly.  It will drive the following best practices:

  • Collection, storage and classification of data at each point in the supply chain in a central repository (cloud-based system).
  • Study of the collected data
    • Identify and fix quality and safety issues using algorithms that learn from the data.
    • Analyze and use business intelligence to help uncover patterns in the data that anticipate customer demand. Technology helps food growers understand customer preferences by tracking product from farm to store shelves. Supply is aligned with demand as farmers can grow what is needed and eliminate wastage.
    • Carriers play a critical role in the quality and safety of modern food supply chains. Using data on carrier cost, reliability, traceability, transparency and training, a pool of select carriers can be identified that will reduce risk in food supply chains.
  • Improve transportation efficiencies.
    • Reduce freight costs and improve vehicle and trailer utilization through the use of optimized transportation routes.
    • Integrate inbound and outbound transportation processes to warehouses and distribution centers and reduce empty miles through the use of backhauls.

 Challenges

Business 4.0 will integrate and optimize the food supply chain through planning and technology.  It demands a cultural change as it entails data quality and data availability challenges. Significant amounts of data are generated from multiple diverse sources. These sources include legacy production systems, ERP systems, warehouse, transportation and demand management systems.  Large amounts of unstructured data exist from social media and weather sites, mobile devices and smartphones, sensors, RFID tags etc. All this data, both structured and unstructured must be aggregated and integrated for analytical purposes. Business 4.0 also requires investments in people as it will change the skills needed to perform jobs. A major hurdle facing the industry is the ability to hire and retain qualified staff.   Training is essential in order to create a workforce capable of working with complex data management and technology.

Summary

Seasonality, freshness, spoilage, and sanitary requirements make food supply chains difficult to manage. Special care must be taken while transporting and storing food. Data sharing, advanced analytics, and optimization together play an important role in the food industry.  The net results of these efforts will be improved food quality and lower costs to consumers.