Consumers today are demanding more sustainable products, whilst shareholders are also pushing organizations for higher profit margins. Couple this balancing act with a shift in consumption trends, driven by the Covid-19 pandemic, food and drink manufacturers have been forced to pivot quickly, reassess product lines and scale up production in certain areas. That’s why many have turned to data and software tools, enhancing cost efficiencies and operational productivity by helping manufacturers produce more in less time and with fewer materials.
About the author
Dean Griffin, Senior Service Solutions Advisor, Tetra Pak.
In fact, McKinsey has estimated the value of increased productivity linked to Industry 4.0 in manufacturing and the supply chain at $3.7tn by 2025. But it’s not just profitability that data is supporting with. Manufacturers are also recognizing its benefits in driving more sustainable practices, reducing wastage and being smarter about material usage. Here and in our White Paper: Unlock The Hidden Factory, we look at how and why data is key in helping firms meet both business and sustainability goals.
Making sustainability an organization-wide priority
Despite huge advances in innovation and sustainability across the food and drinks industry over the last decade, the global food supply chain still represents more than a quarter of greenhouse gas emissions. Organizations can no longer ignore the critical threat of climate change and the role that the industry plays – namely in the burning of fossil fuels, food wastage and the use of plastic in packaging. But it shouldn’t be down to one individual to fight the fight. A company’s sustainability agenda must be driven by the leadership team in a top-down approach. Simply articulating high level CSR commitments or a 2050 strategy won’t always filter through to every department.
The good news is that increased digitization is improving collaboration within manufacturing firms, meaning sustainability goals can be communicated from the C-suite right through to the factory floor. This ensures that everyone knows what their role is in driving sustainability initiatives forwards as well as understanding how these align to wider business objectives. Empowering the workforce by arming them with this information means they can make effective decisions, work productively as a team and collaborate on solutions that are both good for business and the planet.
Uncovering a granular level of detail
It is this enhanced collaboration which is helping manufacturers re-strategize and streamline product portfolios. For example, by embedding data analytics tools such as Power BI or Tableau, firms can start looking at the SKU (product) level detail and analyzing which products are making money, have the highest carbon footprint or consume the most energy to manufacture. Operational cost modelling is becoming a popular measure for operational success, which would allow a milk manufacturer, for example, to see a cost per 1000 liters of milk as well as the productive time versus non-productive time of the bottling machines.
Having a record of this data across one dashboard also links up stakeholders from different parts of the business, from finance, maintenance management and operations, through to sales and senior management. This means decisions around areas like sales strategy or operational delivery can be made more effectively with everyone’s view being considered from the outset.
Creating more with less
Data analytics tools can be used for material productivity as well as workforce productivity. In fact, manufacturers are increasingly turning to technology to understand how they can create the same volume of product with less resources. In doing so, they are also able to see how driving more sustainable manufacturing methods can also shore up the bottom line. In fact, one such dairy manufacturer in Asia was able to create a multi-million dollar saving by implementing an interactive dashboard which helped it reach its stretch output targets and meant it didn’t need to build a new factory to scale up. In this way, factories are using data to measure capacity utilization rates and make changes to lines that are not working to full capacity. This not only raises operational performance, but also helps save on resources like energy and water, allowing manufacturers to meet both business and sustainability metrics. Identifying the ‘what-if’ scenarios
Finally, analytical dashboards are also helping food and drink manufacturers overcome challenges, such as bottlenecks in production. By highlighting errors or unusual patterns in a process and proactively flagging things like maintenance updates, data tools can pre-empt problems before they turn into real issues. This results in reduced unplanned downtime of machinery – which according to a recent survey, comes at a cost of $2 million in lost production and productivity. Added to that, production bottlenecks can also dramatically impact the quality of output, which is of particular concern to food and drink manufacturers, for whom an impacted product assembly line is often irreparable and results in huge wastage.
Smart, connected factories are nothing new and technology has been supporting manufacturers for years to improve output efficiency and productivity. But with sustainability so high on everyone’s agenda, now firms are starting to realize that using data is a double edged sword, making operations both more sustainable and profitable. Digital skills and tools are becoming an increasingly prominent part of the future factory. Those that invest in these resources now will be able to harness the vast quantities of data at their disposal, putting them in pole position to outperform their competitors whilst also meeting UN sustainability targets.