Revenues in the food and beverage industry are growing, but profit margins are shrinking. Market forces, mixed with the battle to reach ever-changing consumer demands without compromising quality and food safety, means that most manufacturers and retailers have pushed price margins to the limit. Here, Sean Robinson, service leader at industrial automation specialist Novotek UK & Ireland, explains how to modernize without the hassle.
 
Despite the fact that the UK's leading food and drink producers experienced revenue growth of 7.5 per cent in 2017 — pushed by inflation and a weak pound following the Brexit referendum — commodity price inflation resulted in average profit margins falling half a percentage point to 6.2 per cent.
 
The data, according to OC&C's 30th annual Food and Drink 150 report, show that while the weaker pound saw exports grow by 14 percent, producers and retailers were also hit by increased commodity costs of around £1.6bn. £645m of this was absorbed by producers, lowering their edges.
 
The research is not inconsistent with Novotek's experience in the food and beverage industry. Our customers do business in industries ranging from brewing and baking to processing and packaging. As the sole distributor of GE Digital's analytics platform, Predix, in the UK and Ireland, this also includes non-edibles customers who work in the manufacture of toothpaste, laundry detergents and the like.
 
The largest challenges these businesses face is replying to customer buying-behaviour in a way that is pliable, efficient and cost effective. Being able to transform flavours, roast speciality coffee beans, cut out steps in the cleaning sequence and even optimizing the current draw on a motor in the chocolate conching process; these are all elements that put pressure on manufacturers.
 
Unsurprisingly, this has pressured many manufacturers to act in haste, implementing new technologies as a means to an end rather than equipping themselves to make the most of what the future holds.
 
Novotek's position as a supplier of everything from automation hardware and software that runs inventory and scheduling, to full MES systems, means that we have a unique view of how to correct this problem; businesses should buy automation systems like they would trousers for their six-year old.
 
In the same way that buying trousers for your child is a trade-off between presenting them something that is practical now, but also something they can increase into, plant managers should future-proof their automation system.
 
Food and beverage businesses that have been reluctant to build connectivity into their systems often still rely on physical food safety audits — many still regularly use clipboards. This doesn't have to be the case, considering that the cost of components like sensors, HMIs and PLCs has come down in recent years, with hybrid devices now offering added functionality.
 
As well as lower cost, plant managers should take advantage of real-time data collection that can be accessed by relevant stakeholders across the company. MESs can provide executives with easy to understand analytics and reporting.
 
This convergence of information and operational technology (IT/OT) also means that machine data from the factory floor can be immediately correlated with quality-system data in an offline laboratory to give actionable insights.
 
So, regardless of whether revenues in the food and beverage market have shrunk, businesses shouldn't feel forced to push their profit margins into unsustainable territory. By considering the efficiency and productivity gains offered by the latest automation systems, businesses can thrive. It's quite like buying trousers for your six-year old.



This article is originally posted on Tronserve.com