Why the food and beverage industry needs to start using Internet of Things technology
Interconnected devices can help ensure quality and freshness—and save money
Food that knows if it's spoiled. Machines that know if they're about to break. An inventory that regulates itself. It's not a crazy vision of the future. These are all possible through the meshing of online technology and the devices we depend on for our life and livelihood known as the Internet of Things, commonly abbreviated as IoT.
With more devices that can be connected by network, IoT technology is growing exponentially for industries as well as for personal use in the home. Gartner predicts the use of 6.4 billion connected devices this year, a 30% increase year over year. That jumps to 20.8 billion devices by 2020.
But as in many new technological breakthroughs, the food and beverage industry has been more hesitant than others to adopt IoT. Quality and safety control, cost-cutting and transportation efficiencies should be appealing to manufacturers, but challenges remain in widespread adoption.
How IoT could benefit manufacturers
Quality and safety
One of the most important applications for IoT in a food and beverage industry context is temperature tracking and control. Using sensors in the product, manufacturers can track shipments from afar, both where it is and how cold it is. This provides enough data to know if products have spoiled and maybe even why, like if there's a problem with delivery truck refrigeration.
“It's not really the temperature of the truck that matters, but the temperature of the food,” said Jim Cerra, cofounder and CEO of PlanetTogether. “… If they're opening up the truck to drop off material at various stores and warehouses, the temperatures are fluctuating in the truck. They can be very specific with the French fries or lettuce if they're violating the limits.”
Light is another key factor in quality and safety. Too much can hasten bacteria growth. That’s particularly important for companies embracing the clear packaging trend, or for producers like brewers that traditionally use glass or see-through materials as packaging. IoT technology can detect light, and can send data about when a package is first opened or how much sunlight hits a product during shipping, Cerra said.
On the supplier side, manufacturers can also use IoT to monitor bacteria in products. The technology can also track supply factors like animal health. This could be used for quickly locating something highly contagious like mad cow disease, to ensure one ill cow doesn’t decimate an entire contracted herd, according to Cerra.
As sales have stagnated or declined in the last few years, cost-cutting has been a focus of efforts by many major food and beverage manufacturers over the past few years. IoT technology can enable manufacturers to reduce waste and optimize operations by tracking supply ingredients and raw materials. It can also let manufacturers know when there is a need for upgrades, or when there are tooling and equipment malfunctions. Being able to spot equipment malfunctions — or potential ones — sooner than later can prevent or alleviate the strain of a production shutdown.
“They can track that information and have it be more proactive in terms of planning changes to the production schedule versus waiting,” said Cerra. “If you wait for a machine to fail, then your costs are a lot higher, obviously, than if you can plan the maintenance at the right time to avoid disruption and have cheaper solutions.”
Reducing food waste is also increasingly important to manufacturers. IoT can enable manufacturers to better track ingredients on hand so they don’t over-order supplies they already have.
Transportation and delivery
Manufacturers can use IoT technology to track shipments by boat, truck or train as they travel across the globe, Cerra said. Having relevant data in this area enables manufacturers to drive efficiencies and plan shipping routes accordingly. This is especially crucial as the e-commerce channel grows and becomes a competitive necessity for food and beverage companies.
Aside from bottom-line impact, IoT could also potentially boost manufacturers’ top-line efforts. Several major food and beverage companies have recently posted earnings growth while revenue remains stagnant or declines, such as General Mills, Kellogg and Kraft Heinz.
Implementing IoT can offer manufacturers an edge above their competitors, especially while the technology is so new and underdeveloped in this industry. That edge also comes with verifiable ROI, so both customers and investors stand to benefit.
“By improving functional areas and creating a connected, smart food and beverage manufacturer, companies can have their sales teams exploit this performance gap against their peers to obtain new customers and grow revenue with existing customers,” said Sean Riley, global industry director for manufacturing and supply chain at Software AG. “The best part about this conversation the sales teams will have is that they will be data and performance driven.”
Empowerment, not replacement
Employees in manufacturing sectors, including food and beverage, often consider the rapid growth of technology and the capabilities of computers and robots to be a threat to their livelihoods. Riley stresses that manufacturers and their employees should instead view IoT as a route to empowerment rather than replacement.
“When sensors are combined with powerful analytics and automated actions, people will change their roles from always moving from problem to problem to planning to resolve issues that have not occurred yet,” said Riley. “This will require a deeper, more satisfying level of thought. I see this as one of the most important reasons to implement an IoT solution as it will drive associate satisfaction as companies move away from the constant firefighting that is so prevalent in the industry today.”
Challenges IoT presents manufacturers
IoT adoption in food and beverage manufacturing remains relatively low compared to other industries, said Riley. He thinks the industrywide emphasis on cost could be a main deterrent, and described the food and beverage industry as a “fast follower.”
Business justification and calculating a tangible ROI is also a challenge for manufacturers, especially those new to this technology. Riley said that can be overcome with a focus on “initiatives, and then incorporating IoT technologies into them.”
Cerra argues that adoption really comes down to a lack of knowledge about IoT technologies and the benefits they offer manufacturers.
“It really takes a long time to get the word out on new technologies, especially smaller manufacturers,” said Cerra. “They don't really have a methodical way of introducing technology into the company. It's sort of relying upon people and their education and learning what's out there.”
What it will take for more widespread IoT adoption
IoT adoption in food and beverage is still in its “early stages,” Cerra said.
Awareness is part of the issue, as IoT technology is still relatively new and growing. Innovators need to develop the components, ensure the necessary infrastructure is in place, market products, and then bring down costs to ensure all manufacturers can afford to take advantage of them, Cerra said.
But Cerra is sure that more widespread use of IoT in the food and beverage industry is on its way.
“It will mostly be driven by the people coming into the workforce,” Cerra said. “As younger people are taking over management in these companies, they're more tech-savvy.
"The other thing is going to be the cost, the cost of the solutions and the ease of transformation in the company.," he continued. "If it requires you to replace your machine, that's one thing. If it's just an add-on that you can attach to your equipment, that's a lot easier to implement.”