Misconceptions About Digital Transformation In The F&B Industry

Tuesday, January 15th, 2019

Smaller entrepreneurial manufacturers are especially suited to digital transformation since they are more nimble and responsive to changes in the market, says Wesley Kowalski, Head of ASEAN, Infor.

Digital transformation has been a buzzword for the past few years, and with good reason. By 2021, it is expected that digital transformation will add an estimated USD 1.16 trillion to Asia Pacific’s GDP and increase the growth rate by 0.8 percent annually (Microsoft). There are a number of stories about the impact of digital transformation across industries—from automotive to e-commerce to healthcare. However, misconceptions have also grown about digital transformation, which has subsequently affected the F&B industry.

Here are some common myths encountered in this industry that we would like to dispel:


Myth 1

Digital technology is disruptive, and that means chaos and instability.

By one definition, the word “disruptive” is almost synonymous with chaos. There are comparisons of the implementation of disruptive technologies to organised chaos, which carries a negative connotation of confusion in the workplace, processes getting interrupted and an overall sense of instability during transition periods.

In business, disruptive means an idea, service or idea that radically changes an industry or business strategy, for the better. While many technologies like IoT and Cloud technology are ground-breaking and extremely innovative, their implementation can be far from chaotic or confusing. It does not result in unfilled orders for customers, or a halt processing units.

In fact, the difference between implementing a solid or well-thought-out digital transformation strategy and a weak one, is managing deployment in a phased approach, with adequate time slotted for training employees to handle the new technology and introducing new offerings to customers.

The biggest disruption to an organisation comes in the form of fresh thinking and bold innovations, and these are all positives, welcomed by companies who are forward-thinking.


Myth 2

Digital technologies are only for large enterprises with huge budgets. 

The big stories we hear on digital transformation are associated with corporate names such as Alibaba, Tencent, Grab and Deliveroo that have big budgets. But they, like all companies, were once just a mere idea. Today, Grab, Alibaba, and Netflix are among those companies that have essentially changed the face of their respective industries.

Many companies using digital technology are small to mid-sized companies (SMEs). In fact, smaller entrepreneurial manufacturers are especially suited to digital transformation since they are more nimble and responsive to changes in the market.

Larger companies are often overloaded by layers of approvals and methodical decision-making. The subscription model, versus new processes and solutions that require a significant one-time capital investment, gives companies of all sizes the ability to launch new locations, new business models, and new offerings with minimal investment.


Myth 3

Digitalisation is robotics and the Internet of Things (IoT)

Wearable health monitors that track blood pressure or cars that signal when due for an oil change are some examples of the Internet of Things seeping into our everyday lives. Robotics and machine-to-machine connectivity are other technologies that are also spoken about quite often. While these are significant technologies, they are just a few of the important examples of digital transformation.

“Softer” capabilities are also highly valuable. For food processing companies and their suppliers, digital strategies are often about visibility, communication and data-sharing. As consumers are increasingly insistent about knowing where their food originates, networked intelligence and connected suppliers are essential in the F&B industry.

Digital technologies help forge these lines of visibility about ingredients and batches, from farm to table. Enhanced communication is another outcome of digital networks. Farmers, suppliers, processors, and retailers can all share crucial data about demand and consumer feedback.


Myth 4

Digitalisation is high risk and invites security breaches

Digital transformation for a company usually incorporates integrated IT solutions and a cloud platform for at least part of the solutions, and organisations evaluate every technology tactic and their projected Return on Investment. However, some new technologies have yet to develop long histories, purely because the technology is changing so quickly. Companies that are completely risk adverse can avoid those technologies but can still deploy those applications which have a reasonable number of early adopters.

Potential security breaches, though, always need to be considered seriously. From phishing schemes in emails and malware viruses being shared among users, to ransomware, security is an important topic that deserves careful consideration. When formulating a digital plan, organisations should work with a provider that brings security expertise to the table, along with digital transformation capabilities.

In fact, the rise in data breach and vulnerability figures has led some to suggest that digital transformation leaves organisations at greater risk. For example, Gartner recently predicted that 60 percent of digital businesses will suffer major service failures by 2020 due to the inability of security teams to manage digital risk.


Myth 5

Organisations that have not yet gone through digitisation have missed the bus.

An organisation can still embark on a digital transformation journey; it is not too late. But the pressure is one reason to initiate the digital transformation journey early to avoid becoming irrelevant. In both business-to-business (B2B) and business-to-consumer (B2C) relationships, the buyer has high expectations for value, ease of doing business, and a positive buying experience. Customers, whether a family preparing dinner or the purchasing agent for a large restaurant chain, expect to know details about the product: where it originated to how it was shipped, stored and processed. Such details are demanded. In fact, customers need to have live updates, be able to order online, and look at all services on a digital platform.

Keeping up with the current market also means managing inventory, pricing and order accuracy. Small mistakes that may have been tolerated in the past are, today, fatal flaws. It is imperative to ramp up modernisation and improvements to your IT infrastructure. It is not too late, but the time to invest in digital transformation is slowly closing in, and the window of opportunity is narrow.


Digital Transformation With An Experienced Provider

Digital transformation is key across industries in today’s day and age—especially when it comes to the F&B industry, due to the dynamic nature of the industry which requires quick turnarounds at every step. Because digitisation is a buzz word, there are various misconceptions about the term. These five myths are just some examples of how misconceptions can get in the way of acting in a timely manner and deploying sound digital strategies. This is the reason it is critical for an organisation, big or small, to work with an experienced provider who can guide you through this digital journey and safeguard you from the risks.

It is time to jump on this journey, if you haven’t already done so, as doing nothing means risking becoming obsolete.

Gartner predicts that 60 percent of digital businesses will suffer major service failures by 2020 due to the inability of security teams to manage digital risk.



Read APFI’s eBook here.

Like our content? Subscribe today!