Disruptive Technologies Improve Productivity
Monday, February 10th, 2020
Individualistic and empowered consumers desire to take control of all aspects of their needs and lifestyle preferences. GlobalData’s 2018 Q4 consumer survey substantiates how consumers in Asia-Pacific (APAC) depend on technology in their daily lives.
Manufacturers have recognised that innovation and technology adoption is the foremost growth mantra in the APAC consumer industry and there is ample space for innovative ideas and technology use. Leading companies are already looking at disruptive technologies for their next horizon of performance improvement across their operations, from customer-facing solutions to supply chain efficiency and to better target emerging consumer trends.
Following are the trending technologies worth looking at in APAC:
Blockchain is a digital distributed ledger in which transactions or data can be recorded chronologically and publicly. While blockchain is often associated with cryptocurrencies, it will likely have a more fundamental impact on larger consumer goods businesses in helping to manage and control supply chains.
Shagun Sachdeva, Consumer Insights Analyst at GlobalData, says: “Blockchain allows greater visibility at each stage of the supply chain of sourcing, and in turn the ethical credentials of key inputs. Counterfeiting and fraud within the supply chain can also be tackled in a similar fashion. Distributed ledger technology also has the potential to enable manufacturers to move more into the retail space by helping enable direct-to-consumer sales channels.”
For instance, Chinese retailer Alibaba collaborated with Australia and New Zealand-based firms such as international dairy cooperative Fonterra to create a food-tracking system built on blockchain technology to help customers track the supply chain of foodstuffs ordered online and prevent food fraud.
Chinese alcohol marketer and wholesaler Oranco is set to launch its blockchain-based spirits identification and collection technology, Huaxin Cellar Blockchain platform, following the completion of its test phase.
Not just food, blockchain is finding its application to trace ocean plastic fabrics. Waste2Wear launched world’s first collection of fabrics made from ocean plastics that will be fully traceable using blockchain technology.
Internet Of Things (IoT)
IoT refers to the interconnection of computing devices embedded in everyday objects, via the Internet, enabling them to send and receive data. This promises to have a wide range of applications that will affect consumer goods in many ways. For example, automated home products lead to ambient commerce, where consumers are offered automatic re-ordering of products or even new product suggestions by their own household appliances—making effective presence in this new marketing channel that is crucial for products and brands.
Sachdeva adds: “IoT’s impact on the retail and FMCG sectors will be particularly strong. Major retailers are looking at possibilities for collecting a wealth of data in their stores and warehouses in order to reduce operating costs by improving efficiency, and for bringing the customer experience that e-commerce platforms offer to their traditional brick-and-mortar outlets.”
At the same time, IoT presents FMCG brands with significant opportunities in form of ability to create more accurate alerts for stock replenishment and allows them to be more responsive to changes in consumer demand.
For instance, Danone added ‘hydration coaching’ cap to Font Vella bottled water to coach consumers towards adequate hydration. Switzerland-based smart packaging company ScanTrust collaborated with Shanghai-based coffee firm Cambio coffee to build a blockchain–enabled traceability functions to fight counterfeiting and bring in greater transparency across the supply chain.
Japanese technology company Fujitsu announced the launch of new tape-measure based device that will allow for more efficient measurements in the apparel industry.
Virtual & Augmented Reality (VR/AR)
Augmented reality is a technology that superimposes a computer-generated image on a user’s view of the real world, thus providing a composite view. New marketing and shopping experiences are possible using augmented reality, providing opportunities for brands to differentiate their products from the competition. This could include showing marketing animations on a smartphone app while shopping in-store to enhance customer interactions with brands and products.
Augmented reality apps and mirrors enable consumers to virtually trial products such as cosmetics to recreate physical retail experiences. For instance, Hong-Kong-based AS Watson Group launched Magic Mirror, a smart device powered by AR in two stores in Hong Kong in 2018.
Japanese beauty brand Shiseido has launched personalized and advanced subscription service for skincare called Optune, paired with augmented reality and artificial intelligence. Treasury Wines’ 19 Crimes launched augmented reality wine labels that revealed the story of a convict on the label through a smartphone app.
Artificial Intelligence (AI) & Robotics
AI refers to software-based systems that use data inputs to make decisions on their own or that help users make decisions. Across consumer goods companies, there is a wide range of potential uses, especially if retail implications are also considered.
Sachdeva explains: “Shelf management within retailers can be improved using AI to assess whether corrections or stock re-orders are required or not. Customer service can be improved using chatbots that mine consumers’ purchasing behaviour to provide highly personalized customer service. General business functions such as financial and sales planning can also be improved.”
Japan’s Fast Retailing Group, the owner of brands including Uniqlo and Gu, has employed two robotic start-ups to help improve efficiency in warehousing and distribution. In beauty industry, brands are focusing on product innovations based on AI and introducing products such as AI face cleansers, AI beauty assistant apps and AI beauty advisors.
In the consumer goods industry, robotics is used in the supply chain to replace some of the labour costs associated with production. The use of robotics instead of labour for specific parts of the production process ensures product uniformity.
Recently, Australian start-up company Niska opened a robotic ice-cream store in Melbourne. IKEA collaborated with an American start-up Ori to develop ROGNAN as a robotic furniture solution for small space living. It is due for launch in Hong Kong and Japan in 2020.
3D printing or ‘additive manufacturing’ is the process of joining materials to make objects from three-dimensional model data, usually layer upon layer. For consumer goods companies, 3D printing has the potential to create packaging or plastic product prototypes at a greater speed and at a lower cost than ever before. This means that a wider range of products can be tested effectively, and companies have a better chance of sending the best possible products and packaging off into full scale production.
Sachdeva continues: “There is also potential for mass customisation, as 3D Printing can receive digitally produced customer designs and turn them into bespoke products. This can be used in a range of categories from confectionery to cosmetics.”
The concept 3D food printers is one area where food manufacturers are keeping their eyes on. 3D food printers use different types of powdered or liquid food material to bring extra nutritional value to our plates and additional income to companies. For instance, Natural Machines, the start-up behind the 3D food printer Foodini, uses open capsules to allow users to choose ingredients of their choice and create customised savoury or sweet cuisine. Natural Machines also has an office in China highlighting the company’s belief in 3D food printing market potential in the country as well as in the APAC region.
Sachdeva concludes: “Exciting advancements in technology are becoming increasingly entrenched in the consumer industry. However, to be successful, companies need to create a balance between the technological innovations and the human element. Improving the customer experience must always be on the back of their minds while investing in technology.”
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