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Food Industry 4.0 : A new era of consumer empowerment

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Highlights

  • Industrial revolution 4.0—using Big Data as a tool for developing business—has generated much interest in Thailand and abroad. EIC sees the downstream food industry as an especially promising candidate for a 4.0 upgrade, more so than their upstream or midstream counterparts.
  • This is due to the fact that downstream businesses have better access to consumer data, enabling them to present products and services in myriad ways and respond efficiently to consumer preferences.
  • This business model is likely to lead to ever more specific yet diverse food consumption behaviors. As such, other players in the food industry supply chain will have to adjust accordingly in order to enhance their capacity and expand beyond their current limits towards sustainable long term growth.

 

The food industry cannot afford to overlook the coming of Industry 4.0

Although food manufacturers today are able to produce large quantities of products efficiently, technology is still limited, as seen in defects due to production processes or time-lagged downstream data input resulting in the failure to implement timely production process adjustments.

All over the world, the business sector is paying close attention to the next industrial revolution led by what has been termed Industry 4.0: The use of digital technology to enhance communications between all players in the supply chain.

This new technology is not only limited to production processes, but also covers everything from raw material sourcing to final delivery.

Digital technology can vastly enhance all of these processes. For example, manufacturing equipment will be able to communicate with objects and sort different types of food packaging, which will greatly reduce errors.

Consumer preferences for different types of foods can also be incorporated into mass customization processes with speed and efficiency.

In the 4.0 era, Big Data will be a key driver of competitiveness

It can allow businesses to analyze consumer spending based on credit card and retail store membership card data. Businesses will be able to identify consumer behavior patterns by segment and age using the data.

It will also help them add value to their products and services, differentiating them from competitors. For example, analysis of consumer credit card usage can let midstream food producers know which of their ready-to-eat meal products are popular.

They may then invest in the expansion of automating production processes for those particular products, instead of relying on labor and facing continually increasing labor costs. New technologies like this will not only help to cut costs but can also save time and reduce errors. Automated food production equipment may also be further enhanced through the use of contamination detection technology and specific food demand sorting capability in order to meet future demands (mass customization).

Downstream businesses hold the most advantages due to their direct access to consumer data, which can be further analyzed and used in conjunction with the development of new technology leading to products and services that best respond to market demand.

One of these downstream businesses is the modern trade. Key players in the global market, such as Amazon, Tesco, and Wal-Mart, as well as local players such as Big-C, Central Online, and Tops, are allocating many more resources to online stores than in the past, as they require much less investment than opening new branches.

Online stores also allow businesses to collect basic consumer data, such as age, education, income, and types of frequently ordered foods, among others parameters.

The data can then help stores improve quality or develop new services.

For example, Tesco South Korea has started building virtual shops in underground train stations in order to drive up purchases by office workers. The company opened virtual shops because data indicated that office workers tend not to shop at retail stores but also do not shop online, as most of their time is spent working.

Author: Narithtorn Tulaphol

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