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Digital Transformation in the Consumer Goods Industry

When it comes to consumer goods, standards are exactingly high across the industry, and processes are often complex. Digital transformation across multiple vectors – from logistics to packaging to quality control – can both revolutionize efficiency and ensure that the highest standards are met.

30 March 2023 • 6 min read

The range of digital solutions in the consumer goods industry is diverse. From planning to logistics, digital technologies are used across all areas of a company and open up numerous opportunities for organizations to master current challenges and to make processes more effective, efficient and transparent.

Digitization in the consumer goods industry

There’s no question that the consumer goods industry is one of the most important economic categories in Germany. Spanning different sectors, particularly the food industry, thousands of companies in Germany (many of them medium-sized) enable us to cover our everyday needs.

With their demanding standards for hygiene, quality and consumer protection, consumer goods are extremely complex – but the processes are predestined for digital solutions. Their implementation requires a suitable strategy for digital transformation – and this works best with the right partner. 

With their demanding standards for hygiene, quality and consumer protection, consumer goods are extremely complex – but the processes are predestined for digital solutions.

Demanding customers on the one hand, dynamic market conditions on the other – the consumer goods industry has to balance quite a few things every day. Political regulations, dependence on suppliers and related sectors such as packaging, logistics or plant construction set the framework, while product development and quality management must ensure, with the greatest care, that the products always meet the highest standards. The consequences, such as health risks from defective products, can be fatal.

Finding the right levers in the digital jungle

The options for the industry are diverse: digital tools can now be used at every stage of value creation – this applies to all departments. The challenge is therefore to find the right solutions for your company: which ones make sense for your own goals and requirements? What actual added value do they bring, and how is this best implemented?

In order to be able to proceed systematically and in a structured manner, it’s advisable to develop and create an individual roadmap for the digital transformation. In this way, management and specialist departments in the company have a concrete plan that helps to decide which solutions are suitable for the individual specialist areas and to what extent, time frame and in which order these should best be introduced. From planning to logistics – digital technologies can be used in all areas of the company:

Digital tools for planning and forecasts

Anyone who manufactures products must know at all times what will be in demand in the future. What do people need today, tomorrow and next year? What are the trends that may determine the success of companies? In order to plan accurately, companies must be able to formulate forecasts that are as accurate as possible – not exactly easy in a fast-paced world like ours. With dynamic market conditions, it’s data that makes the difference here. Empirical values ​​from previous periods can be evaluated and intelligently combined with current information in order to more precisely identify upcoming trends and needs. With the help of artificial intelligence and process automation, forecasts can be continuously developed and improved.

Digital technologies can also be useful in the further planning process: the potential ranges from precise monitoring of the supply chain in real time and a better overview of your own inventories to long-term purchasing planning and cross-plant inventory management.

Recipe for success in product development

In view of rapidly changing market conditions and diverse customer requirements, recipe management has become increasingly complex. This puts product development in the focus of the consumer goods industry. The aim is therefore to provide an overview of all current and old recipes that is as intuitive as possible. This is also possible with the right IT solutions. Integrated systems such as SAP bring together the information from the specialist departments – for example, sales, purchasing, production and quality management – and ensure a transparent flow of communication. In this way, already existing and developed recipes and their complete history can be used in product development, and the need for duplicate or even multiple recipe developments can be avoided.

Back to basics in sales

Even in times of digital solutions and major transformations, personalized contact remains the heart of sales. However, a close customer relationship takes time – and that is exactly what the right technologies can provide. Bundling and preparing individual customer information, or digitized support from contact to purchase – automated processes make sales so much easier and enable shared and mobile access to information.

Personalized contact remains the heart of sales. However, a close customer relationship takes time – and that is exactly what the right technologies can provide. Digitized support and automated processes make sales so much easier.

In addition to electronic data exchange (EDI for electronic data interchange), RPA bots (Robotic Process Automation), for example, can be used to optimize the overall process. Digital bots learn specific tasks that are often repetitive or time-consuming. They not only save their human colleagues valuable time, but also minimize the error rate in these frequently repeated activities.

Optimized processes for purchasing

The digital transformation of purchasing is also about process optimization. The core tasks of purchasing include the search, selection, evaluation and support of often numerous suppliers for an optimal purchasing process. With the appropriate SAP applications, tools are available that bundle information and important documents such as contracts or offers centrally, and enable intuitive operation with a modern user interface.

This transparent procurement management forms the cornerstone for an optimal purchasing process. Detailed and meaningful reports also provide all the relevant information to be able to evaluate, classify and support suppliers even better.

IoT technologies are revolutionizing production

The Internet of Things (IoT) has long since arrived in production with Industry 4.0. On the shop floors of modern production, everything revolves around networking – of machines, systems and people.

As electronic or mechanical sensory organs, sensors record everything that is important for smooth processes and even enable these processes to be automated. While the smart systems communicate with each other, experts can concentrate on the check – this minimizes errors and saves resources.

Technologies can help human colleagues in many of the process steps of day-to-day work. They shorten inefficient waiting times or walking distances, and bundle information in real time.

This also goes hand in hand with intelligent personnel planning, in which algorithms can be used to precisely determine which employees are available and when. But technologies can also help human colleagues in many of the process steps of day-to-day work: digital worker assistance systems make work much easier. They shorten inefficient waiting times or walking distances, and bundle information in real time. Especially trendy: virtual and augmented reality technologies.

Digital twins optimize quality management

Machines and computers are careful, precise and fast – three core aspects that are also important in quality management. A triad which, however, is difficult to perfect in the hectic everyday production, and requires a lot of time and personnel. The technological solution: a digital twin that virtually maps all relevant production parameters and continuously compares the actual and target status. Any deviations are identified promptly and can thus be remedied at an early stage. This prevents the production of faulty batches and significantly reduces the effort involved in laboratory analyses.

At smartFoodTechnologyOWL, the digital twin is already being successfully implemented as a demonstrator according to the motto ‘Where Food Meets IT’ – whether for mashing or pizza dough production. As part of the smartFoodTechnologyOWL innovation alliance, NTT DATA Business Solutions is developing efficient and largely digital quality management for production in the food industry, with numerous industrial and scientific partners. The core of the cooperation project is the digital twin technology. Self-learning algorithms in the cloud constantly compare the measured data with the default values, interpret them in real time and trigger an alert in the event of deviations.

Efficient and automated storage solutions

Best-before dates and remaining terms – more than just a clock is ticking in the food industry. This is particularly noticeable in warehouse management. Speed ​​and maximum efficiency are required so that goods can be delivered on time. Digital aids such as scanners, glasses and voice control functions help to effectively record, sort and prepare the products for dispatch. The collection of such data creates trustworthy transparency and enables an overview of current stock levels and batches, which can be used for optimal warehouse control.

However, technologies are also required for storage and retrieval in order to increase efficiency in the warehouse – the automatic scanning of barcodes, for example, saves time-consuming manual activities. Our indoor localization system ‘loopa’ records, among other things, the movement of goods in real time – and thus avoids the manual maintenance and time-consuming searches for batches in the warehouse.

All of these business areas are closely interlinked in the end-to-end processes that are characteristic of the consumer goods industry. The cloud-based solutions from SAP are particularly suitable for a large overall view and increased efficiency. And with a trusted partner to bring expertise and tailor-made add-ons for specific industry requirements, companies in the food and consumer goods sector, and all other industries, are fit for digital transformation.

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