The quantum shift
It’s ironic, isn’t it? People can’t live without food and beverages, and yet food and beverages can’t be produced without people. It’s a codependent relationship of existential proportions.
As far as industries go, our $131 billion food- and grocery-processing sector provides the essentials and makes up a massive part of the FMCG supply chains we rely on to feed, clothe and entertain us.
The FMCG industries, of which the F&B sector is the foundation, have experienced a quantum shift. They have rapidly evolved to meet consumer demands, and are now the leading manufacturing industry in Australia and New Zealand.
Likewise, enterprise resource planning (ERP) has improved to enable FMCG manufacturers to streamline and efficiently manage their supply chain. The software has become more integrated and easier to use; it now has interchangeable modules, open architecture and cross-platform usability, which makes collecting and analysing real-time data easier.
The Organisation for Economic Cooperation and Development (OECD) recently released The OECD Employment Outlook 2019, The Future of Work. The report says we are in an era in which rapid digitalisation causes disruption and sees new technologies become “gamechangers”. The report estimates 14 per cent of existing jobs could disappear over the next 15 to 20 years, and 32 per cent are likely to change radically. Among the OECD’s 34 member countries, Australia has one of the highest rates of casual workers and has had one of the largest increases in underemployment since 2007. A large number of adults will need to upskill or retrain to meet the needs of future jobs as automation replaces many less-skilled functions. And, while new jobs will emerge, transitions may not be so easy.
The numbers are in
According to Austrade, F&B processing is Australia’s largest manufacturing industry. The Australian Food and Grocery Council’s (AFGC) 10th annual industry snapshot, State of the Industry 2018, Food and Grocery the Future of Australian Manufacturing, says the industry directly employs 324,450 people, which represents nearly 40 per cent of Australian manufacturing jobs.
The Beyond Commodities: Manufacturing into the Future report, by the New Zealand Ministry of Business, Innovation and Employment, lists F&B as the largest of all manufacturing subsectors. It directly employs more than 240,000 people and accounts for over half of total exports.
Australia’s F&B exports account for $26 billion, or 71 per cent of all manufactured goods, and the subsector makes up 32 per cent of all manufacturing output. However, with input costs such as higher commodity prices influenced by the drought, as well as rising energy costs, the sector is navigating a tough environment.
When you think about these factors and the OECD report, it makes you question how will tech shape the future of FMCG supply chains? But with all challenges come opportunities, and the industry needs to understand where the issues lie and how these can be converted to commercial opportunities which innovate, disrupt or diversify an enterprise and the industry. Of course, this involves people that will develop new technologies and create new products, leading to new revenue streams.
What the CEOs should be asking themselves is why they need to embrace technology, if they haven’t already. Digitalisation will help those in FMCG to reduce costs without compromising the quality of their products. Not only that but it will also enable more effective management of complex operations – this is something that is occurring globally.
People are essential
People need to eat, and food and drinks will continually be developed to meet these needs. Added to this is Australia’s international reputation for being a source of safe and high-quality produce. There is no shortage of trade partners looking to import our valuable, locally grown commodities. To meet the supply and demand, we need people throughout the supply chain to oversee this process and ensure manufacturers are delivering to growing consumer demands – both domestic and global. Machines don’t have the creativity or the type of intellectual capacity required to develop new ideas and technologies, to interpret data from automated systems and ensure they’re continuing to allow better efficiencies for manufacturers. Humans are needed to fill these roles. The changing landscape of data-creating software requires people to make meaningful use of that data, whether they are an accountant, in HR, a compliance officer or even a mechanic (to name a few).
The adoption of automation within the industry also allows manufacturers to spend more time on the business than in the business. It provides opportunities for building stronger relationships with suppliers and customers so that the business can continue to grow. A growing business needs a growing workforce to sustain customer satisfaction.
Throughout this process, ERP is a shadow following the business journey. It is closely aligned to accurately track processes in real time, enabling businesses to respond to market conditions faster. It also allows for better traceability, which not only results in better customer service but helps manufacturers gain a competitive advantage.
Staying ahead of the trends
Industry 4.0 affects all jobs throughout the supply chain, from the CEO who has to drive the transformation strategy, to the CIO who has to build the infrastructure. Or the CFO who has to fund it, to the COO who has to drive the operational transformations. Automated workflows are changing the way we work – even sales and marketing teams are not immune to the changes.
As the OECD report demonstrates, history has shown us that technology has helped us and created new offshoots and opportunities for the FMCG industry. The continuous loop that is based on catering to changing consumer habits means the future of work must stay ahead of such trends, but this can only take place through technology. People will always remain at the core of this and there will always be new opportunities and jobs which will help the FMCG industry change in a positive way. [
Rob Stummer, CEO, SYSPRO Australasia.