Executive Briefings

Food & Beverage Technology: It's Cold, It's Safe - and It's Got ROI

Analyst Insight: The generally low-margin and high-waste food & beverage sectors will continue to increase their technology investments in 2012. Traceability, quality and fulfillment technologies are emerging with strong ROI, though compliance and traceability get much of the attention. No doubt global regulations on food safety may be somewhat of a catalyst, but companies say that the benefits are what really drive their investments. - Ann Grackin, CEO, ChainLink Research

ChainLink has spoken with hundreds of companies across the food industry. They indicated increased interest, and have increased pressure from many fronts - including both cost as well as compliance - to invest in technology. Categories of growth in 2012 are:

• Risk Management and Supplier Information Systems - Globalization has brought huge economic opportunities to many, but it is not without risk. The occurrence of outbreaks, such as E. coli and listeria, and tainted-product recalls have consumers concerned and have economic implications. The creation of supplier multi-tiered databases will be pursued by many segments in the industry, often by the industry groups, so small firms can have access to the technology.

• Produce Buying and Selling Platforms - Agriculture is a growing segment with global demand, but farmers need to have 21st Century technology to access markets. Better linkages to connect buyers with produce growers and their distributors increase sales, as well as support collaborative business processes among trading partners.

• Compliance - Global markets have increased requirements on trade documents, licensing and labeling. In addition, the "fresh" and organic movement has brought pressure to prove to the consumer the pedigree/provenance of the food source. In addition, large manufacturers and grocers have very specific compliance requirements for routing guides, handling (temperature, light and vibration) and product packaging.

• Monitoring, Track and Trace - Once products are sold and ready to ship, we need sensors and tracking technology for data visibility and product monitoring along the route (actually, throughout the whole chain). This is the read-epicenter of cold chain monitoring. Cold chain monitoring and data collection can be accomplished with cloud-based, trading-partner integrated platforms and RFID, GPS with sensors. The market for these technologies has seen volume growth as the cost of these solutions has come down and their utility has gone up. Case studies and research on quality, integrity and waste reduction from implementation projects are making these investments more attractive for companies to consider.

• Quality - From farm to factory to market to fork, quality has been an issue of integration as well as unique systems that support and measure quality at each phase. Manufacturing, in particular, has seen a big surge in quality systems.

• Auto-ID, barcoding, RFID and sensors, and GPS all will get a boost in demand from the compliance, quality and monitoring software and process requirements. Most other technology sectors also are beginning to rely on these technologies for data collection, sorting, fulfillment, location, temperature and equipment monitoring, and many other functions.

• Manufacturing - Many of these systems need upgrading with stronger data management models, as compliance and regulatory trends dictate an increase in the number, as well as multi-year retention of records and forms.

• EDI/MFT - Always present, always needed, more small- to mid-sized firms who are trading with large distributors, carriers, grocers and manufactures will adopt EDI as a standard method of communication, which has expediency and leverage to other applications.

                                      The Outlook

The food & beverage industry has not been traditionally the high-growth area for technology, but things are looking up. In 2012, expect to see greater investment in cold chain technologies purchased by growers, manufacturers and, especially, logistics providers who are charged with ensuring end-to-end quality and on-time delivery of products. Reporting requirements, consumer awareness as well as the changing landscape of players in the chain have increased automation in all aspects, from agriculture to manufacturing and logistics to retail.


Keywords: Food and Beverage; Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management, ChainLink Research, Risk Management, Supplier Information Systems, Organic, Product Packaging, Cold Chain, RFID, Farm to Fork, Auto-ID

ChainLink has spoken with hundreds of companies across the food industry. They indicated increased interest, and have increased pressure from many fronts - including both cost as well as compliance - to invest in technology. Categories of growth in 2012 are:

• Risk Management and Supplier Information Systems - Globalization has brought huge economic opportunities to many, but it is not without risk. The occurrence of outbreaks, such as E. coli and listeria, and tainted-product recalls have consumers concerned and have economic implications. The creation of supplier multi-tiered databases will be pursued by many segments in the industry, often by the industry groups, so small firms can have access to the technology.

• Produce Buying and Selling Platforms - Agriculture is a growing segment with global demand, but farmers need to have 21st Century technology to access markets. Better linkages to connect buyers with produce growers and their distributors increase sales, as well as support collaborative business processes among trading partners.

• Compliance - Global markets have increased requirements on trade documents, licensing and labeling. In addition, the "fresh" and organic movement has brought pressure to prove to the consumer the pedigree/provenance of the food source. In addition, large manufacturers and grocers have very specific compliance requirements for routing guides, handling (temperature, light and vibration) and product packaging.

• Monitoring, Track and Trace - Once products are sold and ready to ship, we need sensors and tracking technology for data visibility and product monitoring along the route (actually, throughout the whole chain). This is the read-epicenter of cold chain monitoring. Cold chain monitoring and data collection can be accomplished with cloud-based, trading-partner integrated platforms and RFID, GPS with sensors. The market for these technologies has seen volume growth as the cost of these solutions has come down and their utility has gone up. Case studies and research on quality, integrity and waste reduction from implementation projects are making these investments more attractive for companies to consider.

• Quality - From farm to factory to market to fork, quality has been an issue of integration as well as unique systems that support and measure quality at each phase. Manufacturing, in particular, has seen a big surge in quality systems.

• Auto-ID, barcoding, RFID and sensors, and GPS all will get a boost in demand from the compliance, quality and monitoring software and process requirements. Most other technology sectors also are beginning to rely on these technologies for data collection, sorting, fulfillment, location, temperature and equipment monitoring, and many other functions.

• Manufacturing - Many of these systems need upgrading with stronger data management models, as compliance and regulatory trends dictate an increase in the number, as well as multi-year retention of records and forms.

• EDI/MFT - Always present, always needed, more small- to mid-sized firms who are trading with large distributors, carriers, grocers and manufactures will adopt EDI as a standard method of communication, which has expediency and leverage to other applications.

                                      The Outlook

The food & beverage industry has not been traditionally the high-growth area for technology, but things are looking up. In 2012, expect to see greater investment in cold chain technologies purchased by growers, manufacturers and, especially, logistics providers who are charged with ensuring end-to-end quality and on-time delivery of products. Reporting requirements, consumer awareness as well as the changing landscape of players in the chain have increased automation in all aspects, from agriculture to manufacturing and logistics to retail.


Keywords: Food and Beverage; Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management, ChainLink Research, Risk Management, Supplier Information Systems, Organic, Product Packaging, Cold Chain, RFID, Farm to Fork, Auto-ID