To say 2020 was a challenging year would be an understatement. Whether you were supplying the hospitality, travel or retail sector, your experiences during the COVID-19 pandemic may have been very different. Similarly, the unknown of Brexit loomed large throughout the year and despite a deal being struck with the EU just before Christmas, challenges remain in the food supply chain.
So, what does 2021 have in store and what food industry trends look likely to continue in the future? In this blog, we look at:
- COVID-19 and the acceleration of digitalisation
- The rapid growth of e-commerce solutions
- Compliance and labour challenges of Brexit
- Overcoming disruptions to food sourcing
- Trending towards plant-based foods
- Tackling waste reduction and sustainability
COVID-19 and the acceleration of digitalisation
The effects of the pandemic have accelerated digitalisation in everyday life. Just think of how many of us now use Zoom or Microsoft Teams to speak with work colleagues or loved ones… even my 80-year-old parents have embraced that technology!
Online ordering of food and drink has grown significantly due to the risks of visiting retailers, resulting in our shopping lists changing from paper to digital online images.
At the time of writing, the early success of the UK vaccination roll-out has raised hopes of a potential end to many of the restrictions. However, it’s unlikely society will simply revert back to what was known as the “norm” before. This provides opportunities, but also presents challenges to business models that have had to change.
The rapid growth of e-commerce solutions
Although the hospitality industry will enjoy an initial surge in demand given how long the UK lockdown has been, many of us have become accustomed to eating at home. This transition has squeezed margins further for food suppliers, so there needs to be a focus on improving efficiencies to remain profitable.
Technology and business solutions can solve some of these issues by providing platforms that enable flexibility and scalability to address changes in business models.
In addition, the changes to consumer spending habits during the pandemic has resulted in suppliers accessing the market directly and supplying straight to end consumers. This is particularly relevant when talking about new/trending products.
In the past, we may have been loathed to do this given the potential hassle with not using a ‘one stop’ shop approach. However, the growth in e-commerce solutions provides a more rapid and flexible route to market which can be tailored to address changing consumer needs.
Compliance and labour challenges of Brexit
With UK food exports reaching nearly £24 billion and two thirds of that going to the EU, getting a Brexit deal helped relieved concerns to food suppliers regarding potential tariff costs.
However, the need for relevant documentation and testing certification now applies to any destination. The right core solution with labelling/documentation software can help food suppliers achieve this and help minimise any disruption at the point of entry to the EU.
In addition, the restrictions on free movement of labour to the UK from the EU could have an impact on the ability to find workers for manual tasks. This is a particular risk with seasonal labour, where the resource may only be required for a short period of time.
Although there are tools within business solutions that can support load and resource planning, a likely continuing trend will be towards the wider use of automation which helps minimise labour requirements.
Overcoming disruptions to food sourcing
The changes in documentation and certification due to Brexit will inevitably lead to disruption in the supply chain to and from Europe. And clearly if legislation widens between us and Europe, the supply chain will have to adapt accordingly.
To combat this, it’s likely food manufacturers will look at moving to more locally sourced products. This will not only help with supply chain issues, but also support a reduction in carbon footprint because of reduced travel from the source.
The right business solution can aid the sourcing process through tracking recipes and associated costs. It can also help manage and digitally record any tracking and tracing requirements rather than it being a complete offline process.
Trending towards plant-based foods
There has also been a growing trend towards more plant-based foods for their perceived health benefits, with businesses looking to rapidly expand their vegan and vegetarian ranges.
New product development engages multiple teams such as geographies, partners, suppliers and sellers. These teams need to be coordinated to meet the right design, regulatory compliance, budget and changing customer demands.
By having the right platform through the right business solution, such as an enterprise resource planning (ERP) system, new product development (NPD) can be improved significantly. This technology can support the entire NPD process by effectively managing the product information with all information held in one central accessible place.
Tackling waste reduction and sustainability
Waste reduction has been a key focus area for businesses from a cost and sustainability perspective. Supply chain waste within food is always a concern given the short shelf lives of certain products. Over-supply in the form of purchasing and manufacturing can lead to products being thrown away if they’re not required.
However, by investing in a true end-to-end solution such as an ERP system, food suppliers can efficiently manage supply and demand all the way through the supply cycle. Through set-up and the automation of the relevant calculations involved, demand change effects can quickly be addressed and adjusted accordingly.
In addition, an ERP system can help avoid any lack of alignment on inventory levels and reduce chain carbon footprint by minimising travel throughout the supply cycle.
What else is in store for the future of food?
Recovery from the pandemic will be slow so, to become futureproof, it’s essential for businesses to consider digital transformation. By embracing technology, you can set clear future objectives for your business, prepare for different COVID-19 scenarios and rapidly respond to these scenarios.
But what do other businesses’ digital transformation plans look like? Are they even thinking about digital transformation? And how are they staying competitive? In our report, we evaluate the state of the food and drink industry and discuss the role digital transformation will play moving forwards.
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