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Food manufacturers: prepare yourself for industry 4.0

The food and drink industry is the manufacturing sector most exposed to changes in patterns of household consumption [1]. The new and exciting technologies that make up industry 4.0, will help food manufacturers keep up with consumer demand, allowing them to quickly adapt to changes.

Industry 4.0 is founded on automation and data exchange, otherwise known as the “fourth industrial revolution”. Realising the potential of digital in food and drink manufacturing will help businesses identify opportunities to increase output, decrease costs and improve quality.

Although this is exciting, changes to manufacturing processes will alter the risk profile of the industry and businesses. Make sure you’re prepared for these risks, as well as the opportunities.

Industry 4.0 opportunities for food manufacturers

Investment in digital change has the potential to improve production processes, creating a “smart factory” and reducing waste. Investments could also optimise your workforce, enhance supply chains, monitoring systems, distribution and the speed in which prototypes and new products are brought to market.

Manufacturers can use industry 4.0 to:

Recall and trace ingredients

Using new technology will create a better and more integrated supply chain and will make it easier for you to trace ingredients. This means that you can recall products faster, and new technologies are making it possible to trace the source of raw ingredients.

Increase safety and efficiency

Connected systems will enable you to track products from delivery to the shelf. They can make your business more efficient and save time, meaning you can respond to your customers’ needs quicker.

Through 3D printing, prototypes no longer take weeks to produce. They can be done in a matter of days, resulting in reduced consumer testing times.

Optimise your workforce

Machines are becoming more equipped for performing a wide range of cognitive and physical tasks. This could potentially increase the level of automation in your factory and reduce labour costs. It could also reduce waste costs associated with human error.

Identify opportunities and increase output

You can achieve real-time visibility across all of your operations by implementing a system where data collection is automated and centralised. Doing this will provide access to invaluable data, helping to forecast increased output and identify issues that might otherwise hide away in silos.

Manufacturing businesses should be excited for industry 4.0, but as with all changes to business processes, this brings its own set of challenges.

How does industry 4.0 affect risk?

As new technologies and connectivity between systems and third parties increases, so does the risk of cyber threats. Ensuring security between interconnected systems is vital. One of the food and drink industry’s greatest cyber risks is disruption to production from a technology failure.

The ransomware “Petya” infected more than 2,000 companies, some of which were major food and drink manufacturers. The shift towards Industry 4.0 provides cyber criminals with more opportunities to carry out cyber-attacks.

The move to the “smart factory” means you need to be resilient and able to respond and recover from cyber-attacks quickly to minimise damage. A cyber-attack could cause business down time, resulting in;

  • loss of income
  • damaged supplier relationships
  • negative media coverage
  • poor employee relations through diminished trust
  • your business going into administration.

Every attack is different, and it’s important for you to have plans in place for reacting to different scenarios.

Preparing for the shift to industry 4.0

As a manufacturer, you should look to use scenario-based analytics to identify and measure future risks, so you can prepare for all situations.

Your business should prepare for the shift to industry 4.0. Here’s how:

Understand

How technology will change your overall risk profile. Having a good knowledge base will help with risk analysis.

Identify

And quantify future risks using scenario-based analysis. Tracking products and ingredients will affect many areas of the business. If you put the risks into loss scenarios, you can see the financial impact and the full scope of risk.

Quantify

The maximum foreseeable loss and non-damage business interruption loss. Businesses are struggling to quantify the risks as they are new and emerging. There are several options to help quantify risks:

  • Assess the potential financial cost of a cyber attack
  • Build a model to quantify the financial cost of a data breach
  • Create an assessment for loss arising from data loss

Treat

The effects of loss events by crisis planning, building strong contractual relationships, and tailored insurance. It’s worthwhile for food and drink businesses to do the following, to help with decision making on industry 4.0 risks:

  • Stress-testing financial capacity
  • Review insurance programmes
  • Crisis management planning
  • Asses contractual risks
  • Risk benchmarking

What to make of Industry 4.0?

The move towards automation and digitalisation will provide your industry with many opportunities to enhance business capabilities.

Cyber risks are already well-established in the food and drink industry, but as new, smarter technology is introduced, the risk profile is changing.

If your manufacturing business is making the move towards a “smart factory” and you are introducing new technology to your operations, it’s important to check and manage your risks as your business changes.

 See Cyber Risks for more on this topic, or you can get in touch with your local Jelf adviser by checking out contact us.

 

Sources:

1. EEF - Sector Bulletin: Food and Drink, 2017
2. Ibid
3. Food Manufacture - Food Manufacturers Advised to Plan for Industry 4.0,
4. Automation World - The Future Food and Beverage Industry,
5. World Economic Forum. The Global Risks Report, 12th Edition, 2017.
6. Food Logistics - Time’s Up; Pencils Down—Are You Ready for Industry 4.0?
7. The Digitalization Productivity Bonus, Siemens Industry Finance

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