In today's rapidly evolving technological landscape, cloud-based software has emerged as a game-changer for the food industry as farm-to-table is transitioning to farm-to-data-to-table.
The power of cloud computing has revolutionized the $4+ trillion fresh and packaged food industry in many areas, enabling resilience, margin expansion, adaptation to shifting consumer demands, action on sustainability, and more. “AI, machine learning, and cloud-based technologies are helping food and agriculture companies transform for a digital world,” wrote Sonia Fife, Global Lead for Consumer Packaged Goods, Google Cloud. “We’ve found that successful food and agricultural enterprises invest in connecting internal data across departments and legacy systems (e.g., connecting IT and OT), and by blending external and internal data to improve predictions and decision-making.”
Cloud-based software is changing the food industry from the farmer to the consumer, with McKinsey saying that AI “has the potential to help reshape the world’s food system.”
6 Ways Cloud-Based Software is Changing the Food Industry
Cloud-based software has the potential to not only help food industry companies to transform their business, but when deployed properly it can be a competitive advantage.
Here are 6 ways that digital technology is reshaping the food industry:
- Building Resilience in Uncertain Times: Cloud-based software has empowered the food industry to build resilience amidst an increasingly risky world, including foodborne illness outbreaks, natural disasters, and supply chain disruptions. McKinsey says that an average company can expect to lose about 45 percent of one year’s earnings over the next decade due to supply chain problems. Google Cloud says that food companies that invest in digital and AI tools can reap 5x faster decision-making processes and 3x faster execution.
Businesses can respond faster to changing market conditions when they leverage cloud-based software to access data on everything from suppliers to inventory and shipping data to consumer behavior to geopolitical factors. This real-time data and insights into their operations can help businesses identify and mitigate risks before they cause problems. Also, in times of natural disasters, power outages, or other disruptions, cloud-based access ensures uninterrupted access to vital information, enabling businesses to quickly recover and continue operations.
- Margin Expansion by Controlling Costs: Cloud-based software has paved the way for margin expansion in the food industry by reducing inefficiencies, streamlining operations, and lowering costs as various processes can be automated, such as inventory management, supply chain optimization, and demand forecasting. Real-time visibility into inventory levels, demand patterns, and production schedules enables organizations to make informed decisions and optimize their pricing strategies, ultimately leading to increased profitability.
Google Cloud says that it’s important for food companies to use AI and other technology to remain profitable in the face of elevated manufacturing and raw materials costs. Tracking inventory levels and optimizing ordering processes can lead to significant savings on food and other costs. McKinsey, for example, estimated that AI-enabled tracking to sell food before it spoils can reduce food waste on farms and at retail stores and restaurants.
- Adapting to Shifting Consumer Channels and Diets: Cloud-based software has enabled the food industry to adapt swiftly to shifting consumer channels and diets, including increased brand switching and acceleration of e-commerce and omnichannel purchases of groceries and prepared foods since the COVID-19 pandemic started. With changing consumer preferences, cloud-based solutions offer the flexibility and agility required to meet these evolving demands.
Advanced analytics and machine learning algorithms integrated into cloud-based platforms enable companies to analyze vast amounts of data, identify emerging trends, and tailor their product offerings accordingly. Google Cloud says, “Winners use data to gain real-time, detailed insights about consumer behavior and to drastically lower the cost of experimentation. They invest in mining data – at an individual level and segment level – and then use it to shape their product development and data-driven marketing approach.”
The payoff? McKinsey research says that data-driven marketing growth for consumer goods companies can:
o Drive 3 to 5 percent in net sales value for top and bottom-line growth.
o Result in 10 to 20 percent efficiency to reinvest in growth.
o Increase in agility and throughput by 10x.
- Action on Sustainability in a Meaningful Way: Cloud-based software has facilitated the food industry's ability to take meaningful action on sustainability by centralizing data and providing real-time insights that allow organizations to monitor and optimize resource usage, reduce food waste, and implement sustainable practices throughout the supply chain. Enhanced traceability and transparency made possible by cloud-based solutions, help ensure compliance with environmental regulations and certifications, enhancing brand reputation and consumer trust.
Google Cloud says that “successful food and agriculture enterprises are determined to have their financial and sustainability goals co-exist since they are now so dependent on each other. They blend data from external and internal sources to demonstrate their success, measuring their progress on multiple dimensions of environmental impact, and making public commitments to bettering the environment.”
- Enhancing Collaboration and Communication: Cloud-based software has revolutionized collaboration and communication within the food industry by providing a centralized platform accessible to all stakeholders, including suppliers, manufacturers, distributors, and retailers, cloud-based solutions streamline communication channels. Real-time data sharing, instant messaging, and collaborative document editing foster efficient and effective collaboration, improving overall supply chain coordination and customer service.
Cloud-based software also helps food businesses improve collaboration by making it easy for employees to share information and work together on projects. This can lead to faster decision-making and better results.
- Enhancing Food Safety and Quality Control: Cloud-based software plays a vital role in enhancing food safety and quality control. By integrating data from various sources, such as suppliers, production facilities, and testing laboratories, cloud-based platforms provide comprehensive visibility into the entire supply chain.
Real-time monitoring and predictive analytics help identify potential risks, track product quality, and facilitate prompt recalls if necessary. This heightened control ensures consumer safety and reduces the impact of foodborne illnesses.
Cloud-based software has undeniably transformed the food industry in numerous ways: from building resilience and margin expansion to adapting to changing consumer demands and sustainability practices, cloud-based solutions have become indispensable tools.
As cloud-based technology continues to evolve, we can expect to see even more innovative ways for food businesses to use cloud-based software to improve their operations.