The coronavirus pandemic jumpstarted the use of certain technologies for companies in many sectors, including the food industry. Specifically, data analytics and automation are areas the industry is gravitating toward due to need for proactive monitoring and fulfilling online orders.
Data Tools
Manufacturers will be spending more on data management and analytics tools post-coronavirus, reported The Wall Street Journal (June 2). These tools will be used for deeper insight into operations, sales, and supply chain disruptions, according to some information officers and observers.
At aluminum giant Norsk Hydro AS A in Oslo, Norway, the company is building its data capabilities to enhance its ability to remotely monitor plant equipment, which engineers had limited access to during the pandemic, according to CIO Jo De Vliegher.
“While we expect more employees to return to work onsite when authorities allow so, this data availability is a clear game-changer,” De Vliegher said. He noted the company used data, which is produced by shop-floor scanners and other hardware tools, to measure and improve performance of machinery more accurately.
These and other types of abilities are expected to make annual spending by global manufacturers on data management, analytics, and other advanced capabilities to nearly $20 billion by 2026, up from about $5 billion this year, according to a report by ABI Research.
Expenditures will include software licenses, cloud services, connectivity, and professional services geared toward data and analytics, as well as scanners and other devices.
“It’s a case of going from reactive analytics, reporting on what happened, to proactively analyzing what might happen and the suggested actions to take,” said Michael Larner, a principal analyst at ABI.
Larner noted the pandemic made manufacturers more aware of the need for improved ways of monitoring operations, particularly when facilities are accessible to only a small number of workers.
“From a data analytics perspective, it is a realization that they cannot rely on guesswork,” he said.
Automation
The warehouse automation market will more than double from $13 billion in 2018 to $27 billion by 2025, at a CAGR of 11.7% between 2019 and 2025, according to Research and Markets.
Growth can be attributed to emerging multichannel distribution channels, globalization of supply chain networks, increased adoption of micro-fulfillment centers, the rise of autonomous mobile robots, and the need for same-day delivery. During the pandemic, online ordering surged, which also contributed to the need for automation.
Several grocers are implementing automated warehousing. For example, Ahold Delhaize is partnering with cold storage provider Americold to build two fully automated frozen warehouses. The new facilities are part of the company’s previously announced supply chain transformation plan as it transitions to a fully integrated, self-distribution model.
The facilities will enable Ahold to innovate in new frozen storage warehouse design, including transforming facilities to enhance automation and leverage technology advancements, such as integrated transportation management system and end-to-end forecasting and replenishment technology, designed to support the omnichannel experience and multi-channel growth.
Additionally, Kroger is planning three more Ocado automated warehouses, reported Supermarket News (June 8). The fulfillment centers will fill online grocery orders for the Great Lakes, Pacific Northwest, and West regions.
“Through our strategic partnership, we are engineering a model for these regions, leveraging advanced robotics technology, and creative solutions to redefine the customer experience,” Robert Clark, SVP of supply chain, manufacturing, and sourcing at Kroger, said in a statement.
Automated grocery warehouses could also be the future for strip malls, according to BTIG LLC, reported Bloomberg. Analysts Michael Gorman and James Sullivan said real estate investment trusts (REITs) that own shopping centers should consider adding micro-fulfillment centers to food markets already on their properties because those facilities can cut down the time it takes to fulfill an online order to five minutes from one hour.
“Developing cutting edge micro-fulfillment centers in their properties could fix critical gaps in online grocery fulfillment, increase store productivity, and make REIT shopping centers even more critical real estate,” Gorman and Sullivan wrote.
