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SMART FINANCE


SURVIVING THE ‘NEW NORMAL’


Finance in helping navigate the economic ‘new normal’” conservatively estimates that over the next five years $567 billion in investment funds are needed for digital transformation alone in the global food and beverage industry4


. Nonetheless, the


incremental increase in annual revenue that manufacturers can stand to gain from digitalising their processes is significant. Research from Siemens Financial Services (SFS) has shown that manufacturers can stand to gain an additional 6.3 – 9.8% of their annual revenues from bringing digitalisation into their manufacturing operations5 Even as the crisis recedes, food and


.


beverage companies will need to integrate business agility into their operations if they are to cope with continued uncertainty. Sensor technology and machine learning are already being used by the brewing industry to predict when beer moves from fermentation to the free rise phase – effectively “teaching” technology to predict when it is ready for the next stage of production6


. Similarly, artificial


intelligence (AI) has been employed to identify hazards in milk or detect machinery faults before they occur7


. All of these


applications help to minimise downtime, prevent spoilt batches and increase the operational efficiency of the production line. Aware of the enhanced operating agility


and efficiency that digitalisation offers, 74% of SMEs in the industry have already made steps towards improving production processes through digital technologies8


however, investment appetite tends to shrink as companies feel a need to focus on shorter-term returns. That being said, commentators9


Brian Foster, head of Industry Finance at Siemens Financial Services, UK, says investing in agile digital technologies is key to a resilient food and beverage industry


T


he economic impact of the current pandemic is expected to be significant and prolonged. Last year, the food and


beverage industry has had to rapidly adapt to changing circumstances and patterns of consumption – be it suppressed or increased demand. The industry will be reshaped in the medium- to long-term and companies that are unable to adapt quick enough to the ‘new normal’ will run the risk of getting left behind. Unsurprisingly then, companies who had


invested in agile technologies and machinery were best placed to react to shifting market demands with optimal flexibility when the crisis hit. Companies with automated and


digitalised production units were less affected by the lockdown-induced staff shortages1


, for


instance, making them more resilient. Surviving recent disruptions required business agility on all fronts – companies that weren’t sufficiently equipped for a drop in demand were faced with a lack of cold storage for perishables2


, for example. Conversely,


manufacturers equipped with ‘digital twins’ were able to simulate coronavirus impact scenarios and react quickly and effectively in volatile situations3


. The challenges inhibiting investment,


however, are considerable. Our latest report “Rising to the new challenge: the role of Smart


54 JULY/AUGUST 2021 | PROCESS & CONTROL


continue to invest typically emerge ahead of their competitors. This means that the pandemic and its economic aftermath have in fact made the importance of investing in new technology more important – not less. In fact, the urgent challenges of the


pandemic and its long-term effects may even compress the timeline for investing into a shorter period. Previous research from SFS estimated the window of opportunity left to gain competitive advantage from investing in digitalisation to be 5-7 years away10


. After this


point, manufacturers having not invested may struggle to ever catch-up. It is likely that this estimation may need to be narrowed to account for the impact of the crisis. To provide food and beverage


manufacturers – large and small – with a financially sustainable path through the current challenging environment, smart financing models are emerging. Smart finance for digital transformation in manufacturing tends to come from integrated specialist financiers, where the


. In times of crisis,


suggest that companies who


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