Digital Transformation is a marathon, not a sprint.
Because every F&B organization is unique, digital transformation can be achieved through multiple pathways..
Every Food & Beverage enterprise is in the race to transform digitally. This didn’t happen by chance. As consumers shifted away from traditional advertising and mass media and toward social media, marketing organizations across the F&B industry began to realize they were losing the connection with their customers. This meant missing out on the opportunity to engage in dialogue and collect meaningful feedback. Since the race began, F&B enterprises have embraced digital transformation with different approaches.
For example, many organizations have adopted industry 4.0 technologies like cloud computing, data analytics, robotics, machine learning, or AI to streamline internal processes, automate tasks, and analyze data to gain insights into consumer behavior and preferences.
According to one study, 73 percent of F&B companies have continued or increased their investment in digital technologies, with supply chain operations (51 percent), data collection (38 percent), and improved business analytics (37 percent) standing out as the primary use cases. Today, it’s often thought that transforming digitally must be achieved in sprints: modernizing every workload, grasping for every piece of data, or enlisting the latest point solutions. In a recent article, Dr. Venkat Venkatraman, Professor of Management at Boston University, argues that digital transformation is such an overused term that it “loses its power to be the glue that drives organizations forward.” 1
In fact, the marathon is a better metaphor: a series of strategic investments and actions that combine to help drive a unique organizational vision. It’s a long-distance race that includes reinventing the business and reallocating key resources. Importantly, observes Venkatraman, it “starts with steps to recognize and respond to inherent traps that prevent change.”
Digitization and digitalization are enormous initiatives, and there’s no one-size-fits-all solution. Because every F&B enterprise is unique, digital transformation can be reached by multiple pathways. Research has found that while these pathways represent a critical pursuit, it’s not easy—only 33 percent of organizations successfully meet the challenge. But those that do tend to make big strategic bets and are rewarded with significant revenue growth and 14 extra points of total shareholder return, on average.2
1.“How to Make Digital Transformation More Than a Catchphrase in Your Organization,” Venkatraman, 2022.2.BCG, Digital Strategy Roadmap.
In the early stages of digital transformation, sales and marketing organizations within F&B took the lead, driven by the need to adapt to a disruptive change in consumer behavior. Digitization initiatives eventually spread into areas like R&D, supply chain, and procurement. Meanwhile, teams focused on Food Safety, Quality, and Regulatory—all hugely important to consumer trust of the brand—remained at the back of the pack. These business functions have been traditionally viewed as back-office, risk-averse cost centers. The way F&B organizations were conventionally structured, and because of insufficient technology investments, they became siloed.
Today, F&B companies are beginning to understand the value of earlier involvement and tighter integration with Food Safety, Quality, and Regulatory in product development efforts. These functions are increasingly recognized as the core of what a F&B company is, and the value proposition a brand presents to customers. There’s almost nothing that Food Safety, Quality, and Regulatory do not touch in F&B enterprises: consumer experience, brand trust, product differentiation, innovation speed, and cost of quality (COQ). Consequently, they should be an essential part of any F&B enterprise’s digital transformation.
These functions also need to become more interconnected. Given the rapid pace of digital, cloud, and decision-making—along with Environmental, Social, and Governance (ESG) initiatives and demands for sustainability and transparency—leading F&B companies are better connecting these disciplines or have merged them to be part of the same organization as they digitally transform.
The area of Product Claims is an example of why stronger digital collaboration between these functions is vital. Visibility of claims is important because it can work to power—or validate—marketing efforts. The scientific and innovation side of the organization—R&D, marketing, consumer insights—needs to be in lockstep with the operational side—manufacturing, supply chain, finance, procurement—to accurately deliver on the claims being made about food and beverage products.
As on any journey, obstacles and hurdles are common features of digital transformation in the F&B industry. Having an awareness of them, while keeping an open mind, allows F&B leaders to better navigate the twists and turns so that transformation efforts don’t run off track.
There’s another, overarching trap: F&B leaders often continue along a digital transformation pathway with the right intention but either come out of the gate too fast or don’t invest in the resources required to make a measurable difference. It’s important to find the balance between starting too narrowly, where the effects are negligible, and going too broad, where any adverse effects can turn into a major setback. While speed is essential, the end goal for every F&B organization is to become increasingly customer-centric while providing safe products of the highest quality. This focus provides a valuable lens for any digital pilot that leaders undertake, prompting questions like “Does this help us deliver a safe, quality product while being more customer-centric and providing a rich customer experience?”
Take, for example, gluten-free. The global gluten-free products market size was USD 5.9 billion in 2021 and is expected to grow at a compound annual growth rate of 9.8 percent from now until 2030. There’s clearly a growing market for the category; consuming foods that contain gluten can have harmful health effects on individuals living with celiac disease. What happens if R&D makes a slight formulation change to a food or beverage product claiming to be gluten-free, affecting the integrity of the claim? If the areas of innovation and operations aren’t connected with an end-to-end view, the implications can be far-reaching, ranging from starting over to recalls to fines to global brand damage.
Investing in a digital pilot that helps R&D and regulatory fully connect with manufacturing and supply chain can have an enormous benefit for the brand.
For a digital transformation pilot to be meaningful, you’ll want to aim for critical mass, where results from testing will be compelling enough to indicate success or failure. A pilot with a handful of people in a USD 50 billion organization will not be as effective as a 250-person pilot in multiple geographies across a meaningful percentage of the business.
We’ll now show you four examples demonstrating how you can launch a successful digital pilot that starts with a portion of the business and brings together the disciplines of Food Safety, Quality, and Regulatory in a consumer-centric way.
