How does 2017 look for manufacturers? We decided the best way to find out is going straight to the experts.
We asked Janette Woodhouse, editor of What’s New in Food Technology & Manufacturing and Prepared Food; Matthew Treeby, Commercial Marketing Manager – South Pacific at Rockwell Automation; and our own General Manager, Mark Dingley, to gaze into their crystal ball and tell us what’s coming in 2017.
Together, they identified seven key themes that will impact manufacturers in the year ahead, so here are their manufacturing predictions for 2017.
- Internet of Things (IoT) is coming …. but there’s a long way to go
Matthew Treeby explains, “The Internet of Things or IoT is one of several technology disruptions creating opportunity for transformation into Smart Manufacturing environments. Early adopters have accepted the concept of Smart Manufacturing and are embracing technology to augment their processes and their people for higher performance and efficiency.”
However, says Janette Woodhouse, despite the media hype around the Internet of Things (IoT) and Industry 4.0, there’s still a long way to go.
“The concept of interconnectedness with all equipment communicating and optimising productivity, efficiency and profitability is quite seductive, but I fear in truth it is pretty far from reality,” she says. “Many manufacturers, and especially start-ups, are really at the beginning stages of moving from manual to automatic and are a very long way from the ‘connected factory’.
“That being said, the user-friendliness of newer automation systems, especially wireless systems with minimal set-up costs, will mean that some companies will move from manual to IoT and miss the middle automation stages.”
Mark Dingley agrees — though he expects we’ll see more of a two-speed adoption of Industry 4.0 to create a connected enterprise.
“The SMEs will continue to explore the concept, learn more about it, and what it means to them and their business. Meanwhile, the large multinational manufacturers with the ability to tap into the global knowledge will develop implementation plans and maybe set up some test lines or environments.”
- Personalisation will continue to rise
The ongoing rise of “personalised” will continue to impact food manufacturing in 2017.
Janette says, “I think this will make batch sizes smaller as more unique products are made for smaller groups of consumers.”
Mark says personalisation is just the beginning; consumer trends and technologies will influence manufacturers’ adoption of technology in the year ahead. (See here how personalisation goes beyond the consumer’s first name.)
Take a look at the influence of Millennials, the former Gen Y: Tetra Pak’s recent report, Packaging up Millennial Success, revealed that Millennial consumers are self-confessed foodies, while AdAge says Millennials are spending an average of 25 hours a week online and, more than any other generation, are relying on mobiles and tablets to research and buy goods. In 2017, it will be even more critical for brands to understand consumers and find ways to be relevant and engaging to them. (Find out more about how Millennials are forever changing the face of packaging.)
- Growth of online sales platforms
New sales platforms will open doors for manufacturers in 2017. Mark says that channels such as Alibaba and Amazon will provide manufacturers with alternate channels to market, and as a result, they will need to create onmi-channel, go-to-market strategies. For example, Alibaba, GS1 and GS1 China recently forged a trading alliance to standardise product information for Australian brand owners selling online in China.
Also, Amazon recently announced it will open fresh food stores in the United States to augment its existing online grocery ordering and delivery service, Amazon Fresh. Will it be long before we see Amazon enter the Australian food and beverage market?
Janette adds that online sales platforms will affect manufacturers who will be able to bypass tradition distribution routes and sell directly to consumers. “This will save money in some ways, but will require investment in promoting products directly to consumers and internal distribution systems,” she says.
- Mushrooming of innovative start-ups
Matthews’ Mark Dingley says we will see growth in the number of innovative start-ups with exciting product ideas. “Contract manufacturing options, alternate sources of finance such as crowd funding, and access to disruptive technologies will continue to lower the barriers to entry in 2017,” he says. (You may be interested in how crowdfunding platforms work.)
That said, there will also be more mergers and acquisitions. “Larger manufacturers will continue to buy the start-ups to get access to innovative products and ideas,” he explains.
For example, Campbell Soup Co. has recently joined a number of food and beverage companies, including Coca-Cola and General Mills, to jump into the start-up world. The soup company has invested US$125 million in a project to fund food start-ups so it can keep up with the smaller, entrepreneurial companies that are driving food trend in the USA.
- Automation and interconnectivity will gain momentum
Automation will continue to be a big focus and open standards for interconnectivity will gain momentum, according to Mark, with food and beverage managers in particular increasing automation levels and machine integration. Will 2017 be the year we start seeing a decisive move towards 100% automated manufacturing facilities?
Rockwell Automation’s Matthew Treeby says they are seeing a continued emphasis on productivity, safety and security, operational intelligence and smart machines among their customers.
“Productivity to compete in a globalised market. Safety and security to protect people and brands. Operational intelligence to provide greater visibility into production and understanding where to optimise. And overall a greater awareness of machine data and an expectation that production, maintenance and management can have access to contexturised information related to their role to derive greater responsiveness, performance and reliability.”
Matthew Treeby notes there is a huge focus on the plant data available and how to efficiently manage a greater abundance of data in ways that help them make better, faster business decisions. “This includes using IoT device intelligence, cloud connectivity and data analytics together to help manage the large data sets required for balancing production activities based on upstream inventories and downstream demand.”
- Brand building will grow in importance
Mark Dingley says, “With growth in innovative start-ups and alternate channels, brand building will be a focus for manufacturers. The use of existing and new social media channels to build brands and connect with consumers will proliferate further.”
Companies that are already exploring the potential of social media in innovative ways include SPC Ardmona, which took the successful #SPCSUNDAY campaign and extended it to celebrate the company’s 100th anniversary in 2016.
Smart packaging is also an effective tool enabling brand owners to start the conversation with consumers and build brand loyalty by providing them with exclusive content and promotions.
- Change and confusion are driving advanced manufacturing
Matthew Treeby concludes that manufacturing is going through a period of profound change, opportunity, confusion and competitive pressures, but he is seeing a more positive outlook from Australian and New Zealand manufacturers and equipment builders.
“Partly this is the more favourable currency exchange rate for exporters but also the increased demand for flexible production, stricter regulations and expectation for real-time information. With Australia and New Zealand’s focus on advanced manufacturing, this should play to our strengths and make us less dependent on comparative labour costs.”
So there you have it…
In 2017, manufacturing is going to see more personalisation, automation, entrepreneurialism and brand building, but there will also be some challenges in getting the right technology, connectivity and channels to market to see results.
Tell us, what are your predictions for the coming year? Do you agree with our impromptu panel of experts?
Tell us, what are your manufacturing predictions for 2017? Do you agree with our impromptu panel of experts?
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