2018 is almost over and what a year it was! We found needles in strawberries, saw a surge in food fraud and an outbreak in listeria from contaminated rock melons. We observed the rolling of another Australian prime minister, while the positive growth in Australian manufacturing continued. We watched Apple become the world’s first US$1 trillion business and blockchain start making waves in food traceability.
So, did our experts’ predictions for 2018 come true? We’ll leave that to you to decide.
The biggest question now is this:
What will 2019 bring in the world of manufacturing?
As always, we turned to our panel of experts for the answer. Meet the experts:
- Dr Angeline Achariya, CEO of Monash Food Innovation Centre (follow Angeline)
- Roland Thomas, CEO of Operations Feedback Systems (follow Roland)
- Andrew Steele, Account Director, GS1 Australia (follow Andrew)
- Mark Dingley, CEO – Matthews Australasia, Chairman – APPMA (follow Mark)
Get ready for these big changes in 2019
We asked our panel what changes they expect manufacturers and suppliers will need to prepare for the coming year. Here’s what they told us:
Manufacturers will finally start moving to the cloud. “Manufacturers have been very conservative about the deployment of their infrastructure in the cloud. There were lots of concerns, including data security, the choice of an appropriate technology stack, the cost of and skills required for change, and more. Better understanding of all of these inhibitors, in addition to more mature cloud infrastructure and access to a broad range of ancillary cloud solutions, has turned the sentiment firmly towards the cloud. We will see several manufacturers take the plunge in 2019.” – Roland Thomas
The demand for product information will surge. “Consumers want more information about the products they buy, so suppliers must be able to provide all on-pack product information electronically for omni-channel retailers. Barcodes will have more product data embedded at point of sale, such as use-by dates and batch/lot numbers. In addition, manufacturers need to have a ‘digital twin’ of their physical product available to share with their trading partners. Retailers will also need to ensure they are building digital capability to respond to consumers as the need for more product knowledge is increasing. There will be more self-service checkouts and ‘scan and go’ technology will continue to be trialled in supermarket stores.” – Andrew Steele
Millennial influence will grow.“From a food and agribusiness perspective, the big shifts will be how the growing Millennials start to really influence and impact brands with their choices of products not only being diverse, but they’re looking for knowledge about food, how it is prepared and the story behind the story. Given all the focus on Millennials, let’s not forget our Silver generation, who are looking for more positive dialogue with brands and have the spending power. But do not ask them to age well – they are 60 going on 20!” – Dr Angeline Achariya
Food safety and inspection procedures will improve. “As the shockwaves of 2018’s food contamination events continue to be felt through the industry, 2019 will be the year smart manufacturers translate learnings into actions. This will mean updated food safety procedures for SMBs and mid-tier manufacturers in combination with a strengthened investment in food inspection equipment such as metal detector and x-ray units.” – Mark Dingley
Augmented reality and machine learning will become a reality. “Considering a longer time scale, we will see some concrete use in case examples for Augmented Reality, and we will get greater clarity separating the wheat from the chaff in machine learning applications in manufacturing.” – Roland Thomas
The spotlight will be on sustainability.“Sustainable issues in everything from packaging to supply chain traceability will come to the forefront. Consumers will want to know about sustainability, and if they do not hear about the impact that brands want to make in this space then they will vote with their wallets. The conscious consumer and rise of reducetarians will increase as more start to choose to reduce their meat intake due to impact on their health and environment.” – Dr Angeline Achariya
5G will spur huge innovations. “Long-term technology trends such as Internet of Things (IoT), connected factories and automation will continue. The first 5G networks will become operational in Australia during 2019, eliminating the need to wire in the last mile for many customers. This will spur huge innovations at the device and application level as well as – most excitingly – new business models limited only by our collective imaginations.” – Mark Dingley
Export will become less hard. “There is a great momentum across business, government and public organisations, and while the pressures of cost, margin and utility costs will continue to be a focus area, businesses will look toward beyond Australia to the opportunities for consumer goods and services in Asia. With so many resources and capabilities now available, not just thinking about export but doingit will be less hard – though still not easy!” – Dr Angeline Achariya
Food will become the first medicine. “Consumers will start to turn to food as their first medicine given the rise of gut health offers such as kombucha and almost anything with pre- and probiotics. Flavour-focused vegan/vegetarian foods and probiotic-rich beverages will continue, and more brands will look to sound scientific evidence to back claims in order to differentiate.” –Dr Angeline Achariya
Priorities for manufacturers and suppliers in 2019
With all these changes, what should manufacturers and suppliers be focusing on in the coming year to set themselves up for success?
Focus on clear communication with retail trading partners.“Major supermarket retailers are investing heavily in automated distribution centres as they focus on speed of delivery. There is no room for error with increasing levels of automation, so manufacturers need to have accurate demand and supply forecasting discussions and agreements in place with their retail trading partners.” – Andrew Steele
Differentiate your offerings.“By now most manufacturers have learnt that launching products based on price and margin is not going to win the long game. The marketplace is getting cluttered, and the consumer is becoming tired of overwhelming choice. With a focused innovation approach, manufacturers will need to differentiate their offers among their competitive set. Preparing ahead and properly regarding which innovation bets to take to market will be key. It’s about ensuring that product solutions not just meet the consumer need but also offer great differentiation with an appealing story and impact to environment.
“The rise of private label will continue to force pressure on brands and, as cost of living rises, the consumer may be more prepared to switch more in categories they may not have. The focus on health, nutrition and wellness is a must for all categories – how can manufacturers leverage this in their current brands and product offers across all channels from grocery to foodservice to QSR[quick service restaurant]? Premiumisation is a great way to increase $/kg and manufacturers should look to having a diverse portfolio mix. Spread the risk!” – Dr Angeline Achariya
Take control of your operations. “Apart from perennial priorities of operating costs and DIFOT (delivery in full, on time), manufacturers should prioritise the following:
- Moving their cloud strategy from thinking to doing
- Concrete steps towards an Industry 4.0 strategy and data infrastructure
- First measuring and then getting control of their energy usage
- Moving from ‘check-box compliance’ to genuine compliance and determining how provenance data will move along the supply chain.” – Roland Thomas
Tap into export opportunities. “With the Australian dollar predicted to continue on its slow downward trajectory, the focus will turn to export opportunities as our competitiveness begins to improve. In the food export space, ‘Brand Australia’ will quickly recover from the challenges of 2018 and continue on its long-term growth curve thanks to the booming Asian middle-classes. Increased trade tensions between China and the United States will cause export-focused manufacturers to consider diversifying their focus. Markets on our doorstep, including Indonesia, Papua New Guinea and the Philippines, will in turn receive renewed attention.” – Mark Dingley
“Think beyond Australia. EXPORT, EXPORT and EXPORT!” – Dr Angeline Achariya
It’s time to say goodbye to…
Whether for good or bad, what should we expect to say goodbye to in 2019?
Old-school factories.“Hopefully we will say goodbye to factories without modern data networks beyond control networks. It never ceases to amaze me that one of the obstacles to factory digitisation is access to a little blue wire or WiFi access point.” – Roland Thomas
The single retail model.“The ‘single retail’ model is no longer – retailers need to have an omni-channel or multi-channel presence in today’s consumer market. Cash payments will continue to decline as non-cash payment options continue to grow.” – Andrew Steele
Complacency.“Staying stagnant is not an option and for those just manufacturing, doing the same old products is not going work in the future. Moving away from an element of complacency is needed. FMCG is continually evolving and given that 90% of new products fail in the first 12 months of launch, the question is how do you make sure the 10% has stickability or, better yet, increase those odds beyond 10%?” – Dr Angeline Achariya
The Coalition Government.“With the betting odds heavily in favour of the ALP for 2019’s federal election, we may indeed be saying goodbye to our national Coalition Government. Regardless of which party wins the election, we are bound to see winners and losers emerge as spending plans are unveiled across each portfolio. At the end of 2019, we will say goodbye to the decade that was, and welcome the 2020s with open arms.”– Mark Dingley
The #1 New Year’s Resolution every manufacturer and supplier should make…
“Always treat the customer as number one and be quick to respond as the needs of the market change at an increasing rate.”– Mark Dingley
“Don’t wait to digitise your factory.” – Roland Thomas
“To grow you need to invest!
- Invest in true innovation and ways to truly differentiate your offers; it’s a very savvy consumer out there now, the old tricks will not work!
- Invest in building your organisational capability in finding and creating value across the food value chain, not just in new products – there are $$ to be made and saved!
- Invest time and effort in research that will differentiate and provide evidence-based data for your products for the long game, not just quick one-offs. Yes, there is space for both.” – Dr Angeline Achariya
“Adaptability is the key. The retail market is changing rapidly, so manufacturers need to review and update their strategies more frequently to respond to consumer trends. Manufacturers need to ensure product and packaging data is accurate, up-to-date and available to be shared easily with trading partners.” – Andrew Steele
OVER TO YOU
Now you’ve heard what our experts think, what are your predictions for 2019? And most importantly, what are your priorities to ensure your business is set up for success in the year ahead?
We’d love to hear your thoughts – share in the comments below.
For more information on any of the trends and technologies mentioned in this article, check out our resource library which is filled with free-to-download information for Australian manufacturers and suppliers.
Image credit: iStock/ MicroStockHub