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Blog
In the Industrial Internet of Things (IIoT) world, industrial analytics has been among the most widely adopted technologies, due in part to perceived ease of use and quick ROI. Broadly speaking, we’ve seen an adoption rate of nearly 60% across manufacturing industries. That's higher than manufacturing operations management/manufacturing execution system (MOM/MES) platforms (which has hovered at about 40% for several years) and even quality management applications, where adoption runs about 52%.
There's a laggard in every group, and in this case, it's the world of food and beverage (F&B) manufacturing and consumer packaged goods (CPG) manufacturing. Among these companies, adoption numbers for IIoT tech skews much lower—as do adoption rates for all other manufacturing software solutions, aside from planning and scheduling software, and quality management systems. The big question is: Why? Why are food and beverage makers and CPG companies so far behind when it comes to manufacturing software, especially IIoT?
Reasons vary from one sub-sector to another within these broad categories, and from one company to the next. However, we can make a few general observations based on what companies in these industries report as highest-level business priorities. Companies in the food and beverage/CPG industries spend a high percentage of resources on managing complex supply chains and improving flexibility to match varying consumer tastes—and legacy manufacturing software platforms have not been a match for these requirements. That is, coming up with recipes for the 60 varieties of baked beans we see on the shelf at the local grocer is very important to these companies; improving OEE is a lower priority. At the same time, companies in these industries often view manufacturing operations as a second-tier priority or they outsource operations altogether for cost reasons.
Additionally, companies in CPG/food and beverage lag their peers in empowering plant operators with data and decision-making authority.
When we surveyed them, the trend was clear: these organizations trust managers to make decisions with data, but not shop floor operators.
Again according to our research, this signals a lack of maturity in how companies view and use IIoT technologies. Manufacturers that are more mature in their Industrial Transformation (IX) programs (3+ years) use the opposite approach, they specifically empower operators and their direct managers with the data and analytics―and the authority―needed to make decisions immediately, without waiting for senior management to weigh in. Moreover, our survey data shows that providing shop floor operators with visibility of data analytics has a marked impact on operational metrics including higher throughput and quality, and reduced costs.
As we look at top use cases for IIoT analytics in the CPG and food and beverage industry, the results show a combination of business outcomes and manufacturing challenges. Forecasting comes in as the number 1 and the number 4 priority; in fact, food and beverage/CPG is the only industry we’ve surveyed that has this result. This posture matches well with the business and financial demands CPG and food and beverage manufacturers face, particularly given the emphasis on growth, profitability, and cost-cutting. Many of the other top use case responses align with other sectors we have surveyed, including continuous improvement programs, benchmarking performance, and improving quality.
Should and can food and beverage / CPG companies even catch up? The strong correlation between the use of IIoT analytics and performance capabilities suggests that any company not planning to use IIoT analytics and related technologies is (or will) rapidly losing ground to competitors. For those with IIoT analytics already in play or on the way, the advantages will compound over time to create an even greater performance differential ahead of non-adopters.
LNS Research recommends that companies in the CPG/food and beverage industry that have not started down the path towards IIoT analytics start looking at use cases mentioned above to determine where analytics can best help them address current operational challenges. Across LNS, we've heard anecdotes about some very creative uses of IIoT analytics, and we're hearing stories about process and operational improvements from individual teams that had no idea that the data they needed for making decisions was even available. Even companies that have already taken a bite of IIoT analytics should revisit plans and programs on a quarterly or biannual basis―use cases and ROI calculations are constantly evolving, so that solution your company took a pass on last quarter might just be what it needs to catch up to competitors.
Learn how industrial companies drive business results in the ebook by LNS Research, “CPG, Food and Beverage Industries Apply Data and Analytics for Better Performance: Benchmarking the Value of Enterprise Data Visibility and IIoT Analytics.” You can also watch our recent webcast for additional insights on the impact operational performance in the food and beverage and CPG industries.
Read my next blog on the Impact of Analytics and Data Visibility on Manufacturing Operations KPIs.
Research Analyst, LNS Research
Patrick Fetterman is a research analyst with LNS Research providing collaborative coverage across industrial analytics, manufacturing operations technologies, Industrial Transformation, and the Industrial Internet of Things (IIoT). A native of Detroit who has worked on both coasts, Patrick has more than 30 years’ experience in marketing and product management for enterprise technology, including more than a dozen years in manufacturing ERP, manufacturing execution systems, quality management systems, factory automation, and manufacturing analytics. His roles have included VP Marketing and Products at Sight Machine, VP Marketing and Product Management at Plex Systems, and President at Mi8 Corp.
LNS Research examined the use of manufacturing data in a survey with nearly 400 respondents, seeking to answer the questions: How does ubiquitous access to manufacturing data impact performance for companies in the Food & Beverage/Consumer Packaged Goods industries? And what operations show the most dramatic improvements?
LNS Research also looked at the relationship between traditional MES/MOM systems and the deployment of newer IIoT platforms and advanced industrial analytics to extend the benefits of these systems, and the role of both types of systems in these dramatic performance improvements. And finally, the survey examined the most successful companies to identify common best practices and approaches.
Reach manufacturing excellence through Industrial IoT insights and intelligence.
Consolidate and transform manufacturing data across plants for cloud storage, analysis, and analytics.
Addressing Food & Beverage/CPG industry challenges and delivering manufacturing of the future.
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See how you can use data in your F&B/CPG manufacturing to improve performance