Food & beverages
Scope of the study
The F&B industry as defined for this study’s purpose covers
the following sub-sectors of NACE Rev. 1.1 Division DA 15: DA 15.43;
DA 15.5 (51, 52); DA 15.6 (61, 62); DA 15.8 (81, 82, 84, 85, 86, 87,
88, 89); DA 15.9 (91, 92, 94, 97, 98). These
sub-sectors deal with the production of processed food, rather than with
the first transformation of agricultural products.
Results of the e-Business Survey 2006
The e-Business Index 2006 places the F&B industry among the sectors with
a comparatively low level of ICT and e-business adoption. This overall result,
however, should be regarded cautiously, as it hides a varied picture; moreover,
although a direct comparison of the survey results from 2005 and 2006 is not
possible, some interesting trends have been recorded in this analysis.
The F&B industry has a relatively good level of development of internal process
integration and supply chain-related activities. Supply Chain Management (SCM)
systems, in particular, show the highest diffusion among the 10 sectors
analysed, and a remarkable increase over the past years.
External pressure from distribution is increasingly driving F&B companies
towards the adoption of e-business practices. The high diffusion of e-invoicing,
inventory management, and linking of ICT systems with those of customers
illustrate this. Medium-sized companies appear quite positive and active in their
investment attitude, and are already well advanced in the adoption of solutions
such as ERP (Enterprise Resource Planning), SCM and e-invoicing. While this aspect
is of particular interest for future developments, it is equally important to
note that the cost of software solutions still adversely affects smaller companies
more than the larger ones.
- There is new evidence that the F&B sector is reducing the gap
to other sectors in basic ICT infrastructure which was
evident in the e-Business W@tch Survey of 2005. Positive signals
can be seen in the remote network implementation data from the e-Business
Survey 2006, with figures for F&B markedly above the 10 sectors
low importance apparently assigned to training and ICT skills in
general within the F&B sector gives cause for concern: only 50%
of large companies reported practicing regular ICT training. Outsourcing
of ICT processes has grown slightly, particularly in medium-sized enterprises.
and interoperability are a “hot” topic
in the F&B sector, due to regulatory impacts (such as traceability)
that require improved communication among the different players of the
value chain. Presently, the most diffused standard is EDI, notably among
the sector’s large companies. The use of open source software
clearly increases by firm size in this sector, as its lower price is
balanced by the need of internal competences to develop and adapt it
to the company's requirement.
data reveal a good diffusion of ERP in F&B industry:
ERP appears to be a stepping-stone towards further evolution of e-business,
and often includes procedures common to SCM and CRM software solutions.
Accounting systems have an even wider diffusion, extending widely within
small and micro enterprises.
- e-Procurement use
in the F&B industry still lags behind the 10-sectors average, probably
due to the centralisation of purchasing activities in the large companies
that dominate this sector. Where present, e-procurement does not seem
a driver for systems evolution. SCM, on the other side, shows a remarkable
growth, probably due both to regulatory constraints of food safety
and traceability, as well as to the competitive advantages linked to
a better management of the supply chain.
- e-Marketing and
sales are focused mainly on the distribution chain and are, therefore,
usually considered as part of the SCM or ERP systems. CRM systems are
used mainly by large companies in a B2B environment, while a more B2C-oriented
approach is typical of this sector’s micro-enterprises and SMEs.
- Innovation through
ICT solutions is mainly perceived as a process innovation, with an
interesting accent on customer services and on the creation of customer
communities. Meeting customer expectations joins competitive advantage
and regulatory constraints as the main drivers of ICT and e-business
adoption in this industry.
size and cost are the main barriers to e-business
adoption reported in F&B. Companies that do not practice e‑business said
that they feel that they are "too small" for doing e-business,
and/or that they cannot afford the required technologies. Other barriers
(e.g. security concerns, the complexity of technology) are perceived
as less relevant.
Current e-business trends and implications
e-Business W@tch looks at how ICT and e-business can support
F&B firms in dealing with relevant competitive challenges in this
industry, such as integration with business partners and quality assurance.
This study focuses on the following topics:
processes automation in the F&B industry. Compliance with
food safety regulations, together with increased competition and the
request for cost-efficiency drive the trend toward integration of internal
processes in the F&B industry. The integration of production line
control, administration, sales and logistics helps companies to manage
food safety risks, to increase asset efficiency, and to improve their
margins, while achieving continuous product and service innovation, and
better corporate accountability. The introduction of systems for internal
process automation is also fostered by the possibility of better exploitation
of internal assets, which, in the case of the F&B industry, are
often represented by recipes or by particular production processes.
Chain Management (SCM) and Customer Relationship Management (CRM).
Through the application of SCM, food manufacturers and grocery retailers
are trying to radically reduce costs and inventory levels. SCM facilitates
the development of integrated relationships, real-time information
transfers and moving towards a ‘pull’ rather than ‘push’ distribution
system. The focus is on increasing the flexibility amongst upstream
suppliers, in response to the strategic power of the dominant supermarket
chains, through the closer integration of external enterprise relations.
Inter-enterprise integration, represented by SCM, is strongly related
with, and dependent upon, the effective implementation of intra-enterprise
integration (mainly represented by ERP). These software systems represent
complementary approaches for addressing related strategic challenges.
applications and RFID. Mobile applications and Wi-Fi systems,
together with RFID applications,
are inextricably connected with supply chain management and quality
assurance issues. Currently, these systems are mostly used by large
enterprises. SMEs, on the other hand, use strategies such as sales
force decentralisation (e.g. working from mobile/home offices) to increase
their flexibility and to shorten supply chain processes. The usage
of RFID is limited to only 1% of the F&B firms. This figure does
not reflect the high emphasis that media and ICT suppliers are placing
on RFID usage and its potential benefits. Nevertheless, the experiences
analysed in the e-Business
studies illustrate that potential benefits are remarkable and that
the pioneering adoption of RFID may lead to relevant competitive
The use of ICT and e-business in the F&B industry has its main impact in
areas related to production and logistics.
As regards marketing and sales, the potential of e-business is not fully exploited
for the benefit of manufacturers. Large retailers exert their power in this area
and tend to maximise the advantage of their direct control over customers.
In general, the powerful ICT systems and e-business solutions of large
companies enable more advanced practices, which can yield greater achievements
in terms of savings and efficiency. Nevertheless, there are
areas – traceability being the most important among them – where
SMEs are adopting ICT and e-business on a relatively large scale, and where a
significant impact can already be observed.
At a general level, policies to promote ICT adoption among F&B companies,
notably the smaller ones, should aim at improving the development of
infrastructure (including skills and standards) and the legal
and regulatory environment, as well as at creating a favourable
business environment. The analysis of findings from the survey, the
case studies and desk research conducted for this report point at the following
issues which could be relevant for policy-making:
e-skills, especially among SMEs. ICT and e-business are changing
the way business is conducted in the F&B industry. There is evidence
that many small companies face difficulties in coping with these changes.
A lack of e-skills, i.e. a proper understanding of e-business, is one
of the reasons. Measures in this area could aim at promoting entrepreneurial and managerial understanding
of e-business applications. Providing more information about
in a way which is adequate for small firms could support their decision-making.
The development of skills in change management, for example how reorganise
work processes with support of e-technologies, could be encouraged.
F&B compliance with quality and safety criteria. An important
application area for ICT in the F&B industry is to ensure compliance
with quality and safety regulations. Therefore, firms could be supported
by measures such as the provision of relevant information and training
in how to use ICT in this field.
a favourable environment for innovation. F&B firms need to continuously
innovate. e-Business policies aiming at a favourable environment for innovation
could include the promotion of value chain co-operation, the sharing of good
practices among F&B firms and the participation of SMEs in business networks.
Policy measures in the area of standardisation should focus both at
the sector and at the cross-sector level. They could include supportive
actions to stimulate increased participation of SMEs in standardisation
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