Digital transformation: The recipe for success in Malaysia’s F&B industry?
DIGITAL technology and disruptive innovations such as the Internet of Things are sweeping across every business landscape, completely transforming the many ways things are done.
An industry in which modernization is very quickly becoming key to business growth is the food and beverage (F&B) industry.
While the things that customers want within this industry has not changed – good quality, convenience, and low price for instance – customers are becoming more demanding. As customers behaviors and needs change, F&B organizations must leverage digital technologies to help optimize daily operations and hone profit margins.
Malaysia seems to be particularly focused on driving growth in the F&B industry with digital technologies. At the ‘Recipe for the Future 2018’ event held today, multi-national conglomerate, Siemens Malaysia, signed a Memorandum of Understanding (MoU) with the Malaysian Investment Development Authority (MIDA).
The signing of the MoU signified a collaboration between the two parties in improving the capacity and competitiveness of the F&B industry in Malaysia through the adoption of digitization and technology.
With the technical know-how of digital-leader Siemens, along with the financial and educational support of MIDA, F&B organizations in the region are able to make the digital leap and bring value to any part of the supply chain process.
But how are F&B manufacturers in the country feeling on the journey towards digital transformation?
During the event, Tech Wire Asia caught up with Anna Teo, CEO of Hernan Food, Mark Pui and Jason Lee from SC Food, and CFO Mohamed Shukri Mohamed Zain, and MD Mazidah Binti Mohamad Zain, Halal meat manufacturer, Omcorp.
Why is digital transformation needed?
The automation of data collection
Food manufacturers often operate within narrow margins and high quality of standards. In order to raise profit, reduce operation costs, and improve productivity- all while delivering an even better product, leveraging digital technologies may be the answer.
“With digitization, I am trying to see to what Siemens or any other companies can do to come and help us not only in terms of getting more information and data, but also to improve in terms of our capabilities and capacity, as well as standardize what we’re doing currently,” explained Anna Teo from Hernan Food.
Digitizing paperwork and moving it to a digital platform seems to be another selling point to F&B companies in Malaysia.
“A lot of the nature of the work previously was carried out with pen and paper documentation for things such as quality control. Now, this is part of our digitalization,” explained Mark Pui of SC Food.
The enhancement of production capacity
Smart technologies allow food manufacturers to better design, measure, predict, and control all aspects of the manufacturing process. As a result, these businesses will become more productive and efficient.
“Even though we are in the meat processing industry, which is a very traditional industry, I know that we can move further with the latest digital technologies and through connecting the whole production,” Mazidah Binti Mohamed Zain, MD of Omcorp told Techwireasia.
Adhering to clients requirements
Environmental and safety regulations are pushing F&B manufacturers to reduce energy consumption, increase sustainability, provide consumer traceability, and prove health and safety compliance.
“One of our main clients is a multi-national company, so we have to adhere to their requirements, which are quite stringent,” explained Mazidah Binti Mohamed Zain.
The need for a cultural transformation
Something that all of the companies interviewed agreed on was the need for cultural change in the digital transformation of their business.
On the journey to digital transformation, the entire organization is required to adopt new processes, ways of working, and ways of working with customers.
According to the F&B companies, workplace culture is one of the main challenges to company success in the digital age – mainly due to a lack of education on the new technologies.
“Malaysia and the rest of Asia is very much different to more developed countries such as the UK. In Southeast Asia it is very labor intensive, so a lot of these people may not have the education that staff in other countries have.”
“I think cultural transformation is the biggest challenge because you can implement a lot of wonderful processes, such as inventory management, but changing peoples habits is the hard part.”
“We have to keep trying until we get something that works. We can’t expect it to be a perfect solution. It’s about being practical about what you can expect to accomplish,” explained Pui.
Technology will help gain an edge over competitors
In an increasingly crowded and competitive industry, digital transformation gives F&B manufacturers the tools to grow and stay ahead of competitors.
An increase in foreign investors
With the benefits that come with investing in a digital transformation, F&B manufacturers are likely to attract foreign investors.
“When we have an order from Walmart, by visiting and auditing our current factory, they are uncertain we can give them the volume as well as the products they require,” explains Teo.
“But if we make this type of investment in technology, they will surely understand that we could cope, and so they would have more confidence to give us a forecast on order volumes,” she added.
Improved operations: the secret recipe for winning
Simply put, companies that don’t invest in digital technology will fall behind their competitors due to lower productivity, lesser-quality products, and increasing costs.
“It’s a must to invest in technology. You can choose not to and run the business as it stands, but what will happen is the rest of the world is going to out-pace you.”