The Competitive Landscape is Changing
Things are changing rapidly in the Food and Beverage industry. Today’s leaders are facing new pressure as markets evolve to a more global, omnichannel environment. Emerging competitors like AmazonFresh are disrupting the industry with innovative business models while upstarts like Blue Apron challenge the status quo by driving market shifts bigger than their relatively small size.
The barriers to entry have dropped. It’s no longer enough to compete by being the biggest and leveraging scale. Instead, even the largest companies need to innovate faster than ever to stay ahead. They have to leverage all available information to identify market opportunities and react quickly to threats from new upstarts. They have to evolve consumer experiences, perhaps incorporating more personalization and technology into traditional offerings, and flexibly deploy new products into their global supply chains with unprecedented speed. They must continue to drive increasingly higher levels of productivity to squeeze out profits, all despite tight margins, global competition, and complex quality and regulatory demands.
Brand owners, manufacturers, and retailers are facing a changing landscape that will result in a new competitive order, with some major traditional players likely losing favor to smaller, more agile companies. To survive, Food and Beverage companies have to raise the bar to stay competitive. More of the same will not be enough.
Digitalization is the Strategy for Survival
It’s time for Food and Beverage companies to make the transition to the digital enterprise. Digitalization is the key to innovation, consumer intimacy, and efficiency in today’s markets. A digital Food and Beverage company has a distinct advantage over their competition, allowing them to:
Digitalization is being adopted across industries and providing significant innovation and productivity improvements. Food and Beverage companies are poised to take advantage of it. Digitalization fundamentally improves the way Food and Beverage companies operate in three major areas; R&D, production, and analytics. But companies can’t flip a switch to digitalize. They need to choose an improvement that will offer strategic advantages applicable to their business and competitive landscape. This post serves as the introduction to a series of posts on the opportunities to digitalize.
Together, these initiatives are the keys to transforming Food and Beverage companies to the digital enterprise and helping them compete in rapidly changing markets.
Digitalization in Food and Beverage
So what is digitalization and what does it look like in the Food and Beverage industry? The digital Food and Beverage company is streamlined and efficient, replacing older paper and document-centric processes with digital information that integrates information, people, and processes.
More importantly than that, they are agile organizations that can identify and capitalize on market opportunities before their competitors can react. Digital businesses leverage the vast amount of data available from public sources, market research, social media, smart equipment, and their own internal systems to uncover insights that can change the course of their business. They can identify trends and connections that lead to radical business results, and respond to them with digital agility. A digital enterprise is connected across departments and with their supply chains. They have the information they need at their fingertips, and they can share information instantaneously and collaborate across business boundaries to profit from innovation.
A digital Food and Beverage company is fundamentally different. A digital company:
The digital enterprise connects different aspects of the product to automate information, understand impacts, and facilitate change starting from requirements through produced product. One of the keys is a digital product model that connects product and packaging specs, production, and other product information coupled with digital twins of production equipment and facilities. This allows them to easily identify the optimal production location and process to transfer R&D innovation to plants around the world. It also lets them localize and personalize products, introducing them quickly and efficiently, without errors, supply chain disconnects, or regulatory problems. Finally, digitalization generates a body of data that can be used to improve processes and quality by using big data analytics and feed new ideas and insights back to R&D and Manufacturing to drive improvements.
The status quo for most companies is no longer paper, but it’s not really digital because information is locked up in files on hard drives or network file shares. They’re still stuck in a document-centric mindset. It’s really an electronic approach, or what some call “paper on glass,” not a truly digital one. Even for companies that have invested in PLM systems to improve specification management, most still have a lot of data in documents and spreadsheets that hasn’t really been seamlessly connected together. These silos are no longer good enough to compete in an increasingly agile, complex, and regulated world.
The digital enterprise requires a platform of solutions that connects information and people seamlessly across the enterprise. PLM provides the foundation for digitalization by centralizing information and access. Integrated manufacturing solutions help realize the potential by digitally simulating and optimizing cost, throughput, energy consumption, sustainability and transferring innovation into intelligent manufacturing facilities and the supply chain. And predictive analytics turns vast amounts of data into meaningful insights that create new business opportunities. With this combination of capabilities, digitalization allows Food and Beverage companies to move from simply electronic or computerized approaches to realize the benefits of the digital enterprise.
The Digitalization Payoff
Why does all of this matter? Digitalization increases the velocity at which Food and Beverage companies innovate and get to market. It allows them to be agile and respond to changes without introducing costly errors. It lets them got the most out of both human resources and production capacity. And, it creates corporate knowledge. Food and Beverage companies that embrace digitalization – companies both large and small – will be better positioned to compete as the market shifts to more connected customers and more customized foods. Digitalization helps companies pivot quickly and confidently to address issues or take advantage of market opportunities, with a digitally connected production network and supply chain that can intelligently respond as one.
The competitive landscape is changing, and those that embrace digitalization will have the upper hand. How will your business take advantage of the opportunity?
Jim Brown is the President of Tech-Clarity, an independent research firm focused on how manufacturers use best practice processes and software to drive operational improvement and business value. www.tech-clarity.com
The cloud holds a lot of promise to help manufacturers reduce the total cost of ownership (TCO) of their enterprise applications and engineering tools. It lets them take advantage of economies of scale and shifts costs from capital expenditures to more manageable, operational expense items. It also reduces the load on the internal IT team.
But there’s more to the benefits cloud computing offers than cost and resource savings. Web-based services offer the potential for better performance than most companies can achieve on their own. They also reduce business risk through more flexible licensing strategies like subscription pricing (although there are other ways to achieve this) and allow companies to take advantage of new releases more rapidly. Our research even shows Top Performers (companies with better revenue growth, margin expansion, innovation, and cost reduction) are more likely to use cloud solutions.1
So it’s time to turn to the cloud for product innovation, product development, and engineering software, right? Maybe, but it’s not that simple of a decision. Is it ever? First, it’s time to develop a strategy. As our recent Exploring Cloud Options for Product Innovation and Development eBook concludes “The time is right to take advantage of the cloud, but it’s not a trivial decision or transition for product innovation, product development, and engineering software.”
It’s important to realize that moving to the cloud isn’t a “one and done” operation when you decide when and how to leverage cloud applications. The cloud isn’t an “all or nothing” proposition, it typically happens in stages. That relieves a lot of pressure because you don’t have to find a cloud solution that fits all of your needs at once. Companies have the opportunity to pick and choose which capabilities should reside in the cloud, and when.
Companies have to do some work to decide what to move to the cloud, when to make the change, and what deployment options work best for them. That’s a lot to consider! To state the obvious, deciding what application to moves to the cloud shouldn’t put cost as an overriding factor over functionality. Low TCO on the wrong solution may reduce the investment, but doesn’t create compelling business benefits. So make sure you know your functional requirements before getting too enamored with technology options.
But where should you look first? TCO reduction applies across the board, from enterprise solutions like PLM to design tools. Not all cloud opportunities, however, offer the same benefits. Some areas offer more strategic value on the cloud than others (see graphic). For example, IoT and big data analytics solutions require cloud-level computing resources to be effective. Most companies don’t have the resources to do that internally.
But some applications could be run inside the business or out. Some key examples are simulation and generative design. Running these solutions in the cloud offers significant benefits by tapping the elastic, infinite capacity of the cloud. So prioritizing these applications to improve performance in addition to recognizing cost savings is a valid strategy.
The other major decision to make is “when” is the right time to move to the cloud. The decision can have a lot to do with company readiness to adopt the cloud and/or company policy. It typically requires some prioritization and tradeoffs. There may be very good reasons to prioritize changes to fill current gaps. Or your company may have pressing needs, like creating a new joint venture or losing support for an old package. These create business-oriented drivers for cloud timing.
One of the key factors for most companies is what cloud offerings and plans are available from current software vendors. There’s an compounding relationship between the risk of changing technologies and the risk of changing the cloud delivery option. Specifically:
This leads many companies to change only one of these factors at a time. For this reason, you may choose to wait for your existing solution to be deployed in a cloud environment that meets your needs. That may turn out to be a great factor in determining transition timing and approach than any preconceived “ideal” scenario.
So what options are available today? The eBook describes a series of options, including:
Each has plusses and minuses to consider. But remember, most companies aren’t starting from scratch. This is not an “assemble to order” process where you order from a menu of options, such as “I’d like FEA on Cloud SaaS please.” It’s important to understand what’s available. One good place to start is to understand and align with vendors’ timelines, and check what options are available from both your vendors and their partners.
The decision-making process will vary for every company, but there are some commonalities that can be helpful. The eBook offers a sample decision-making framework for companies to follow based on current application maturity, existing solutions, requirements, timelines, company policies, and their vendors’ current offerings and cloud strategies.
The decision to move engineering and innovation software to the cloud is not a simple one. It requires self-reflection and analysis to find the right capabilities to move and when to make the transition. Most companies will have to pick and choose, and their strategy will likely look more like an evolution than a revolution. The resulting initiatives frequently result in hybrid solutions with a phased transition over time. It’s time to know your requirements, understand the cloud options, recognize that some solutions gain extra power from the cloud, and put forth a transition that aligns with your needs, policies, and your vendors’ strategies.
Read the eBook to learn more about Product Innovation and Engineering cloud options and how to develop a strategy for your company.
Jim Brown is the founder and President of independent research firm Tech-Clarity. Jim is a recognized expert in software solutions for manufacturers, with over 25 years of experience in application software, management consulting, and research. He has extensive knowledge about how manufacturers use Product Lifecycle Management (PLM) and other enterprise applications to improve business performance.
Recently, the Omneo solution for product performance intelligence from Siemens PLM Software received a Frost & Sullivan Best Practices Award. In this guest blog post, Frost & Sullivan's Mike Jude, Ph.D., explains below why products like Omneo are critical to a successful PLM strategy to improve product performance.
Product Lifecycle Management (PLM) is a great idea, but most companies focus more on the P and L than they do on the M. There is an old truism that you can’t manage what you can’t see and this is true with PLM as much as any process. In order to implement PLM processes, a company needs a management framework that is based on metrics and analytics: metrics because a company needs a measure of performance and analytics because metrics are meaningless unless a company knows what the metrics mean. Yet, most companies do not have the tools to adopt true PLM. For this reason, the new frontier for business is in the area of advanced analytics. This does not mean traditional business intelligence, where business performance reporting was automated and routinized to provide operational data. It is a quantum leap from reporting to using data predictively: that is, to use data to inform on the outcome of the processes involved. Transcending the “what” of data to the “why” of data and ultimately evolving the capacity to predict the “where to” of business processes is the purpose of advanced, or predictive, analytics.
Stratecast | Frost & Sullivan is very interested in this space and has been tracking the evolution of advanced analytics for a while now. There are many technology companies that are currently working to deliver advanced analytics to the market (in fact, Stratecast has identified at least 400 that claim to, to one extent or another), but there are few that have taken the time to map analytics to specific business needs. One that has is Siemens PLM Software which has focused on the product management lifecycle and asked the fundamental question of how can analytics improve the design, production, delivery and support of products. This seems like a rather obvious place to focus analytics, but the market, so far, has mainly been focused on the overhead functions of a business ( the cost side) rather than the production functions of a business (the revenue side).
One area, in particular, where the application of advanced analytics is poised to deliver substantial value to enterprises is in the analysis of production quality. That is, analytics can tell us a great deal about how well production processes are doing in terms of how well a product performs once it is shipped. By building a virtual representation of the product – a virtual twin – one can then compare the simulation to the actual performance of the product. This can provide essential insights into both the design of the product as well as its overall quality. In fact, PLM is an essential outgrowth of the, by now, ancient notions of Deming TQM (total quality management) and the more modern notions of Six Sigma. PLM enables one to see immediately if a process is in or out of statistical control and, furthermore, provides insights into what one can do to correct a process that is out of control.
For these reasons, Stratecast | Frost & Sullivan is bullish on analytics as a real growth industry. Over the next five to ten years, we predict that analytics, based on big data foundations, will come to dominate most industries. For those companies, such as Siemens PLM Software, who are providing this technology and expertise to industry, the future looks very bright.
To learn more about the award Siemens PLM Software received for the Omneo solution for product performance intelligence, head over to the Big Data Blog.
About the author:
Mike Jude, Ph.D. is a program manager with Frost & Sullivan with over 30 years of experience in Telecommunications and IT including technology application, market research, consulting, and operations management with expertise in decision analysis, market and business analysis and developing innovation and encouraging creativity. His industry expertise covers a broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives in network automation technology and local exchange telephone service providers and service automation. He received his B.S.E.E. & M.E.E.M from University of Colorado and Ph.D. from Walden University.
Hybrid manufacturing, a new additive manufacturing process that combines metal deposition with CNC (computer numerical control) machining on a single machine tool, exhibits potential to unlock design freedom and transform industries.
Here’s a prediction I feel comfortable making: the number of world-changing designs that actually make it to market is about to increase beyond anything we’ve seen before. Why? Because hybrid manufacturing technology is about to make impossible ideas possible – while also offering faster, less expensive, and more flexible manufacturing processes.
What is hybrid manufacturing?
To date, additive manufacturing processes have been limited to prototypes and small metal parts that are impossible to manufacture using conventional techniques. Hybrid manufacturing takes additive to the next level by combining it with metal machining processes on a single machine tool, unlocking new opportunities to make production-quality parts with the same additive-like flexibility.
One way to describe hybrid manufacturing is to picture combining a metal foundry with a CNC machine tool. The finished parts, made from high-performance metallic materials, are “grown” by a process called laser cladding, which uses a laser beam to fuse a metal powder feed into layers (think strong weld) on the surface of the workpiece. Once the metal has cooled, the workpiece can be machined using the traditional machining methods available directly on a machine. (Watch a video showing hybrid manufacturing.)
How can hybrid manufacturing help unleash innovation?
Until now, designers and innovators have been constrained by conventional manufacturing rules that dictated how products were made, and as a result placed many uninspiring controls on appearance and performance.
Hybrid technology removes those controls, offering the ability to more easily machine complicated and organically shaped parts, to make parts with interior details, to produce lighter-weight parts (but equally strong) made from lattice structures, to make parts that don’t need to be replaced, and even to make parts made up of multiple materials.
How might hybrid manufacturing transform my industry?
That answer is loaded with potential. Hybrid technology offers the ability to produce better performing and personalized products with lower maintenance and warranty costs, shorter lead times, less energy consumed during manufacturing and less material waste.
It also enables manufacturers to reduce inventory, make products on-demand, create smaller localized manufacturing environments, and even reduce supply chains down to single links. In a nutshell, it has the potential to make a massive change.
Imagine how much impact a 30-percent reduction in weight can have on a vehicle's fuel efficiency - let alone on the manufacturer's business, energy consumption, and the environment. While it is just a start, Airbus estimates that some 3D printed aircraft parts, such as this bracket, can weigh 30 to 55 perce.... Airbus also predicts that aircraft of the future will have a fuselage comprised of 3D printed parts.
Likewise, Elon Musk plans to revolutionize space access by enabling the rapid reusability of space craft by means of a space ship that lands like a helicopter to easily reload propellant. The Dragon V2 (watch the unveil video), Space X’s latest design, will be sent into space using the SuperDraco Thrusters, the first printed propulsion system and is able to produce 200 times more thrust than its predecessor.
How do you prepare to take advantage of hybrid manufacturing?
There aren't many hybrid machines on the market today, but they are being produced. If your company is considering purchasing one, here are some ways to prepare yourself to be one of the early adopters.
First, become proficient at CAD/CAM and CAE software. The shape and geometry of hybrid parts can dramatically differ from conventional parts, so not only will you need to be able to model them, but also to analyze their strength and durability using CAE. Heat transfer will need to be considered during the deposition process and CAE technology can be used to predict and compensate for expansion and shrinkage.
Second, develop skills at programming and running multi-axis and multi-function CNC machine tools. Because of the complex geometry, multi-axis machine programming skills will be important. Also, a CAD/CAM system capable of defining and controlling metal deposition tool paths will be necessary.
Third, get access to a 3D printer and powder bed machines. Exposure to these machines will introduce you to the basic additive process and additive tool paths, as well as the more advanced laser deposition capabilities, including the metal powders and materials available.
Lastly, because you will perform as a foundry, become familiar with the processes necessary for certifying hybrid production parts. In addition to geometry inspection, this can include metallurgical properties as well as CT scanning and comparing the internal structures of the physical part to its design model.
While hybrid technology is a completely new and unchartered manufacturing technology, it exhibits the potential to change how products are made and the products themselves. The time to start thinking about how your company will use it is now!
What is your additive manufacturing strategy?
I recently caught up with our president and CEO Chuck Grindstaff to record our latest podcast. We happened to be in the same city at the same time so there is video to boot.
I noticed Chuck uses the word “excited” a lot in this conversation. When you listen to him explain the breadth and depth of what our employees and customers are working on, it’s easy to understand why.
It is an exciting time in PLM. We’ve got rockets and rovers, red arms and green wheels, wind turbines and fire, beautiful ships, teeth and even beer!
Catch the full 25 minute audio podcast.
You can also watch these video sound bites below.
In part one of our conversation, Chuck shares his thoughts on important 2013 announcements. He focuses on the roll out of our Catalyst Series. We also discussed our openness strategy in light of last year’s Belmont announcement.
“It’s good to see a repeat customer. Every entrepreneur has a choice to build their own – make or buy from alternatives…it’s good to see them back as partners.”
Other key product announcements in 2013 included NX 9 with fourth generation design (4GD), Teamcenter Rapid Start, and Solid Edge ST6.
At our last employee town hall, Chuck noted that product complexity has doubled in the past 15 years while product lifecycles have shortened 25 percent. He shares how we are helping our customers with software to address this product complexity and speed through technologies like 4GD, systems driven product development and active workspace.
Chuck calls 4GD “a breakthrough in performance and scale”. Much like the breakthrough that synchronous technology was for design, 4GD is for assembly.
“Our customers are very anxious to bring on engineering talent that really understands the practical side of things as well as the theoretical side. So by engaging with the universities, we feel we can help bridge the gap...It’s not just throwing software over the fence…I have a very strong view that we as an organization need to stay engaged with these universities and help them with curriculum development and help with execution of the next generation of engineering education.”
In case you missed some of our 2013 academic news, we launched a free parts portal through CADENAS and new online learning courses to augment the classroom. We also announced new academic partners in the U.S., China and Germany to name a few.
I hope your new year is off to a good start. Here's a video update from me on a few things going on at Siemens PLM. First, I talk about the new release of Teamcenter Appshare on the iPad. Then I give an update on Active Workspace, including feedback from beta customers.
For those of you who thought my first blog post would be my last, think again. Here's number two live from Linz at PLM Connection Europe. I presented this morning and sat down with Dora this afternoon to give you this video update.
In his first public appearance as president, Chuck Grindstaff shared with PLM Connection Europe attendees Siemens PLM's vision from a business, technology and solution standpoint. He covered a lot of ground from the widening scope of PLM in the past 32 years to how that scope will be managed and delivered in a single active workspace via HD-PLM.
Here's my Q&A (in two video parts) with Chuck sharing the highlights:
At the Siemens Industry Software analyst event a couple weeks ago, Helmuth Ludwig ended the Q&A with analysts with a literal passing of a baton to Chuck Grindstaff. Chuck became president of Siemens PLM Oct. 1 while Helmuth became head of Siemens Industry Automatio....
It is great to see the trust Siemens places in the original UGS executive team to promote Chuck to this role. Here's a brief video interview with Chuck on where he sees the company headed under his leadership.