Why digitisation is the key to the future of the consumer-packaged goods market


By Senthil Kumar Venkataramanujulu, Vice President, Industrial Business, Schneider Electric India.   

The Indian consumer packaged goods (CPG) market, which is also known as the fast-moving consumer goods in the country, is the fourth largest segment. The CPG sector is estimated to have grown to USD 52.75 bn in FY2018, with home and personal care accounting for approximately 50% of the sector, followed by food and beverage (F&B) and healthcare.  

Although a close second in market share, the packaged F&B segment holds tremendous growth potential, with the sector expecting to double to US$ 70 billion by 2025. While the sector has progressed aggressively in past years, the sector has had a gradual increase in adoption of 21st century technologies, leaving a major scope of transformation.  

As a consequence of the public health crisis and associated regulations, the sub-segments within the F&B sector has had a varied impact, with most sub-segments witnessing a major decline in production growth. With F&B segment completely comprising of perishable and non-durable products, the market volatility and uncertainties associated with crises created the need for CPG and especially F&B segment to focus on agility and resiliency, and in the process, invest in 21st century technologies. 

As we all adapt to the ‘new normal’, the F&B sector has been gradually integrating Industry 4.0 into the production processes and across their value chains. The volatility in the market, combined with new demands quickly to improve agility and resiliency in plants and across supply chains, will serve to accelerate digitisation and adoption of the Industrial Internet of Things (IIoT).

In India, manufacturers supply chains are complex, having an intricate network of forward and backward linkages. Fast adaption, flexibility, visibility, and resiliency across these complex systems are key. Product and operational consistency across multiple sites is essential. These complex, interrelated supply chains are accountable to not only meet regulations but also track and trace the products they make. And of course, consumer’s demands and needs are changing, with an increased focus on the health and the sustainability impact of what we eat and drink, as well as increased ecommerce requirements.

Digitisation and CPG 
Digitisation makes sense in the current market as it enables manufacturers to adapt quickly, providing flexibility, agility, resiliency, and visibility across supply chains. We’ve seen manufacturers pivot from making beer to hand sanitiser, adapting quickly to meet changing demands. Companies who were fortunate enough to digitise parts of their operations before the crisis hit are in a much better position to adapt quickly through the crisis and beyond. In fact, a recent LNS Research study highlighted that 20% of manufacturers surveyed were speeding up their digitisation activities during the crisis to meet the new demands.

Taking steps to optimise digitisation doesn’t necessarily mean high capital spend or major infrastructure changes. With the ultimate goal of fast deployment and quick return-on-investment, solutions which can be easily adapted to your current systems, are key. To speed up deployment and make changes or adjustments easy during operation, tight linkage between the control and supervisory functions, can save time and money as new lines are designed, deployed and operated.

Looking at specific solutions like those to help with supply chain complexities, Recipe and Batch management helps safeguard product quality by automating batch processes to deliver consistent quality, to recipe specifications. These systems must work with the numerous plant asset control systems in real-time. Supervisory systems can help manage batches within a plant to achieve the required product quality and make the best use of assets while recipe management systems ensure consistency both within the plant and across today’s complex supply chains.

Digital recipe management
CPG companies are managing more and more product variations and digital recipe management is an important tool in enabling them to manufacture their finished goods with more agility. It allows companies to successfully manage flexible, multi-stream and multi-product operations.

By managing more production and packaging variation more effectively, with reliable quality and consistency, manufacturers can be more responsive to consumers and reduce time to market. This is especially important with the rapidly changing demands of today’s ‘new normal’.

Digital recipe management enables operations to stay competitive by simplifying recipe optimisation, deployment, adaption, and execution, managing more production and packaging variations for faster customer response and reduced time to market of new offerings, as well as making the best use of capital assets and resources already in place.

The future of batch management
Digital batch management helps ensure that products which are produced at several different facilities all meet the same output requirements. In an ideal world each facility would operate from a single master recipe assuring customers and regulatory bodies of consistency from site-to-site. However, the reality is that there’s often multiple plants with no strategy for standardisation of processes making it difficult for companies to easily move production across their network of plants. This is especially true today when that network could include more and more outsourced manufacturing. In addition to consistency this also adds considerable time and cost when new products are brought to market.

A two-level approach is often the best way to meet these challenges. Firstly, a plant recipe management system manages recipes locally and then coordinates with a global recipe management system to ensure consistency across multiple plants. Globally, a single recipe is created for each product type from all the different recipes used. Automatic electronic record-keeping allows users to capture the ideal batch configuration and finetune recipes to reproduce the optimal setup. Reduced equipment idle time allows an increase in overall asset utilization, leading to increased operational performance and throughput.

The main benefits include greater operational efficiency by optimising plant performance, standardised changeover with reduced machine set-up and changeover times, automatic electronic records to store ideal batch settings and finetune recipes for best results and complete genealogy/history for end-to-end traceability and improved regulatory compliance.

Integrated recipe and batch management solutions put digitisation to work to improve quality, traceability and regulatory compliance for CPG companies while helping companies face some of the main challenges of the ‘new normal’.

  1. https://www.careratings.com/upload/NewsFiles/SplAnalysis/FMCG%20Sector%20-%20July%202020.pdf
  2. https://www.ibef.org/industry/fmcg.aspx