The Role of Automation in the Food and Beverage Supply Chain

By Geoff Coltman, Vice President of Catena Solutions

Across industries, company leaders are looking for solutions to optimize operations, reduce costs, and manage demand. This is especially true for the food and beverage industry, where supply chain leaders are grappling with fluctuating consumer demand, labor shortages, new regulatory standards, and inventory challenges. In fact, 73% of food, beverage, and agriculture leaders reported losses related to supply chain as higher or much higher than expected over the last two years. As global demands continue to rise, companies are turning to automation to combat these issues and enhance efficiency. 

Emerging automation technologies enable a massive amount of growth in logistics, manufacturing, and delivery. They can also be instrumental in maintaining and boosting productivity in the face of disruption from labor shortages, inflation, material scarcity, severe weather, and supply chain bottlenecks. Here are several reasons why automation technologies will be indispensable to the future of food and beverage supply chains.

Streamlining distribution centers 

The heartbeat of any supply chain lies within its warehouses, where products are stored, picked, and packed for distribution. Automation technologies play a pivotal role in streamlining operations, ensuring accuracy, and saving time by automating tedious, repetitive tasks. For example, utilizing software-powered robotic arms to sort and assemble products, prepare orders for delivery, pack and unpack containers, and deliver goods to customers can be a valuable addition to digitizing warehouse operations. We can expect to see widespread adoption of these tools as the global industrial robotic arm market is projected to reach $23.2 billion by 2033. 

Another tool supply chain leaders should consider is an automated storage and retrieval system (AS/RS), a software-controlled system that automatically replaces and retrieves inventory. These systems are extremely precise and accurate, which minimizes waste and boosts output and productivity. AS/RS systems are being used in a variety of mediums including unit loads, mini loads, vertical lift modules, shuttles, and carousels.

Improving distribution center efficiency requires supply chain leaders to consider the implementation of new machines and tools, as well as the maintenance. Regular maintenance is a necessary aspect of any machinery-dependent industry, including food and beverage supply chains. Historically, maintenance crews have been responsible for machine upkeep and repairs, but new technology is changing that. Automating maintenance, repair, and operations (MRO) reduces costly downtime. Predictive maintenance, enabled by sensors and data analytics, allows companies to identify potential issues before they escalate, enabling proactive interventions. This not only extends the lifespan of equipment but also ensures that operations continue without disruptions.

Automating repack operations 

Repack processes are resource-intensive and can contribute significantly to operational costs. Nearly 20% of labor is spent on packing, making it the third most labor-intensive application in a warehouse. In response, consumer packaged goods (CPG) companies are automating the repack process to increase efficiency and cut down on costs amidst inflation and the high price of materials shortages. Companies adopting automated repack solutions benefit from reduced labor costs and increased agility in responding to market demands. Bringing repack operations in-house also gives companies greater control over supply chain processes, enabling a quicker response to demand fluctuations and reducing overhead workforce costs. 

Enhancing supply chain visibility 

In the past few years, unforeseen disruptions and fluctuations in consumer demand have made supply chain operations, specifically inventory management, a large hurdle for food and beverage and CPG companies. With the integration of advanced automation technologies such as radio frequency identification (RFID) and Internet of Things (IoT) sensors, companies can easily collect valuable data to gain visibility into the movement of raw materials, production processes, and distribution channels. This visibility allows company leaders to know they are making informed, data-driven decisions, reducing the risk of disruptions, and enabling proactive responses to changing market conditions. Automating data collection also allows companies to seamlessly communicate with stakeholders including suppliers, manufacturers, and distributors. Automated inventory tracking also enables accurate demand forecasting, minimizing the likelihood of excess inventory and reducing carrying costs. By leveraging these technologies, food and beverage companies can establish a leaner and more efficient inventory management system, ensuring that products are readily available to meet consumer demand.

Improving sustainability practices

Sustainability is a critical consideration for the modern consumer and an essential component of corporate responsibility. Improving sustainability efforts should be a key concern for the food and beverage industry due to its heavy reliance on natural resources and environmental products. Introducing automation to create precise packaging strategies can be an effective way to minimize food waste by optimizing inventory to reduce excess and promote energy-efficient operations. By leveraging real-time data analytics and advanced sensors, companies can optimize inventory levels, minimizing excess and preventing stockouts resulting in cost savings and reducing the environmental impact associated with overproduction and waste disposal. 

As companies continue to invest in these automation technologies, they not only bolster their operational capabilities but also position themselves as leaders in a competitive and ever-evolving market. However, while the benefits of introducing automation to supply chain operations are evident, technology alone can’t always help prevent disruptions. Automation should work in tandem with human expertise, rather than replace human skills. By pairing these automated technologies with human insights, manufacturing organizations minimize disruptions while also gaining a competitive edge. Upskilling employees and hiring talent with the skills to drive innovation projects and operate these technologies is also crucial for organizations focusing on digital transformation projects. With any innovation initiative, change management is a step that can’t be skipped. Companies need to maintain open communication and understanding, especially with automation projects, as employees may be skeptical. When implemented correctly, the balance between automation and human capital can result in enhanced productivity. Embracing automation and pairing it with human expertise is not just a strategic choice; it’s a necessity for those seeking to thrive in a future where efficiency, sustainability, and visibility are the key ingredients to success.

Geoff Coltman is Vice President of Catena Solutions, a supply chain consultancy that specializes in supporting supply chain organizations with their business initiatives including digital, financial, human capital, and supply chain transformations.