Friday, 27 October 2017 10:21

Manufacturing and logistics needs to change

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How people see and buy things is being affected by technology, and that can be a particular issue for businesses selling perishable items such as food.

"Everyone's being disrupted" by technology, Infor executive vice-president John Flavin told iTWire. But different industries have different problems.

In the food sector, it's not just technology. Home delivery of meals or by supermarkets, and "meal ingredients in a box" services are impacting the demand side of food manufacturers' supply chains. In addition, "the millennial is eating differently" with a focus on fresh, free-range, non-GMO (etc) food.

So how do manufacturers of highly perishable impulse buys such as ice cream cope? They need to consider how they deal with customers, and work out how to deliver in the most efficient way whatever those customers want, he said.

In this new world, delivery life can be just as important as shelf life. If a customer isn't home to accept a delivery, special packaging may be required. But styrofoam boxes and ice packs or dry ice add to the cost of a product that you don't actually need, such as ice cream.

Flavin gave another example from the food industry, this time concerning meat cutting and distribution.

A saving of just 25c per carcass through better scheduling of cutting adds up to $1 million to $2 million over the course of a year for a substantial operation.

Then there are seasonal considerations: people tend to want thicker pork chops during the summer because they barbecue better than the thinner ones cooked in the kitchen at other times of the year, and also overall demand varies at different times of the year (eg, turkey at Christmas).

Outside data also comes into play. A meat processor can sell its output at the prevailing price, chill it in the hope that prices will rise in a day or two, or freeze it in the expectation that it will take a while for prices to recover. But how will prices fluctuate, and how do you determine the optimal mix?

So the next phase will be the widespread application of predictive analytics and artificial intelligence to the available data, he suggested.

To help customers through this maze, Infor offers a value engineering service through its Hook & Loop operation which has expanded from its original role of looking after UI/UX issues for Infor software.

"They'll be proactive with you, asking 'why do you do that?'," said Flavin, and the answer is sometimes "because we've always done it that way". That, as most of us realise when confronted with our habits, is not an adequate reason, thus opening the door to change.


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Stephen Withers

Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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