Escalating consumer demands for innovative products, a shrinking post Brexit market and a supermarket sector squeezing every last drop of profit from providers is placing untenable pressure on the UK food and drinks market. But insists, Robert MacDonald, Innovation and Technology Manager, Absoft, with the right combination of strategic and technical SAP expertise, many of the business problems facing the industry can be solved using the flexibility of the cloud.
Punishing Business Model
Exports to the EU have plummeted since Brexit, compelling Food and Beverage providers to look elsewhere for customers. But while small innovators can command premium prices for niche products, especially in the trendy plant sector, mainstream businesses are being squeezed harder than ever by the dominant supermarkets.
On the one hand, consumers are increasingly ethically aware, expecting providers to comply with certifications such as the RSPCA Freedom Assured, Fairtrade and Rainforest Alliance certification seals. On the other, supermarkets are expecting complete transparency from food and drinks providers – inspecting each business’ finances in minute detail before cutting a deal. Add in the challenges of supply chain disruption and demands for 24x7 availability and the economics of food and drinks production make less and less sense.
Yet the food and drink industry is the UK’s largest manufacturing sector. Contributing £29 billion to the economy annually and employing over 440,000 people, it is a key part of the nation’s £120 billion ‘farm to fork’ food chain. So how can these companies not only stay in business and meet the demands of both retailer and end customer but also find the time, space and resources to innovate, to improve ethical standards and explore more valuable product avenues such as vegan and plant based or selling direct to the consumer?
Cloud Transition
For growing numbers of food and beverage businesses, migrating existing ERP systems into the cloud is the obvious solution – but only if it truly releases time and money for the business that can be used to drive expansion and innovation plans.
And that can be an obstacle for companies that fail to understand and embrace the inherent flexibility of the cloud. Simply signing up with a Managed Services Provider (MSP) for a straight migration of the existing on premise system to the cloud should work – although there will be inevitable business issues, such as the performance of vital EDI interfaces that require specific migration processes.
But this approach completely misses the true value of cloud computing. This is not a straight like for like swap. Nor is it the same as buying new on premise hardware. There is no need to build in five years growth contingency. No requirement for dedicated test servers. The cloud’s flexibility means the business can scale up – and down – on request. It means test environments can be spun up for just a week, and then shut down. And it introduces a raft of innovative app based solutions that can be immediately deployed to fix pressing business issues – such as reporting.
Improving Control
If handled well, a migration to the cloud can also provide essential 24x7 availability at an affordable cost point. By combining technical and functional SAP expertise with Azure knowledge, an MSP can deliver high availability and automated disaster recovery failover without the cost of dedicated high availability clusters.
Furthermore, intelligent, business focused monitoring can also transform performance by adding relevance and context to traditional systems monitoring approaches. A failure in an EDI connection is an obvious problem that any monitoring software should flag immediately – although trying to work out where the problem lies and get the relevant supplier to admit responsibility and fix it can be worse than herding cats. A less obvious problem is a file missing from a directory at 4am, something that would not raise a flag in any traditional SAP or EDI interface monitoring. But if it means a vital supermarket order has not been received, that is a business critical issue.
With a business focused approach to monitoring, priority problems are identified quickly and the root causes diagnosed. Automated messages can be sent to the relevant supplier immediately and, where possible, those messages can be tailored to highlight the priority of the issue. This puts the onus on that supplier to respond appropriately – minimising the business impact, the potential implications for customer relationships and, as a result, the stress endured by the business attempting to the resolve the problem.
Conclusion
With looming inflation and on going supply chain crises, the industry faces an evolving set of challenges. But there is also amazing innovation. Without a trusted, reliable and cost effective IT infrastructure many will struggle to adapt, fail to maximise the potential of new products. Moving to the cloud isn’t just about running SAP well but ensuring the business is run really well through SAP. And that requires not just a simple technical shift but an intelligent, business led approach to effective change.