The concept Digitalization is described as optimization of business processes through the adoption of a host of new digital technologies ” big data analytics, Internet of Things (IT/OT convergence), Digital Twin, Artificial Intelligence, even 3D printing and robotics (McNamara, 2017, p. 3)According to McNamara, 2017, online grocery sales are growing in North America and western Europe (p. 3); big data analytics affords the Brewing industry insights into shopping trends and ability to predict rather than react to customer needs. There is a growing demand for variety in beverage products.
Seasonal demands require the Brewing industry to pivot quickly; IT/OT convergence will enable plant engineers and operators to fully understand how their facilities will respond to changes in production. The convergence of IT/OT will be discussed in detail in Chapter 4 under section 4.2.4 (Integrating IIoT with existing Industrial IT). A growing trend in the supply chain community is the huge emphasis on digitalization as their top agenda. Most companies are exploring and investing heavily in new technologies with the hope that it will improve the end-to-end supply chain process.
However, it is vital to note that digital transformation is not just about investing in new technology. It goes far beyond purchasing new equipment’s, software or services. Incorporating digital technology to assist people in executing their jobs will lead to major changes in their way of work resulting in new ways of running operations and novel customer engagement. In order words, it leads to a change in the work culture. Hence, at the center core of any digital transformation is culture of the work place which results in new ways of doing things rather than its technology. This cultural shift comes in one of five ways: Big data analytics, cloud computing, advanced robotics, Internet of Things (IoT) and machine learning as disruptive technologies.The Brewing industry faces unique challenges ranging from seasonality in demand changes, growing demand for differentiated packaging types/ store keeping units (SKUs), increasing regulatory/ quality restrictions, to complicated supply chain; it is uniquely situated to exploit the full benefits of digitalization. It must leverage the benefits of digitalization which includes everything from restructuring the value chain, embracing virtualization to capitalizing on the full breath and power of IoT.The advantages of digitalization span beyond mere cost reduction; it helps to develop new supply chain technologies which provide faster, more accurate and highly optimized product life cycle from new product development to customer fulfillment. As a result, time to market is shortened improving customer experience. The importance of digitalization comes from the need to respond to formidable market speed, accuracy and quality everyday consumers and businesses expect from supply chain. However, it is important to understand that digitalizing the end to end supply chain is quite difficult and requires a completely different approach.True digitalization can only occur once businesses follow 3 key recommendations:1. Digitalization must be conceived as a business strategy rather than just a technology implementation/upgrade. It should involve more than update to existing IT systems. Digital solution needs to be viewed across the entire supply chain linking together all moving parts to address each individual challenge along the way. 2. Digitalization must follow customer experience. Customer demand must be used as a reason for change. Digitalization ensures a better customer experience by making it easier and faster to transact business. Digitalization involves the integration of digital solution within the end-to-end supply chain, connecting demand with supply. It caters for consumer desires for fast, affordable and customized products. 3. Investing in technical training for staff to prevent division. The speed with which digital solutions will mature within a work environment is likely to present challenges to the employees’ digital skills. Hence, it is crucial for companies to invest in ongoing training on new technology to prepare employees for digital transformation and address any fears of job disruption (Material Handling Logistics journal, 2017). While it is true that digitalization offers unique potential benefits, it acceptance in the beer industry has been tepid. Some of the reasons for it low acceptance is (Pike, 2018, p.13): Reluctance by Breweries to make changes to their current business models (way of work) Involves huge/large initial capital outlays for new technology/equipment purchase Issues with integration with old/obsolete equipment present in the Brewery. Fear of cyber threat and data security. With this understanding of the concept of digitalization and the current trends in the Brewing Industry, it is important to examine how it impacts on Productivity. However, as a first step, I shall first discuss the concept of productivity and the various factors that affect it.