Digitale feedback loops are the enabler for increased operational excellence
Operational excellence in the food industry means at least two things: managing cost on the one hand, managing margins on the other. In times of global competition, long-term contracts and raw material price fluctuation, that’s quite the challenge. The key to amping up operational excellence? Expanding the scope from ‘within these walls’ to ‘end-to-end.’
We already mentioned this in a number of previous blogs: insight into data from field to fork – i.e. the end-to-end supply chain – constitutes a strategic advantage. Operational excellence has moved on: it’s no longer about what you can manage or control within the confines of your own walls. It’s about which data from the supply chain gives you the insight you need to take operational excellence to the next level.
Digitale feedback loops: the key to more operational excellence
Digital feedback loops – the concept on which a platform like Microsoft Dynamics 365 is built – are key here. What they are, and how they work, is something we already discussed in this blogpost.
In short, setting up digital feedback loops implies creating different data streams in different directions, so that data can be shared and exchanged both ways. In other words: manufacturers have everything to gain from unlocking data for retailers, growers and consumers, but they will benefit from the data these parties can unlock for them as well. Here’s a short example of each:
- Two-way feedback loops between retail and manufacturer:
VMI, Continuous Replenishment, sharing sales figures, actual consumption data, …
- Two-way feedback loops between grower and manufacturer:
Sharing data on field output, use of pesticides and fertilizers, quality scores, …
- Two-way feedback loops between consumer and manufacturer:
Sharing data on source, CO2 footprint etc (by the manufacturer) or sending feedback on products via Smart Label technology (by the consumer)
The idea behind feedback loops is that, by extracting data from deep within the supply chain, manufacturers are able to work more effectively and efficiently on several levels:
- Up-to-date insight into real sales and consumption data means: more accurate production forecasting, better purchase management, better production planning, less waste, more accurate deliveries, …
- Up-to-date insight into grower data means: more accurate forecasting of the yield of a particular field or the quality of a particular crop – and hence: knowing far in advance whether or not you will need to procure elsewhere. Manufacturers working with many growers, can go even further: by consolidating data from all growers, they can set up and share best practices and advice with all of them.
- Up-to-date insight into grower data – e.g. about the use of crop protection - means: knowing far in advance whether the use of a particular product is compliant - or not - with the growing list of requirements that retailers are setting.
- Taking other parametres – such as weather conditions – into consideration means: being able to adjust production faster (hot weather = less chocolate in cookies) or to amp it up faster (hot weather = more ready-made salads). The trick: match fluctuations in sales figures to other ‘events’ - such as the weather, television programs, sports events and so on – and to discover patterns in doing so.
Conclusion: the idea behind digital feedback loops is that every partner in the chain – and that includes the consumer – gets continually smarter. That’s why we also talk about ‘the self-educating chain’ or ‘intelligent data’.
Setting up self-educating chains, requires a platform that is powerful and open enough to create correct digital feedback loops. Microsoft Dynamics 365 for Food is such a platform.
Dynamics 365 for Food: digital feedback loops in action
Microsoft Dynamics 365 for Food is sometimes described as an ERP, CRM and BI system all rolled into one. While this is not incorrect, Dynamics 365 goes way beyond that.
Dynamics 365 is a platform that unifies your business—from data to people to processes—with modern, intelligent business applications that adapt to the changing needs in your industry.
Since it is built on a unified data model, Dynamics 365 is designed to help users set up and use digital feedback loops that are based on data that are uniform, correct and up-to-date.
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