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The dairy products industry and the digitalisation productivity bonus

Digital dairy

Siemens Financial Services (SFS) has released a new research paper that investigates the value of digitalisation for dairy products manufacturers.

New-generation digitalised technology is enabling manufacturers to improve performance through increased manufacturing productivity, improved planning and forecasting, enhanced competitive capabilities and greater financial sustainability.

Increased manufacturing productivity – the ability to either produce the same number of products for less, or more products for the same – has a clear and calculable positive effect on costs and margins. The new paper has named this positive effect the digitalisation productivity bonus, and offers estimates of the potential financial gain for the dairy products industry, along with sub segment estimates for yoghurt and for cheese.

Capturing testimony from international industrial companies, expert management consultancies and academic specialists, the paper has built a model that estimates the digitalisation productivity bonus for different industries. The global digitalization productivity bonus is estimated to be between 6.3 per cent and 9.8 per cent of total revenue.

This bonus can only be realised when a manufacturer has upgraded production technology to new generation digitalised systems and equipment. Specialist financing techniques have been developed to fit the technological platforms and new mindset of Industry 4.0, allowing dairy goods manufacturers achieve digital transformation in a sustainable fashion.  These techniques allow companies to harness the future benefit of digitalised equipment in order to fund the acquisition of that enabling technology.

The paper examines these specialist financing methods, including pay-to-access/use, technology upgrade finance, pay for outcomes, transition finance, working capital solutions, and more. They cover a range of requirements from the acquisition of a single digitalised piece of equipment, right through to financing a whole new factory.

“Intelligent financing arrangements tend to be offered by specialist providers that have a deep understanding not only of how the digitalised technology works, but also of how that technology can be practically implemented,” Natalie Jameson, head of food and beverage finance, SFS Commercial Finance (UK), said. “They are critical in enabling organisations to access cutting-edge technology and start benefiting from the digitalisation productivity bonus.”

 

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