Food & Beverage Industry: Balancing High Material Costs, Fast Innovation, and Operational Excellence

The challenges of the food and beverage industry

The agri-food industry faces five major challenges: customer, material, environmental, human, and sanitary.

• A customer challenge, driven by price pressure from mass retailers, requiring strong competitiveness and differentiation through a strong brand or a clear signature.
• A material challenge, closely tied to volatile raw material costs, forcing companies to reinvent their economic models. It is also linked to raw material scarcity. Raw materials are now a limited resource, with major volume fluctuations driven by the climate.
• The environmental challenge is pushing the industry to invest in reducing its environmental footprint. Companies must produce more while consuming less, while meeting strict constraints on water and energy use, as well as emissions.
• The human challenge is marked by severe recruitment difficulties. Because working conditions can be demanding, the industry is becoming less attractive to younger people. In addition, turnover rates are high.

Finally, the sector faces a sanitary constraint that requires total control of product quality. This constraint covers everything related to food defense (protecting production lines against intentional or malicious contamination) and food safety (preventing accidental contamination). Meeting this sanitary constraint is essential to avoid a product recall, the worst-case scenario, which damages brand image and results in financial and reputational losses.

Balance between high material cost and rapid innovation cycles

There are numerous production requirements and an industrial transfer. The sector possesses strong technical specificities, such as high material costs and rapid innovation cycles.

On the one hand, raw materials itself represent a massive expense, accounting for 70 to 80% of the cost price. On the other hand, the industry faces very short innovation cycles ranging from 6 months to 2 years, which demand the constant development and renewal of high-quality products.

Therefore, it is imperative to improve the industrial transfer—the transition from product conception to mass production—in order to effectively reduce the ramp-up period. Improving this industrial transfer ensures an efficient start-up and the production of "right-first-time" products.

However, there is currently a lack of oversight for this mission. The traditional structure (composed of operational staff and middle management running the workshops) struggles to organize the expertise between the teams developing the innovation and those producing it daily.

Structuring Operations to Balance Cost, Innovation, and Execution

To address this, it is necessary to rely on "industrial methods" capable of bridging the gap and defining key parameters. There is also an urgent need to formalize operators' know-how, as many production activities remain manual or semi-manual today. This knowledge is primarily passed down orally; however, given resource scarcity and the sector's loss of attractiveness, it is imperative that this expertise be digitized, structured, and shared to counter rising turnover.

Operational excellence is not just about tools; it relies on three fundamental pillars: the company's organization, methodology, and the human element (skills and know-how).

The deployment of operational excellence must begin on the shop floor. Achieving continuous improvement requires thorough observation and analysis of the field and the company's operations. Conducting a Gemba Walk helps identify losses, such as wasted materials and energy, as well as costs related to labor and machine downtime. Through real-time field observation, it becomes possible to establish production fundamentals and standards, as you can only improve what you measure.

Training teams in these methods is essential, as it makes the manufacturer self-sufficient and enables faster progress.

Digitalization as a pillar of operational effectiveness

Digitalization quickly becomes the key driver of real-time control in this industry. It strengthens operational excellence without replacing people. In fact, digitalized companies rely on 80% human involvement and only 20% technology. People remain the sector’s cornerstone, while digitalization delivers more reliable measurement and helps transform the organization.

By improving measurement directly on the shop floor, it becomes possible to monitor hidden parameters in the production process, such as those inside tanks or piping. Replacing paper with digital tools enables real-time control and the immediate handling of deviations.

This brings concrete benefits for both quality and management. Managers and supervisors can spend more time on the shop floor and less time on non-value-added administrative tasks, refocusing on supporting operators. More precise data reduces production variability, eliminates costly material overdosing, and improves product quality.

Finally, training all teams to understand data democratizes the use of digital tools across the company, ensuring better management of the factory’s many parameters, from initial process creation to the transformation of raw materials into high-quality finished products.

Conclusion

The food and beverage industry faces simultaneous pressures: price competition, volatile and scarce raw materials, tighter environmental requirements, recruitment difficulties, and strict food safety/defense constraints. Staying competitive depends on managing high material costs while accelerating innovation cycles.

To achieve this, companies must strengthen “industrial methods” to make shop-floor performance visible, standardize work, and capture operator know-how before it is lost. Digitalization supports these efforts by enabling real-time measurement and deviation management, reducing variability and waste, and freeing managers to spend more time supporting their teams.