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Automation and Software Solutions in World Food and Beverage Market
Frost & Sullivan, Aug 2005
Low Margins in the Food and Beverage Industry Hinder Investments in Automation Solutions
Faced with an intensely competitive retail structure and narrow profit margins, food manufacturers are cutting back on their capital expenditure and looking at means to improve operational efficiency and productivity. While investment in automation solutions could help them improve efficiency and profitability in the long run, high initial investments, lack of sufficient return on investment (ROI), and a largely conservative attitude toward technology have made them passive towards implementing automation and software solutions. In overcoming this hurdle, automation and software vendors need to offer competitively priced products with a strong ROI model and thereby convince the food and beverage industry of the benefits of automation.
This Frost & Sullivan research service provides a comprehensive analysis of the automation and software solutions in world food and beverage market, focusing on forecasts by seven product sectors across four geographic regions. In addition, it lists the drivers and restraints for this market and encapsulates key findings with subsequent conclusions.
Compliance with New Regulations in North America and Europe Likely to Drive Demand
The European Union’s (EU's) new 178/2002 EC legislation along with the 21CFR part11 regulation from the food and drug administration (FDA) and the Bio Terrorism act in the United States are likely to greatly enhance the need for automation in the food and beverage industries. These new regulations require food manufacturers to be able to track and trace their products and ensure production transparency through audit trail and access control functions. Since it is difficult to maintain such records on paper, companies would be compelled to maintain electronic records, necessitating the use of automation solutions. While this ensures a greater demand for these solutions, vendors need to incorporate tracking and tracing features in their products and ensure price accessibility and global functionality.
Due to the varied processes involved, food and beverage companies place much importance on the vendors’ process knowledge and the compatibility of their automation solutions with legacy systems and other automation products. In response to this, automation and software vendors are providing automation products with open architecture, thus making them compatible with different products, says the analyst of this research. Smaller companies that lack sufficient process knowledge and products with open architecture are at a risk of loosing market presence.
High Growth Potential for Manufacturing Execution System (MES) Solutions
While the need for tracking and tracing functionalities is driving overall market growth, the manufacturing execution system (MES) solution is emerging as the most dynamic product segment and is expected to show a higher growth relative to other product segments. According to the manufacturing enterprise solutions association (MESA), MES solutions can reduce manufacturing-cycle time by an estimated 45 percent, manual data collection processes by 75 percent, and paperwork by 50 percent. Thus, with the new regulatory requirements and favorable consumer demand, there exists ample potential for MES solutions in the food and beverage sector.
In terms of geographic trends, the Asia Pacific and east European regions are emerging as global manufacturing hubs and promise maximum growth. New regulations are likely to positively impact all product segments, particularly MES, says the analyst. Demand for devices that offer broader functionality, are easier to program and operate, and can be easily integrated with communication networks are expected to boost future market growth.
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