Siemens goes ex­tra mile to help bring dig­i­tal­iza­tion to F&B in­dus­try

The Jakarta Post - - BUSINESS - Viriya P. Sing­gih

Ger­man en­gi­neer­ing com­pany Siemens AG may need more pa­tience to see the fruits of the dig­i­tal trans­for­ma­tion it is try­ing to achieve in the food and bev­er­age (F&B) in­dus­try, which of­ten lacks the in­fra­struc­ture and knowhow to shift to what has be­come known as In­dus­try 4.0.

Over the past decade, Siemens claims, it has in­vested US$1 bil­lion a year to ac­quire soft­ware com­pa­nies and in­te­grate new meth­ods of au­to­ma­tion to pro­vide ser­vices nec­es­sary to dig­i­tize in­dus­trial busi­nesses across the world.

As a re­sult, its net in­come rose by 6.7 per­cent year-on-year (yoy) to €1.46 bil­lion ($1.75 bil­lion) in the third quar­ter of the 2017 fis­cal year end­ing Sept. 30, thanks to dou­ble-digit growth in its dig­i­tal fac­tory busi­ness.

Dur­ing the quar­ter, its rev­enues from the dig­i­tal fac­tory seg­ment surged by 17.5 per­cent to €2.96 bil­lion, while its profit from the seg­ment jumped by 22.7 per­cent to €485 mil­lion.

How­ever, its rev­enues from the process in­dus­tries and drives divi­sion, which in­cludes its food and bev­er­age in­dus­try busi­ness, fell by 2.8 per­cent to €2.18 bil­lion, though profit still grew at a mod­est 2 per­cent to €103 mil­lion.

“The Food and Bev­er­age [in­dus­try] is a very con­ser­va­tive mar­ket,” Kai Sch­nei­der­wind, Siemens’ food and bev­er­age se­nior di­rec­tor, told The Jakarta Post on the side­lines of the 2017 drink­tec trade fair re­cently.

Sch­nei­der­wind fur­ther pointed out avail­able busi­ness op­por­tu­ni­ties through the dig­i­tal­iza­tion of fac­to­ries, which could al­low pro­duc­tion in the short­est pos­si­ble time, in line with grow­ing de­mand for more per­son­al­ized prod­ucts, such as beer or soft drinks that mil­lenials crave.

How­ever, he added, many in­dus­trial play­ers were still re­luc­tant to pour in­vest­ment into dig­i­tal­iza­tion pro­grams, mostly be­cause of a lack of funds and of a clear road map for such a trans­for­ma­tion.

“The sec­ond thing is that it is very strongly dom­i­nated by the ma­chine builders. So even though the end users al­ready take cer­tain steps, the ma­chine builders are slow­ing [things] down, be­cause they are try­ing to cre­ate a seam­less pro­duc­tion of their ma­chines in­stead of fo­cus­ing on in­no­va­tion,” Sch­nei­der­wind said.

Emerg­ing coun­tries in Asia, in­clud­ing In­done­sia, could only boost their food and bev­er­age in­dus­try by in­vest­ing big money to au­to­mate and dig­i­tize pro­duc­tion as well as train lo­cal work­ers in the sec­tor.

“The in­vest­ment will be more likely spent on lo­cal sys­tem in­te­gra­tors, so the money needed to in­crease the level of au­to­ma­tion and dig­i­tal­iza­tion will be in­vested do­mes­ti­cally and even­tu­ally [in­crease] the GDP,” Sch­nei­der­wind said.

In­done­sia’s food and bev­er­age in­dus­try grew by 7.69 per­cent yoy in the first half of this year, con­tribut­ing 6.06 per­cent to the GDP.

Re­al­ized do­mes­tic in­vest­ment and for­eign di­rect in­vest­ment in the sec­tor stood at Rp 21.6 tril­lion ($1.63 bil­lion) and $1.18 bil­lion, re­spec­tively.

In­done­sia may see the en­try of Rp 70 tril­lion of in­vest­ment in the food and bev­er­age sec­tor this year, up from Rp 67 tril­lion last year and Rp 43 tril­lion in 2015, ac­cord­ing to es­ti­mates by the In­done­sian Food and Bev­er­age Producers As­so­ci­a­tion (Gap­mmi).

In­dus­try Min­is­ter Air­langga Har­tarto has re­peat­edly stated the im­por­tance of re­search and de­vel­op­ment for the coun­try to fully im­ple­ment In­dus­try 4.0 sys­tems, which are ex­pected to cre­ate ef­fi­ciency and re­duce in­dus­trial pro­duc­tion costs by 12 to 15 per­cent.

The term In­dus­try 4.0 refers to the de­vel­op­ment of au­to­ma­tion, ar­ti­fi­cial in­tel­li­gence and sus­tain­able tech­nolo­gies.

The min­istry has pre­dicted that jack­ing up com­put­ing power and con­nec­tiv­ity as well as de­vel­op­ing new sys­tems for hu­man-ma­chine in­ter­ac­tion, among other things, will re­quire huge in­vest­ment.

“Such de­vel­op­ments can be achieved through the work of af­fil­i­ated uni­ver­si­ties that can also act as in­cu­ba­tors, the man­u­fac­tur­ing in­dus­try with mid­dle to high tech­nolo­gies, in­ten­sive re­search and a higher num­ber of re­searchers,” Air­langga said Fri­day.

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