- The urgent challenges of the Covid-19 pandemic have required Food & Beverage manufacturers to rapidly adapt to changed circumstances and patterns of consumption, and will continue to impact processes as businesses and consumers embrace ‘the new normal’.
- Companies that invest in agile technologies including automation, digitalization and retrofit projects are best placed to react to shifting market demands with optimum flexibility and resilience. The size of the investment required is, however, considerable.
- New research from Siemens Financial Services (SFS) estimates that the global investment challenge for Food & Beverage industry for digital transformation alone is over $566 billion over the next five years.
- Smart manufacturers are deploying new financing models, mainly from manufacturing-specialist financiers, to provide commercially sustainable ways of maintaining the momentum of technology and equipment investment.
Siemens Financial Services (SFS) has released a new whitepaper entitled Rising to the New Challenge: The role of Smart Financing in helping the Global Food & Beverage Sector navigate the economic ‘new normal’. This is the second in a series of insight papers on the automation, retrofit and digital transformation investment challenges faced by manufacturers.
The pandemic crisis and its economic aftermath make the importance of investing in agile technologies even more critical. Historic evidence shows that companies that continued to invest in previous crises emerged ahead of their competitors. Such investments typically enable manufacturers to achieve levels of operating flexibility that can cope with uncertain and volatile markets – a flexibility that is becoming an increasingly important competitive advantage as patterns of supply and demand, as well as working and labour practices, are likely to fundamentally change as the crisis recedes and businesses and consumers embrace ‘the new normal’.
The size of the investment challenge is, however, considerable. SFS has developed a model which conservatively estimates the size of the investment challenge faced by the Global Food and Beverage manufacturing industry as it seeks to implement smart factory technology during the five-year period 2020-2024.
Expert commentators are advising companies to diversify their financing sources, nurture existing lines of relationship credit, and harness alternative financing sources, such as Smart Financing, in order to preserve existing lines of credit. New financing models to enable technology and equipment investment are often aligned to business outcomes, to integrate financing closely with the expected rate of return-on-investment delivered through the benefits of retrofitting existing installations and/or adopting new agile, digitalized technologies.
“The flexibility offered by upgrading existing platforms through retrofitting automation, or digitalization can be a significant competitive differentiator during this crisis,” says Brian Foster, Head of Industry Finance, Siemens Financial Services. “The ability to adapt swiftly and intelligently to rapidly changing markets remains an urgent need for businesses of all sizes. Smart finance enables sustainable investment based on clearly identified desired business outcomes for F&B manufacturers, facilitating access to the right technology and services with expert support from a specialist financier.”
SFS has developed a model which conservatively estimates the size of the investment challenge faced by the Global Food and Beverage manufacturing industry as it seeks to digitally transform – even through the current economic difficulties. The model takes a variety of analyst predictions of the value of the Global Food & Beverage Industry’s investment in digital transformation for the five-year period 2020-2024 inclusive. The resulting figure is then adjusted by the proportion of digital transformation solutions that the Global Food & Beverage industry is already acquiring through smart finance. Additionally, the estimate is reduced to just half of the ‘available market’, to give a highly conservative view of the sheer scale of investment required even to reach 50% market penetration
For further information, please see: www.siemens.com/new-challenge-food-and-beverage
For further information on SFS, please see www.siemens.com/finance
Siemens Financial Services (SFS) – the financing arm of Siemens – provides business-to-business financial solutions.
A unique combination of financial expertise, risk management and industry know-how enable SFS to create tailored innovative financial solutions. With these, SFS facilitates growth, creates value, enhances competitiveness and helps customers access new technologies. SFS supports investments with equipment financing and leasing, corporate lending, equity investments and project and structured financing. Trade and receivable financing solutions complete the SFS portfolio. With an international network, SFS is well adapted to country-specific legal requirements and able to provide financial solutions globally. Within Siemens, SFS is an expert adviser for financial risks. Siemens Financial Services has its global headquarters in Munich, Germany, and has almost 3,000 employees worldwide. www.siemens.com/finance.
Siemens AG (Berlin and Munich) is a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for more than 170 years. The company is active around the globe, focusing on the areas of power generation and distribution, intelligent infrastructure for buildings and distributed energy systems, and automation and digitalization in the process and manufacturing industries. Through the separately managed company Siemens Mobility, a leading supplier of smart mobility solutions for rail and road transport, Siemens is shaping the world market for passenger and freight services. Due to its majority stakes in the publicly listed companies Siemens Healthineers AG and Siemens Gamesa Renewable Energy, Siemens is also a world-leading supplier of medical technology and digital healthcare services as well as environmentally friendly solutions for onshore and offshore wind power generation. In fiscal 2019, which ended on September 30, 2019, Siemens generated revenue of €86.8 billion and net income of €5.6 billion. At the end of September 2019, the company had around 385,000 employees worldwide. Further information is available on the Internet at www.siemens.com.