2023 is here. Our CEO, Robert Ekrem, shares his thoughts on how the meat industry can step up its digitalization game, taking the challenges it's facing.
It’s 2023. But still, when it comes to how the meat industry operates today, decisions are often made based on know-how and manual calculations. Consider how many meat processing plants rely on data sitting in spreadsheets and multiple internal systems. They need a unified place to gather, analyze and optimize the critical data they already collect to make the best decisions possible. Without this optimization, it leads to limited carcass sorting and suboptimal decisions for cutting and processing. All of this adds to lower profit margins and increased waste in the meat value chain.
No doubt, there is a lot of valuable data sitting in today’s meat processing plants. The question is, how can meat processors use it for their competitive advantage? What benefits can advanced technology and artificial intelligence (AI) bring to the table as more companies set out on their digitalization journeys in 2023?
The meat industry is under pressure
The future of the meat industry is challenging.
According to McKinsey, rising environmental concerns, increasing regulatory requirements with more attention to food safety, and increasing wages are raising costs that have also impacted the consumer purchasing habits of meat.
For example, meat costs in the US went up 20% from 2021 to 2022. Several factors drive this, but the most paramount is labor and production cost.
Among these economic issues are also pressures to enhance overall sustainability and efficiency in processing and production. Consider the rise of synthetic and lab-grown meat alternative brands - many of which are considered to have lower inputs and a higher level of sustainability. Even the United Nations has been vocal about encouraging countries to consume less meat.
As a result, meat processors need to turn to technology to optimize their production, ensure optimal decision-making and planning, and utilize data and machine learning to meet their customers’ needs, both from a price and sustainability perspective.
With the aid of technology and better decision-making, the future of meat will be more sustainable.
Produce more with less
The meat industry is important and is here to stay.
Animal proteins are rich sources of nutrients and amino acids that are hard to replace from other foods. They have also been staples in diets worldwide since the dawn of humankind.
As the projected global demand for meat is increasing, with a growing population, meat processors will need to produce more with less. Optimized carcass balancing will be critical for meat producers to succeed in the future.
The red meat value chain is unique from all other value chains and is one of the most complex. Since the abattoir margins are notoriously low (1-2%), it is critical for meat processors to make use of the entire animal to remain profitable. Taking the value chain complexity and the fact that carcass balancing is a key profit driver for the industry, AI and software will be the only way to make meat production and processing more optimized.
Technology is key
The meat industry value chain has billions of decisions that affect the value chain up and downstream.
For example, one of the customers we work with has more than one million(!) alternatives to cut each primal with more than 1.5 million constraints. It is not humanly possible to comprehend these to develop optimal cutting and processing decisions, so technology is needed to get the most out of our animals.
To address the complexity of cutting and processing decisions, at my company, Völur, we take data from meat processors, contextualize it, and provide an optimal cutting and processing plan for decision-makers based on all variables. Operating with live data enables meat processors with information on what products to push and what-if scenarios based on market demand.
Most meat producers still use multiple internal systems, know-how, and Excel sheets to map and execute their production plans. The data is there: we need to make use of it. Gathering and putting it into context is crucial for every meat producer to succeed in their digitalization efforts - from there, they can deploy it for several high-value use cases involving staffing, maintenance, and (in the case of Völur) optimized production planning.
Meat processors will likely increase their investment in technology in 2023 and beyond: this is the only way to go. And those who won’t will likely find themselves lagging behind their competitors and, after time, will be left out since they won’t be utilizing the animals well enough from a sustainability perspective, thus generating too much waste in the value chain.
The meat value chain is very complex, but data-driven production planning and AI optimization of carcass sorting, cutting, and processing can significantly impact profit margins for meat processors.
Bryan Huber, Head of Sales at Völur wins a prestigious Modern Sales Leader award, presented by HubSpot. This award recognizes 25 individuals globally who demonstrate exceptional leadership, innovation, and success in navigating the ever-evolving sales landscape.