Ciao Metal Molly, I’ll Have Pizza al Taglio, Per Favore
Food producers, such as pizza-maker Prodal of Italy, are embracing digitalization to keep pace with evolving consumer preferences.
Italy is the home of pizza, but is a robot-made pizza less “authentically Italian?” When many consumers want fresh, minimally processed foods, how can a food company successfully use digitalization for supply chain productivity? Prodal of Italy, a privately-owned producer of pizza, bruschetta, and snacks, prompts these questions with its use of ABB FlexPicker robots to automatically spread tomato sauce on its pizza dough. See the process in action in this video [1]. Food businesses must learn to manage a food system that both feeds the world and honors people’s food values. We consumers of food (and pizza lovers!) have the right and responsibility to influence our food system with our spending decisions, so we must understand how digitalization serves us.
Prodal is concerned with digitalization of its supply chain because of macro industry trends. The food industry is struggling to keep pace with changing consumer preferences:
- Diets are constantly evolving. Over forty percent of consumers experimented with their eating patterns last year [2].
- Most people use food to treat or prevent more than eight health conditions [2].
Food product lifecycles are shorter than ever, and “Big Food’s” resulting business performance, lackluster at best, requires supply chain efficiencies to cut costs. While short product lifecycles can trigger innovation [3], today’s dynamic food landscape, and therefore Prodal’s portfolio of products, is changing faster than the company’s traditional supply chain can service. Prodal needs supply chain digitalization to adapt to agile product innovation. Digitalization investments need to deliver a pay-back through multiple trend cycles and the nutrition science journey.
Prodal is addressing the need for flexible supply chain productivity by introducing robots into its pizza-production. Spreading tomato sauce on a pizza was previously suitable only for human handiwork, as machines could not replicate human vision. Robots can now “view” each pizza from above and then spread the sauce to the edge of the pizza with meticulous accuracy and at lower cost. Even more impactful is the ability for most advanced robots to be easily re-programmed to complete different tasks across multiple products [4]. While robots were likely brought in to reduce direct labor costs, Prodal should see less food waste and fewer worker injuries [5] in the short term. Over the medium-term, Prodal should test its robots on new product prototypes to ensure the robots support gluten free, organic, and other future food trends. Without the ability to respond to tomorrow’s wave of innovation, Prodal will miss digitalization’s opportunity to keep pace with consumers’ food needs.
Prodal and other food companies should use digitization to tap an unmet consumer preference: transparency to consumers in where our food comes from. While supply chain innovation to-date has been focused on cost reduction and productivity within manufacturing, Prodal needs to invest in transparent ingredient-tracking and package-labeling to prepare for the future of the industry. Consumers are increasingly turning to local farmer’s markets and food start-ups so that they can better understand where their meal comes from. The cost of managing ingredient data has been a barrier preventing transparency to consumers on labels and online. The opportunity in Italian pizzas is clear. Prodal advertises its superior dough as its pizza’s key differentiator, stating, “It’s the dough that counts. Prodal combines the selection of the best flours with the rediscovery of classic processes” [6]. Since ingredients are core to the strategy, Prodal should invest capital in the creation of digital QR-code labels that share the farm-source and harvesting practices of the dough’s wheat. The investment will pay for itself when consumers can connect with the product more deeply and “vote” with their food values. Pushing digitalization across the value chain will allow Prodal and other companies to build consumer trust and work toward a stronger food system, one in which educated consumers demand foods that balance their individual preferences with the need to feed a growing world population.
Food digitalization address Prodal’s need for a cost-efficient supply chain and flexible new product development. Prodal has just scratched the surface with its use of FlexPickers to spread pizza sauce, and it should address food labeling with digitalization. There are many questions to overcome as digitalization becomes mainstream in the food space. What role should consumers play the global food system – should we “give up” food values that make it tougher to feed the world? How can food companies be incented to “open up” about their ingredients and production process when there is a long journey ahead to improve those practices? While I will always say, “si, per favore” to authentic Italian pizza, I will now vote for digitalization and transparency with my food purchases (767 words).
Works Cited
[1] ABB Robotics – Pizza Making with ABB FlexPickers. Youtube.com. https://www.youtube.com/watch?v=ggFdvUlp8YU
[2] Watrous, Monica. Keeping Pace with Health and Wellness Trends. Food Business News. http://www.foodbusinessnews.net/articles/news_home/Consumer_Trends/2017/10/Keeping_pace_with_health_and_w.aspx?ID=%7B6571B5BA-F86B-4607-A3BF-356ED5C3FE13%7D
[3] Kadaba, Dr. Nagesh and John Cronin. The Complex Role of Innovation in Supply Chain Management. Inbound Logistics. http://www.inboundlogistics.com/cms/article/the-complex-role-of-innovation-in-supply-chain-management/
[4] Sirkin, Hal, Michael Zinser, and Justin Rose. How Robots Will Redefine Competitiveness. BCG Publications. https://www.bcg.com/en-ma/publications/2015/lean-manufacturing-innovation-robots-redefine-competitiveness.aspx
[5] Studwell, Laura. 6 Ways Robots Improve Food and Beverage Operations. Packaging Digest. http://www.packagingdigest.com/robotics/6-ways-robots-improve-food-and-beverage-operations/page/0/5
[6] Prodal Website. http://www.prodal.eu/
Very interesting write-up. I think part of the problem is that the financial upside for better ingredient tracking is potentially limited and no one wants to be the one to go first. If better ingredient tracking truly influences consumer purchasing decisions, others will be quick to follow suit, eating away at any market share gains. And if it doesn’t actually matter to consumers, well, you’ve just wasted a good deal of money. Everyone is looking for someone else to be the guinea pig before committing to such a capital and operational intensive endeavor. I’ll be interested to see how this plays out, but I do have to say that, at least for me personally, it would be unlikely to affect my purchasing decision.
I enjoyed reading this essay Hannah. I was unaware of Prodal but very aware of pizza! Digitization makes a ton of sense for reducing labor costs and using robots to spread sauce; the video of the robots spreading sauce is awesome! Additionally, I typically associate ingredient tracking with healthy/organic food options. Ingredient tracking through digitization could help pizza companies like Prodal differentiate themselves as “healthy” (or as healthy as pizza can be) pizza offerings. If nothing else, it would be a cool marketing campaign to include the sources of all the ingredients inside the pizza box for the consumer to see before eating!
Anything that involves transparency with food, I vote “yes” for, and I agree that the base of customers who want to know more about where their food was sourced is growing. I don’t know enough about the Prodal brand, though, to know if this transparency aligns well with the rest of their story [and unfortunately, their site seems to be down right now!]. We know that their production process sets them apart — are they striving for authenticity via ingredient choices? Or are they going for high quality, low-cost pizza by eliminating labor costs? The former sets them up nicely for a digital supply chain story; the latter, I’m not convinced.
Very interesting to see how digital technology is transforming such a traditional product as pizza. I’m sure our friends at Dominoes would be interested in adopting some of this automation in their restaurants!
I really like the idea of Prodal utilizing digital technologies to enhance transparency in its production process as a differentiator in the marketing. One question this raises for me is whether this will end up being a source of competitive advantage in the long run, or if it will add a level of complexity and cost in their supply chain? Creating lots of visibility in the supply chain calls to mind a certain Portlandia sketch (link below to refresh your memory!). If customers demand more and more information and become more and more discerning about where they source their products, how will that affect Prodal’s ability to produce within its current cost structure? If Prodal’s competitors introduce similar visibility and can prove they have a more sustainable supply chain, is Prodal shooting itself in the foot with this strategy?
Sketch: https://youtu.be/WAlWrT5P2VI
I love that you tied the topic of transparency in with digitalization. Transparency seems to be a megatrend itself, especially in the consumer space. I attended a conference with Google a while back, and they asserted that transparency is something that Millennials especially care about, and it fundamentally affects their shopping behavior.
We see CPG companies acknowledging the importance of transparency in their supply chain many ways. First, we can simply look at product packaging. We see bigger, more prominent ingredient callouts. Taken a step further, fast casual restaurants such as Sweetgreen use transparency in their supply chain as a point of differentiation. For example, Sweetgreen displays the farm name where the lettuce came from that day on the chalkboard for all clients to see.
I think transparency within the supply chain will continue to act as a differentiator for brands, but I also think that it will eventually become a must-have for all. The example that comes to mind is Chipotle’s multiple Ecoli breakouts. They attempted to track several ingredients back to their source to find the cause, but they weren’t able to. If they tracked their ingredients throughout their supply chain, they could have found the source and potentially prevented another outbreak.
I think the idea of adding more transparency is a great way to incorporate digitalization into the food industry supply chain. One primary concern with using locally sourced food is food safety – most larger firms can trace a lot of their products back to the source (for recall purposes) and implement quality control measures that are not currently available to smaller producers. Digitalization may also make food safer down the road (vs just making the source more transparent).
The constant battle of food values vs efficiency is an interesting topic. Sustainable practices are typically (though not always) at odds with efficiency. As with most industries, the historical trend has been to produce more with less resources and now we are seeing a reversal in that trend due to consumer demands. More affluent consumers are willing to pay more for less (sorry Target) in order to promote sustainable practices and digitalization is making that choice possible through the availability of information.
Thanks for a great article! I especially liked how you tied digitization to technology to food trends to transparency.
To your question on whether we as consumers should ‘give up’ food values that make it tougher to feed the world, I would argue that digitization can in fact aid companies to adopt new techniques to reinvent these food values. Digitizing the sauce spreading process will not only lead to waste reduction and lower worker injuries (not to mention lower costs and higher efficiency), it will also help maintain better quality and hygiene standards. Expanding its use to the ‘supply’ part of the value chain, i.e. in agriculture and animal husbandry, can further help increase the total available food. Using digitization to be able to bring the required quantity of good quality and safe food at low costs can convert this ‘food value’ into one that can make it easier to feed the world in the long run!
Thanks for writing this article – you’ve shed light on a serious issue, which is that pizza is now at risk of losing its key ingredient: the love of the chef.
Jokes aside, I take issue with two aspects of your essay. First of all, you claim that consumers are increasingly concerned about where their food comes from, and that they will vote for their food values with their dollars. I am not sure to what extent this is true. For example, only 21% of British shoppers feel they can influence climate change through what they buy (https://www.theguardian.com/sustainable-business/sustainability-food-consumers-live-chat). I think that people are much more concerned with quality and price of food, and thus supply chain digitization in food should focus on improving those aspects, through lower/fresher inventory, etc.
Additionally, I am not sure how much upstream influence a company like Prodal could have. You mention that they should digitize their supply chain, but that requires participants upstream who are willing to invest in their own infrastructure to support product tracking. I would doubt that Prodal has enough weight to throw around to effect this change, and thus they will have to wait until the market (i.e. consumers) demand traceability on a large enough scale, should that ever be the case.
Great idea to add traceability into the raw ingredient source. I definitely agree with some of my classmates’ comments that the added traceability can improve how Prodal handles potential ingredient recalls and that the ingredient transparency can be used as a competitive advantage for customers. With the recent “farm-to-table” trend growing in popularity, I believe some customers would be drawn by the advertising that Prodal knows exactly where their ingredients come from and how they were produced. An added benefit of the ingredient tracking is that Prodal can now monitor and track customer behavior and how often these raw ingredients are being used to actually make the pizzas. This information can help Prodal improve the accuracy of their ordering and identify the impacts that factors like holidays or promotions can have on raw ingredient usage. As we learned in the Barilla case, promotions can be a nightmare for the supply chain, and the impact would be even greater on food that perishes more quickly than pasta (like cheese or dough). Tracking the raw ingredient usage can help Prodal effectively reduce ingredient waste due to spoilage and decrease the chance of Prodal running out of ingredients during a promotion.
One potential drawback to the digitization and automation of the supply chain is that customers may turn away from Prodal if they learn about the automation of their pizza-making process. Some customers still value the authenticity and heritage of handmade pizza, which doesn’t translate well when a machine is spreading the sauce. Customer perception must be identified and managed while introducing automation to handmade food.