Artificial Intelligence (AI) and the Internet of Things (IoT) will likely touch facets of almost every industry. AI enables computers and digital devices to learn, read, write, talk, see, create, play, analyze, make recommendations, and do other things humans do.[1] Businesses can potentially capitalize on the benefits of using AI by leveraging data collected by the IoT. IoT is the network of physical objects — usually “smart” devices embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.[2] The application of these two elements together can lend efficiencies in both gathering and managing data, while also creating consistency and transparency that can potentially lead to cost-savings.

Small business owners not involved in tech-related industries might feel that AI and IoT are at a distance – not transformative enough to warrant rethinking how to do business. However, farmers, grocers, restaurateurs, and everyone along the food distribution channel stand to benefit from such developments. Digital technologies can save time and work hours, improve employee safety, and help manage cash flow and business cycles.

For instance, smart technologies can help farmers optimize crop yields by providing real-time data on soil health and weather conditions. Grocers can optimize inventory management via IoT-powered sensors and AI-driven customer behavior tools. Restaurant owners can leverage AI analytics to predict demand and update menus, thereby personalizing the dining experience to build customer satisfaction and loyalty. These are real impacts with the potential to grow top lines and trim costs.

Here are some specific ways AI is creating real value in the food and beverage industry:

  1. Invest in AI-Enabled Customer Engagement: AI-enabled tools can survey customer behavior, engage with them in real time, help tackle waste issues, and provide enhanced products and services to more customers. However, an AI strategy takes careful planning and investment, but the long-term return could be significant. 
  2. Adopt Omnichannel Engagement Software: Omnichannel engagement software that addresses customer needs 24/7 without requiring additional labor and may improve profit margins in what is currently a low-margin industry. 
  3. Integrate IoT for a More Sustainable Supply Chain: Combining AI tools with IoT-enabled supply chain visibility to promote business operations and management could potentially reduce waste and increase profits. If the business executes well, investors in such projects can benefit from operational efficiency gains.[3] Small business owners should strive to balance consumer preferences with long-term sustainability to nurture the priorities of modern-day consumers. 
  4. Enhance Profitability through Technology Investments: Profitability can also increase through investments in digital and mobile POS systems equipped with AI. By leveraging smart tech, managers are empowered to make data-informed decisions and craft personalized promotional strategies to increase sales. Implementing embedded payments to streamline transactions is also a way to reduce costs.

These technologies can pay dividends in the long term, but there are investment and risk factors to consider. There are also ethical discussions that must be had to determine whether the data collected and the means for collecting it are consistent with the company's values and culture. Further, transparency is critical in maintaining trust with customers and providing assurance that privacy is a priority when calculating the benefits and risks of implementing these new types of technologies.

Additionally, while assessing costs, particularly for a small business, it will be important to assess return on investment to ensure the initial capital investment in these technologies will deliver an enduring benefit that couldn’t be achieved through existing systems and processes. For larger businesses, the scale justifies the cost, but for small businesses, that may not necessarily be the case.

A thoughtful approach is needed to navigate implementation challenges, including the following:

  1. Costs and Investment: Like any business endeavor, managing the price tag is a key consideration. Building new smart plants, ensuring data integrity and security, and being good stewards of capital pose new challenges with potential risks. 
  2. Effective Change Management: In addition to upfront operational costs and ongoing investment needs, new processes and the integration of emerging technologies demand a refresh of procedures and key performance metrics. 
  3. A Cultural Shift: Perhaps the most significant impediment to adopting new technology, systems, and processes is the human aversion to new ways of doing business. Firms must embrace a growth mindset while leveraging lessons learned from the past and applying that experience in innovative ways. 
  4. New Skills and Talent: The food and beverage industry will need capital to fuel growth, and it will likely require different skills and a reshaped workforce. Individuals from varying backgrounds and diverse vocational skill sets must be integrated into a cohesive unit. Each link of the supply chain and distribution process can leverage new technologies to achieve the goal. However, small business owners must adopt a cohesive strategy, skilled workforce, and full digital culture to ensure effective and efficient operations, while promoting bottom-line growth.

Investing in smart technologies, such as IoT-enabled projects, holds the potential for a more profitable future for today’s farmers, grocers, restaurant owners, and others along the food distribution channel. Initiatives, including leveraging sensors and analytics, can achieve significant reductions in resources, including labor hours and resources, thereby boosting the bottom line. Such investments offer attractive opportunities for investors, contributing to streamlined operations while delivering profits for businesses. However, a cost-benefit analysis must be performed that takes into consideration capital requirements, risk factors, and resources required to maintain and monitor the data produced and the durability of the solution.

Discover how PNC can assist your business in managing investments amidst the ever-changing world of digital technology. With professional guidance and a tailored plan, you can move forward confidently, understanding where your firm stands financially as new technologies unfold.