Food and drink firms struggling to transform amidst labour challenges

Labour shortages and skills gaps are the biggest challenges currently affecting the food and beverage sector, according to new research.

A recent survey of more than 600 global C-suite executives across retail, life sciences, and manufacturing – conducted by operations strategy and transformation consultancy Argon & Co – found almost half of the respondents (43%) citing the workforce issues as their most pressing at present.

This was significantly above the cross-sector average of 30%, with the talent gaps said to hinder everything from production capacity to supply chain reliability.

Against this backdrop, optimism about the future is somewhat subdued, noted Argon & Co. Its report on the research stated that just 29% of industry leaders feel confident about their organisation’s growth prospects in the face of disruption; ten points lower than the cross-sector average (39%).

“From UK supermarkets dealing with major cyberattacks, rising packaging costs, labour shortages, and high inflation in the sector, it’s no surprise that F&B leaders are feeling the strain,” commented James Watson, partner at Argon & Co UK.

“But while the outlook is tough, firms should be using this period to take stock and transform. The F&B sector can emerge stronger, but only by investing in the right tools, people, and partnerships.”

Such tools may include the latest smart technology advancements, with research showing that 82% of business leaders believe artificial intelligence (AI) has the potential to positively transform operations. Another 70% say leadership is actively champions AI initiatives and innovation within their organisation.

However, Argon & Co’s report warned there is a gap between ambition and action, including that:

• only two-fifths (39%) of F&B leaders say they have a clear roadmap for integrating AI into business processes
• just 37% believe their firm’s technical infrastructure is currently robust enough to support AI adoption
• investment in skills is also lagging, with 39% of operations leaders saying they are confident that they are investing enough in AI training.

Watson added that AI should be a helping hand for stretched workforces, not a headcount reducer. “It can help businesses respond faster to disruption, help firms to adapt quickly to changing consumer preferences, and reduce manual errors,” he said.

“But without a clear roadmap, F&B firms risk falling behind more agile sectors. Investing in real AI skills – more than just a one-time, tick-box training session – will help F&B firms positively transform their operations for future resilience.”

The full ‘Operations Outlook’ research report can be downloaded for free from the Argon & Co website here.