0:04
Good morning everyone and welcome to today's webinar which is on Overcoming Challenges with Digital Transformation hosted by our professional affiliate members Johnson Carmichael.
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First of all thank you to everyone for coming today we hope that you found the content useful.
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There will be a Q &A at the end so please put any questions that you have into the questions box and we'll do our best to go through as many as we can at the end of the webinar.
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For the end of the webinar we'll be sending you an aftercare email in the next couple of working days, and this will contain a recording of the webinar, a copy of the slides, and the contact details of today's presenters.
0:37
So, without any further ado, I'll hand you over to Adam Hardy.
0:42
Good morning, everyone.
0:44
My name's Adam Hardy, and I'm joined here by my colleague Fraser, who's a senior operator in the digital team.
0:51
And you're going to hear today about digital Challenges that I guess looking at the description of people who have joined the call what you're all experienced You know, you're possibly struggling with clunky reports and manual processes.
1:07
You're growing fast and your systems can't keep up So today we're talking about streamlining scaling and taking back control I Lead food and drink at Johnson Carmichael.
1:20
We're a UK accountancy firm think I've got a couple of slides just to sort of set the scene before I hand over to Fraser.
1:30
Fraser, can you move on to the first slide please?
1:34
So I lead food and drink at Johnson Carmichael.
1:36
We're a top 20 UK firm working with many food growers and farmers, but about 500 food and drink producers across the UK, 900 partners and staff.
1:50
And I think, you know, The context at the bottom is really just to say that in Scotland, which is our region of focus, we actually across industry sector audit more of the top 100 privately owned businesses than any other accountancy firm.
2:09
We do an annual survey of the food and drink industry, which you can see just the highlights and that was all I was really going to say about it.
2:24
It's about circa 100 businesses, 62% below 10 million turnover across the UK, and those topics are what we delve into every year, and that gives us a platform for having some insights to talk to our clients.
2:47
As you look at today, this year, it's chaotic, isn't it?
2:54
Food inflation prices up again today, the unpredictability of global events, climate war and Europe migration, big massive issues driving a lot of businesses, availability of raw materials.
3:11
I think for us supply chain and for you, supply chain has got even more important through Brexit, then COVID, and I guess through tariffs.
3:26
The importance of having shorter supply chains only increased.
3:33
In addition to that, we see the continued disruption with the U.S.
3:40
and the risk of tariffs there, and I guess many of our clients are shifting to new markets away from the U.S.
3:48
Slow UK growth, national minimum wage and NIC is really biting with food and drink business owners in 2025, and labor was a challenge, of course, 2024. Other impacts that we're seeing, you know, social commerce.
4:08
Did you follow that Lidl were the first retailer to put themselves on TikTok?
4:17
So the size of the social commerce market set to double to 16 billion within only three years.
4:27
Health and well-being, always front and foremost.
4:32
And we continually see investments there in that category come to the fore.
4:40
Sustainability, interestingly, in this survey is really driving innovation, which is encouraging.
4:47
But at the base of this survey, and you're welcome to download it, we'll put it in the on so many.
5:00
So that's a flavour of what we've what we're seeing this year and what you're seeing working in food and drink businesses and you're welcome to download the report at your leisure.
5:13
So I want to now hand over to Fraser and who will lead us through the core of the session which as I said is Fraser it's something which is just becoming more and more important our clients, isn't it? Absolutely, Adam, thanks very much for the introduction.
5:31
It's becoming more and more important and the way that the world is going now with artificial intelligence and real-time information needed here and now, so that decisions can be made based on that information.
5:44
The digital and business transformation challenge for the food and drink industry in a chat maybe ask you some questions at the end of this session Fraser and you know and you know dare I say encourage everybody on the call to ask your questions of Fraser too.
6:06
So we're going to talk or you're going to talk now Fraser for about how long, half an hour or so?
6:13
Yep, half an hour depending on how things go. It depends if I interrupt you or not. Okay thank you over to you.
6:24
Thank you, thanks Adam, I appreciate that and thanks to everybody for joining the webinar.
6:28
I really appreciate the opportunity to talk to you in regards to the challenges that the drink industry are finding and also what Johnston Carmichael can do to help everyone out there.
6:39
If I can start off with, hopefully you can see the slides a little bit about me.
6:43
I'm a senior manager within the digital advisory team at Johnston Carmichael.
6:47
I have 30 years of system implementation, project management and training experience.
6:52
In the mid-90s I worked on the regional team in Scotland where we rolled out their sales-based ordering or SBO system.
7:02
So we had a lot of challenges around that, whether that be stock management in regards to the way the systems were set up.
7:10
We were finding that some stores were having warehouses full of stock that they didn't need and then other stores were spot on and the warehouses were practically empty just because they got their ordering spot on and with the systems.
7:25
And again, and I'll come on to this in a short while.
7:30
And the people that are important and how the people use the system and how they make their decisions based on the sales of the everyday.
7:39
I've worked on all sides of business transformation.
7:41
So I've been a customer who have as implemented a system.
7:45
And I've also been a vendor when I work for touchstone who were helping clients to implement new systems and then obviously now when I'm at Johnson and Michael and previously with PWC I worked on the risk assurance project management side of it to monitor how the projects were going and just giving clients comfort that they were getting value for money and the project was on time on budget and and heading in the right direction.
8:09
More recently before joining Johnson and Michael I was 10 years as a group IT manager at a £35 million turnover engineering and manufacturing business in central Scotland and so I've been in the coalface regards to the IT issues the cyber security the selecting systems the day-to-day business as usual and processes and I was responsible for all that within within that engineering and company across three different sites I thought I'd start off with the triggers what are the triggers for and when a need some form of digital transformation and so these triggers and this isn't an endless list but the main ones are round about the software is no longer fit for purpose and so it's not giving you the reports that you require it's not giving you the data that allows you to make the data driven decisions and sometimes companies have growth aspirations and they maybe don't have the size of system that can allow them to do that growth so if for example they're on zero and it comes onto later with multiple legal entities.
9:15
If you then go to multiple entities, zero isn't the solution for you.
9:19
You need to move to more of a mid-tier ERP solution.
9:26
Performance optimization.
9:27
So you're coming in, you're logging in in the morning and it's taking you 90 seconds to two minutes to log onto your system.
9:32
And that is an issue with performance and something that really needs to be looked at.
9:38
If you still have a reliance on spreadsheets, then that is surely a reason to go look at your business and to decide whether there is a ERP system out there that will allow you to remove all the spreadsheets, challenges with spreadsheets are there is more than one source of the truth because everybody has a different spreadsheets and they all do different things with it and they come up with their own information and their own data and their own reports and but that report could be different from somebody else's report and the figures might be exactly the same but it's just sliced and diced up in a different way and that often cause challenges around about decision making.
10:15
Change management is critical when it comes to digital transformation and making changes to the business, making changes to the business processes.
10:24
Non-integrated systems, so you may work for a business that has multiple systems whether it be an accounts package, a CRM system, a stock management system, spreadsheets, access databases and these all can't integrate together so it means that there's duplication of work so you may have a database that's giving something but then that information from that database then has to be manually entered into the accounts platform for example and so it's really not driving efficiencies and it's causing more problems than fixing and again the legacy systems that systems are now out of date and systems that the vendors or the aren't updating anymore and so there's certain versions of for example my systems are Microsoft Dynamics and so a lot of companies are still running on the 2004 or the 2009 versions these systems now aren't and being updated they're not getting patches to to fix any challenges and that obviously causes trouble and when it comes to cyber security for example when there isn't a patch updating the security of these systems and it just becomes high risk to allow hackers to be to to jump onto your system.
11:37
That leads me on to this why is it important to keep updated on the and on the correct infrastructure and I don't think that any of these slides will surprise you that we're mentioning these.
11:47
So most recently Marks and Spencers the Co-op and Harrods have all had cyber security attacks.
11:54
The Marks and Spencers one's probably the biggest one and costing around £300 million in business to them.
12:02
If you look at the mid-photograph there with all the empty trays, that was a co-op photograph where the rotary system was just completely gone and they couldn't get stock to the stores to be able to fulfill the customer's needs and requirements.
12:17
How much business have they lost because of that huge amount and also the trust and the reputational impact of that situation where people are now not trusting co-op to be able to have the stock in place for the customers and also suppliers.
12:36
They're all at high risk as well because obviously their information is held within the co-op systems and their information could then have been stolen and taken and then put in them at risk.
12:46
So reputationally the last month, six weeks has been really critical for the Mars and Spencer co-ops.
12:52
And this is all down to systems not being as secure as they should be and allowing hackers to dial into the system, into their systems, stealing the data, interrupting the data and the data business processes and the business flows.
13:12
So the digital challenges of food and drink business, I've got a slide here where I identify seven of them and I'll go through each one, one by one.
13:20
So there's supply chain visibility and traceability, integration of legacy systems with modern technology, data management and analytics, regulatory compliance and digital reporting, e-commerce and digital marketing challenges, automation and smart manufacturing.
13:37
And then again, I'll come back to the cybersecurity risks because it is huge now in this world.
13:42
So the challenges around the supply chain, visibility and traceability.
13:46
The industry relies on complex supply chains with international suppliers making real-time tracking difficult and so if you don't have a system that can manage the order of processing and then giving you real-time information then it could really affect how you can track that information.
14:03
Blockchain and Internet of Things solutions exist but these are expensive and they require significant IT investment and also requires IT knowledge and within the food and drink industry I do think that there are where IT isn't the number one business process that's always looked at and so the knowledge within the IT of that sector possibly isn't where it should be.
14:32
And then obviously compliance is constantly changing with food safety and traceability regulations and this is challenging without IT and systems but it's also challenging for the vendors because they've got to keep up any changes that are coming in regards to compliance and traceability and it's them keeping up with those that can be sometimes a problem and so the system you might be on might not be updated as quickly as it should be so that's a major challenge around about the supply chain.
15:04
Integration with legacy systems with modern technology so again I think the food and drink industry isn't always at the forefront of having the most up-to-date systems And there is a fear of the investment that's required and to change those systems.
15:19
And so the legacy systems absolutely struggle to keep up with, for example, artificial intelligence as it's coming on round corner and cloud computing.
15:29
And so the legacy systems don't integrate properly with it.
15:33
And that means that you then have to get something in between.
15:36
So you've got a legacy system and then you've got the reporting side of things but you then have to implement a third party system to be able to, such as Fathom or Dext, if you're doing OCR scanning, to allow you to keep your legacy system up to date.
15:52
The cost of upgrading systems can be high, and there's the pushback, and this isn't just the food and drink industry, this is all industries where you've maybe got a slightly aging team within the finance department, for example, and they're just not keen on change.
16:07
They've done the same job for the last 20 years on the same system, they know it inside they're comfortable, they're confident and so there has to be staff training around with that and there's just certain people who just don't want to do the staff training and so that causes a problem for companies who are wanting to update their systems.
16:28
Data management and analytics, there's a plethora of systems out there where you can look at your data and you can report and slice and dice it up in any way you want and so companies generate vast amounts of data from production, sales, logistics, but many lack the tools to analyze and use it effectively.
16:45
So again, it's outputting it to spreadsheets.
16:50
It's then slicing and dicing up.
16:52
And again, that causes a problem because people slice and dice them up to say the way they want to personally, rather than what's the best for the business.
17:00
So if we can introduce a tool into that business where everything's configured the same way so that everybody's getting the same information and develop them, looking at the same reports to allow them to make the decisions.
17:12
I think that's much more efficient for a business and we'll come up with better decision making.
17:18
AI and machine learning are coming at us at full speed.
17:22
And we're in the very early stages.
17:23
And at the moment, it's an exciting time to be in because we can decide how AI and machine learning goes for the next generations and the generations to come.
17:33
So it's definitely an exciting place to be in.
17:36
but I also think that there is some fear within businesses as to say you know what is AI and are we big enough to be looking at AI as it not so for the big banks and the big manufacturing companies and their car manufacturers and that is that not what the AI is all about and it's not AI can be implemented at small companies to allow you to get the information you want and to allow AI and machine learning to help you drive efficiencies within your business but again it comes down to control and also requires expertise and investment and investment.
18:12
Regularly compliance and digital reporting, so Brexit obviously happened and we're still working our way through the compliance changes to that but they are becoming more and more stringent and requiring digital tracking and reporting so for example the oats that come from a field that needs to be recorded properly so that once we get into the manufacturing process and then goes out to the shops and the customers, if there is a problem with it that needs to be identified and tracked all the way back to the source of the raw materials.
18:52
Brexit has added new regulatory challenges, increasing the need for efficient customers and export documentation.
18:59
So in a world where we're trying to get paperless and we're trying make it easier for products to move around internationally, it's just causing more and more problems and we need to get systems in place which although we have to follow the compliance and regulatory situation, if we can get systems in place that will help us and drive efficiencies and then that will help again the businesses with their time saving and labor costs and such.
19:28
E-commerce and digital marketing challenges so again and this kind of come back to the security side of things that more and more people are ordering online and we have a client and based just outside edinburgh who have a product power products that goes out to stores and golf clubs and things like that but they also have the individual purchaser who just wants to go on to an online portal and order a box of bars and purchase for the products that they're selling so there's a big difference between how the big stores the test goes the ads does the Sainsbury's and also just your individual person who wants to buy a box of 24 bars, how they order online, so we have to have robust e-commerce platforms and digital payment systems to allow us to make sure that the customer experience is as seamless and as helpful as possible.
20:20
Again, just to reiterate the lack of digital expertise to compete effectively within the food and drink industry is an ongoing industry, an ongoing challenge and we, and within the food and drink sector, I think it is something that we need to develop and we need to make sure that we're getting the right IT people into the right roles to bring the food and drink industry forward.
20:45
Automation and smart manufacturing.
20:47
So again, this goes back to the AI side of things, but there are more and more companies who are now using automation and smart manufacturing to make that they have the most efficient way of doing the job and the speediest way so that when an order comes in particularly from the big store or whatever that needs it as quickly as they can and that can be turned around as quickly as possible and sent out to the stores and giving again a good customer experience to the Asda's, the Sainsbury's and the Tesco's to ultimately give their customers an ideal customer experience.
21:24
But there's obviously barriers in that because of the high costs and the shortage of IT skilled workers.
21:29
So we need to find ways where we can reduce the costs to implementing new systems and to make sure that IT skilled workers, so the training on site happens so that people are comfortable with the systems and they can then learn how to take things forward and make the systems better for them.
21:51
And again, I come back to cyber security risks just because it is in the news at the moment and it is such a critical situation.
21:58
And if you look at the number of companies that could be affected by a cyber security hit, there's just some figures that I can throw at you.
22:06
60% of food and beverage businesses experienced a data breach in the past year.
22:12
45% faced at least one successful cyber attack the past 12 months.
22:17
58% encountered cyber attacks aimed at disrupting operations and 56 reported incidents targeting their online ordering and delivery platforms.
22:26
So this is all, apart from the one regards to the successful cyber attack, it's more than 50%.
22:31
It's more than half of food and drink businesses in that sector are all being affected by cyber security issues and the was in place and if the systems were all correctly updated and correctly supported, then that would reduce the risk.
22:56
I'm not saying it would completely go away because the hackers are clever and they can always find a way around things, but it would at least help to reduce the risk going forward.
23:06
And so the middle point there, many small and medium sized enterprises lack the resources for strong cyber security measures. And again, there is a cost to it.
23:17
And ultimately, if you can put the cost in place, if you can spend the cost upfront, then long term, you'll reduce the risk of cyber security attacks, which could be 10, 20, 30 times the actual cost of putting in the cyber security solutions.
23:33
solutions, the actual outgoings and the cost to the business could be far, far higher.
23:40
And also the compliance with our relations like GDPR adds another layer to the complexity.
23:44
So yeah, absolutely does.
23:45
So whereas GDPR is important and as a positive step forward, it obviously causes a challenge to both businesses and to the vendors who are creating their systems.
23:57
So just that's a little bit of idea around about what the risks and the challenges are to the food and drink sector.
24:03
and some of the challenges.
24:06
What I'd like to now do is just talk a little bit about Joseph and Michael and their digital advisory team. So who have we worked with?
24:12
So we, in the last 12 months, we've worked with a vertical farming solution where we partnered with the organisation to conduct a review of the company's key business processes.
24:23
This was to look at the processes and just to make sure that they were robust enough and were able to support the anticipated global growth for this business.
24:36
An end-to-end business review process, so we had key people within the room and we basically took them through their end-to-end processes and were able to identify if there were any challenges around about efficiencies, if there was people doing more than one task.
24:51
And sometimes it's interesting when you get into these business processes, into these discovery days, where you take them through it step by step and all of a sudden they realize, well, why are you doing that?
25:01
Why can't that person do that?
25:02
then that could release a bottleneck and it's only when you see it down in paper or you have the discussion that people start to see oh yeah this isn't very efficient and we could do it better and it's we don't know your business more than you know your business but it is ultimately putting things down on paper and it's the old adage of not being able to see the trees for the wood so an independent pair of eyes just looking at it and asking the correct questions can all sudden drive discussions and introduce better ways of working.
25:37
So at the end of that we delivered a comprehensive report highlighting issues and weaknesses and recommended actions for improvement and more often than not those recommendations are implemented and that does show real benefits in the long term.
25:57
There are times where it doesn't and just the business turns around and says, listen, we just can't do that.
26:01
We understand your point.
26:03
But because of cost implications, resource implications, or whatever, we just can't introduce that.
26:08
But at least it's there.
26:09
And if in two or three years time their business has changed and they have the resources or they have the revenue to be able to then make these changes, that's all there for them to do that.
26:20
So ultimately we selected an ERP system for them to replace their current software and then developed a comprehensive statement of requirements and to be process maps and they're now operating on a robust platform which is fully supported, fully secure and is scalable for the future so that as the business grows they won't be looking at a new system again in three years time or five years time, the system will just grow with them and develop and help them to develop.
26:52
Second one was a butchery retailer, much the same And we reviewed their business processes and finance processes and delivered the same efficiency report to optimize system use and unlock operational gains.
27:07
And we rolled out bespoke interactive training, which was delivered specifically to that business's needs.
27:13
So it's not a one case fits all, it was we look at the business and we say, right, what training do they require and what training we will deliver and we delivered.
27:21
we then developed the training books and we walked them through that and then we revamped the chart of accounts and it was a very complex structure so we simplified the structure and this meant that it was much faster reporting, easier to understand and it meant that ultimately they made better decisions and quicker decisions based on that and then we also did integrated their tile online ordering systems with their accounting platform so that eliminated manual errors, delivered real-time accurate sales of stock reporting, and boosted operational control and decision making.
28:00
So all benefits to the business going forward and although yes there was an initial outlay, once that's in place the benefits and then efficiencies that that drives is just a complete return on investment very quickly in a very short time.
28:19
So the Michael Digital Advisory Approach.
28:22
So these are some of the things that we can do for you.
28:25
So we can, I'll walk through them all, but I won't talk too much about them.
28:30
So cloud accounting, system implementation, data analytics, analytics and insights, process mapping and re-engineering, which I do think is a critical one, because I do believe that some people just, cause they've done the job for as long as they have, they don't see where the efficiencies can be and where the benefits can be.
28:47
and also the systems are used have possibly been updated and are able to develop and drive new efficiencies but people don't look at that they just keep doing the same job doing the same tasks day in day out and so yeah the process mapping and engineering is definitely an important one and cloud adoption and optimization everything's gone to the cloud now and we don't actually look at any on-site systems unless the client is absolutely adamant they want to keep the system site and then we guess we ultimately will look at that but when we're going to do a new project we're more looking at getting the client onto the cloud systems purely because that's the future and it's what everywhere's going if you look at all the Google and Microsoft and that they're all putting everything up onto the cloud and the day of on-site servers is becoming shorter and shorter.
29:43
System reviews, so even systems are in place, we can come in and we can have a look at them and see how they're configured the correct way, are you getting the most out of them and with the way they're configured.
29:52
Software evaluation and selection, so we are constantly looking at new systems that are coming onto the market, the existing systems, we're looking at what the updates are and we're seeing what benefits there can be to clients so that we're at the coalface with them to be able to make a decision on what systems to get.
30:08
Project change management, Again, project management is important and some companies, a lot of companies don't have the resource to have a project manager in place.
30:17
So we can come in and we can do that task and make sure that everything is running properly.
30:22
Post implementation reviews or lessons learned as we like to call it.
30:26
So we do a review of the system.
30:28
Is it what was required?
30:29
Three months down the line we come back in and we say, right, where are we now?
30:33
Are you still seeing efficiencies?
30:35
Is it still running well?
30:36
Is there anything else we can go on to to look to take the business forward?
30:41
App advisory and integration. If you look at a lot of systems nowadays, the zeros, the odos, they all have applications that can all be bolted onto them.
30:50
So, you know, Odoo, for example, has upwards of 85 different applications for different parts of the business, such as project management, time sheets, and stock management, stock control and health and safety and there's just so much that can be thrown out of business that they're just not sure where they want to go and how they want to work.
31:12
In that situation though we always look at it and say if you've got a central accounts platform and you have maybe up to five applications voted on then you're getting unwieldy, it's getting risky, it's so many logins, it's so many different passwords and that's where you start to look at Is there a mid-tier ERP system that's more cost efficient and also more efficient with processing?
31:35
Training and upscaling, love going into companies and sitting with people and training them on things and by the end of the day they've learned something new and they can actually see genuine benefit to what they're learning and how that will fit into their everyday job.
31:49
So yeah, training and upscaling is a great thing and then obviously cyber security again is just so risky and you don't want to lose any business and any reputational through cyber security analysis risks and so that's really important to us too. What are the benefits?
32:08
Well these are just some of the benefits but I could have made a slide with double trebled the amount of things but important ones I think is increased productivity so through automation it means that the people, the guys in the finance department or the operational department because there's automation behind it, they're not having to do the same things.
32:31
The simple tasks that the systems can do are being done for the people and that means that the user can be concentrating on what the exceptions are and being able to give a better customer service or supplier experience.
32:44
So if there's a problem with a supplier, they can go back to this, they can at what the exception is, what the problem is, and they can give the supplier a great better experience as well as the customer. That's all around about automation.
32:58
The system being able to do simple tasks, they would do manually previously, but it can be automated.
33:06
So an example of that is a bank feed.
33:08
So normally you would get your bank statement and then you would tick everything off and you'd have to go to the system and you'd have to highlight the ones you to reconcile and update them.
33:18
Nowadays with a bank feed you can basically download from the bank, this is everything that's been paid, tick tick tick tick, job done, move on to the next task.
33:26
Compliance or traceability and reporting to meet evolving standards, so again it's where the oats have come from to make the bars which have then been sold to the stores, which have then been sold to the customers and then there's been a problem.
33:38
Can we get traceability the way back to the farm that the oats came from.
33:46
Cost savings, so again I'll go back to the automation and the efficiency gains to reduce costs.
33:51
Now in that situation I absolutely don't want to say that by introducing new systems and that reduces the resources within the business, we're not here to remove people from their jobs, we're just here to make it better for them and to them happier coming into the job that they're not having to look at the same job every day and day out.
34:12
They're getting new ideas, they're getting new training, they're being developed and then that's helping take the business forward.
34:20
Forecasting for accurate predictions to better plan for the future.
34:24
So if we can get real-time information into a format that helps the decisions makers say right this is our forecast for the next three months, six months, twelve months And also, when you import a forecast into a system, that can then be manipulated and changed on a weekly or monthly basis.
34:42
So it's just giving the real-time information.
34:44
And information that, at the end of every day, that information can be made available to the decision makers to sort of say, well, why did that happen?
34:52
Why did we not sell as much of that?
34:54
Why was there a problem with the logistics getting that information to those products to wherever they were supposed to go?
35:00
that means that we're able to make decisions much clearer and a more real time rather than having to wait till the end of the month when the management reports come out and then everybody's asking questions at that point why not do it on the same day why not watch and see what's happening that day and then make decisions based on that.
35:18
Ultimately the most important thing I think is possibly the customer service because you never want to lose customers so it's giving a customer service the opportunity and to the customers the to have a great experience that will keep them coming back and ultimately and hopefully with systems nowadays is the flexibility so when there is a challenge we can then when there is a challenge we've got the data we've got the report to see what was a challenge and then we can flex the system to make sure that challenge doesn't happen again.
35:49
So in summary Johnson Carmichael can help the food and drink industry tackle key challenges by leveraging technology to drive efficiency, financial management, and support sustainable growth.
36:01
From streamlining supply chains and automating processes to improving data insights and cash flow management, our expert team will help anybody do that and try to get to the best opportunity.
36:18
And, you know, cost pressures and complying with industry regulations is a major thing.
36:23
But I think in the positive side of things, we also want to help scale the business and we'll grow upwards and we'll grow outwards.
36:28
You always want your business to improve and to become more financially stable and to grow for the future and to create that business legacy.
36:37
So by doing that, by helping with new systems, hopefully we are able to do that.
36:43
I think that's now on to questions.
36:46
So I'll stop sharing so you can see me.
36:48
Well done, Fraser. It's always hard work talking to a blank screen or even worse, your slides.
37:01
So well done. So much easier as we used to do in the old days of standing in a room with people sitting around a table.
37:09
So, yeah, well done.
37:12
You've obviously thought long and hard on your time in working the food and drink industry about the specific challenges, and I'm sure there was a lot of nodding of heads of your observations on those and clearly how to deal with them.
37:32
So this is a time to ask questions of Fraser, and if it's anything outside of digital, then please do myself.
37:45
but so as you take a wee sip of juice, talk to us about the financial reporting transformation in growth businesses because I guess that's a particular area of my focus.
38:07
What would you reflect on there please so in the past where we've waited and everybody's waited until and we get the management accounts and then sorry can you start sorry can you start again there was a I think there was somebody digging digging through our uh internet sorry adam yep um you were you were dipping in there as well um yeah as i jumped up saying that we're experiencing some network connection difficulties that's right away now so i don't know if that's cleared is that cleared yeah i can hear you fine yeah sorry so yeah i'll go back to it so again the reporting analyst so the data that we get out of the system is the most important thing because ultimately that allows us to make decisions and so the reporting that comes out of a system but I think the real benefit these days is there any of the dashboards and management information real-time that we can get so at any point during a day somebody who's a decision-maker can go onto the system they can see the dashboards they have the relevant KPIs that they're looking at and they can decide if there's an issue they can decide oh that's doing really well why is that doing really well and that information becomes available to them in real time information.
39:32
So gone are the days where you'd have to wait until the end of the day, the end of the week or worryingly the end of the month where the management reports looking at them and you're saying, right, okay, why did that happen last month?
39:44
And it also almost looks like we're always looking retrospectively.
39:47
We're looking back into the month to see what's the, what was the problem?
39:51
So what are the challenges? Whereas with dashboards, we can look at it.
39:54
That's real time. That's here and now that's information.
39:57
and that then helps us look forward.
39:59
And then when you get to the forecasting side of things as well, so you can then have models where you can put information into the models to see what could happen if, for example, if I was to use a farm and they were to buy 100 new cattle, how would that help their revenue?
40:15
How would that help the cashflow going forward?
40:17
And they can put that information into a model and that then gives them, and then they might say, well, instead of doing 100, is it more profitable to only do 70?
40:25
and you can work around the figures then.
40:27
And that's something that, Jonathan and Michael, that we can absolutely help with and create those models and create cash flow for going forward and scaling the business appropriately.
40:36
Well, that's really helpful and sort of leads on to the wider next question, which is about the investment, because, you know, undoubtedly, you know, if this leads to a new system implementation phrase, then that's pretty costly.
40:54
So, you know, can you talk about how we've more about how we've helped businesses build that business case because, you know, that's ultimately a lot of people on this call, perhaps leading the digital function and their business and, you know, how can we help them build the business case to take a decision to the board to look at something like this?
41:16
Yeah, absolutely.
41:17
And I absolutely understand that it is an initial outlay of, you know, selecting a new system, and then the cost of implementing the new system, and then the ongoing licensing costs once you've implemented it.
41:29
And yeah, it is a frightening, sometimes it can be a frightening figure.
41:32
I think that what we do is that we talk about the tangible long-term return on investment.
41:40
So it's not just, yes, you've got an initial outlay of the next six months, it's going to cost you, but then this is something for the future.
41:46
This is something for the next three, five, 10 years and onwards, because systems nowadays are upgrading and in such a way that that's the way they look at their system as it's a long term.
41:56
We'll upgrade the system as we go along and we'll scale it up and we'll build on it.
42:02
So by implementing a new system, you're also looking at fewer errors.
42:08
So that's leading to more efficiencies because the information that you're entering into the system is more accurate because there's automation in place.
42:16
So information is coming from different systems that doesn't have to be changed by human input.
42:21
A lot of the challenges that have happened previously have been because somebody's had a report in front of them or a spreadsheet and they've sat there and they've keyed in the information and then all of a sudden that becomes incorrect and then the information you're getting out of the system is incorrect because somebody's put the decimal point in the wrong place or have added another zero on at the end of something and it then became far more complex to sort of review back and see where was the problem, where did it happen.
42:46
Whereas with automation and input, it's automated input and means that there's less errors and less human errors.
42:58
That can then lead to improved sales through an enhanced customer experience and operational agility.
43:05
There's lots of case studies and benchmarking data out there from similar businesses in the food and drink where they have achieved measurable gains by implementing a new system.
43:14
So taking the hit now and then, but on a long-term situation, they've seen the benefits of doing that and just giving the customers a much better experience going forward, but also allowing them to position themselves in a scalable way and to make strategic decisions, again, based off the information that they're getting out of the systems.
43:35
So yeah, so very much, yeah, you've got an initial outlay, absolutely, but the long-term benefits going forward Yeah, so it's essentially a third-party view, an external view on what's happening in the business.
43:53
Luke, I'm wondering if there's any questions from, and people, you've got to type them in sadly, there's no facility with GoToWebinar to come on and talk to us.
44:04
So are there any questions there, Luke?
44:06
Yeah we have got one question that's coming which is how do you think AI and automation will reshape operations in the food and drink sector in the next five to ten years?
44:17
It's a great question and it's something that we're looking at at Johnson Carmichael to sort of see where we are with that and to be able to advise our clients.
44:25
I think around the AI side of the thing it's just the information that you can get out of it and the speed that you can get the information to be able to generate and I mentioned it earlier on regards to the out your cash flow and what your revenue could be over the next few years, modelling that appropriately so that you can make decisions, strategic decisions on how you want to go forward.
44:48
Around about the machine learning and the automation of, you know, the really, really clever conveyor belts and then these sorts of things are now coming into play where, and it's not reducing the number of people, it's not reducing the human interaction, there'll always have to be people who have to monitor this and also turn them on and if there's an issue fix them but the speed that is now changing the food and drink industry and being able to package things up quicker so it's fresh and it's then being delivered out to the stores and the customers in a far more fresh way. I think it's just exciting. I mean Adam I don't know if you want to?
45:31
Yeah, well, a way for me and thanks, Luke. It's a really good question.
45:36
And, you know, in the survey, you'll see there's a section around automation.
45:41
And, you know, we would say, you know, if businesses are looking at scaling their business by investing more people, you know, given national minimum wage and then I see the changes this year, we would really challenge the sense of that. And there's a cracking business that we're working with.
46:00
and it's a client, so I'm keen to promote it.
46:03
Fraser, I don't know if you've come across Leap AI, which is a end-of-line food packaging business, so particularly good for fruit and veg and for biscuits.
46:15
And they're talking about a 60% increase in production, a 50% reduction in manpower.
46:22
Sorry, my hand's coming off the screen.
46:25
And a return on investment on that machinery within two years, which all those three statistics you wouldn't have seen with automation, Fraser, in previous years.
46:37
And one of the reasons why that's happening is because the hardware is connected with the software and with AI.
46:44
So suddenly, the automation solutions are much more sophisticated than they were.
46:50
And you know, the guys who are running, I mean, there aren't a lot of food robotics businesses, the food manufacturing robotic businesses in the UK.
47:02
There are only three a year or so ago, so I'm sure it's increasing, but the old story of having to go to the Italians or the Germans is changing, which I think is really positive. Anyway, Luke, any other questions in the bag there?
47:22
We haven't got any more that's come so far. Is there anything else on you guys there that we'd like to close on?
47:30
Just another point I would have, you know, question for you, Fraser, is, you know, talk to us, give me a real life scenario.
47:39
What's been your most difficult, challenging situation, you know, where you've delivered operational improvements, you know, with a business?
47:50
trying to you know bring it to life for us.
47:53
So and as I said in my slides one of the biggest issues is around about staff and their fear of change.
48:03
They've done the same job for years and years and years and they're comfortable in it and it just whenever there's a mention of a new system coming in a new business processes and that is absolutely the biggest fear.
48:13
So there's a client I previously worked with in the hospitality industry who were struggling with fragmented business financial processes and poor stock visibility and so after reviewing their systems we recommended integrating their tiles, their online ordering and their accounting platforms and but there was initial resistance from the operational team there was obviously the initial outlay and there was also the learning curve that people would and that the staff would have to go on and there was a real discussions around about that that they just didn't want to to see if they could change the business processes rather than changing the systems and because there was a fear within the staff.
48:53
So what we ended up doing was actually we said, listen, pick a system and we'll come in and train you on it and we'll sit with the people and we'll train them on that system.
49:02
So we created the documentation for the training and we went in and we sat with them.
49:08
But what we also did was, and this was an important step, was we included the people in the selection process.
49:12
So they were in it from the starting point.
49:15
So they understood what the system was going to look like.
49:18
They actually made decisions on what the system should be configured like that would help them do their job.
49:24
So they were on the bus right from the start and then they came through the whole journey.
49:28
So by the end of the process, they were all on board.
49:31
They were dead keen to get the new system in place and they were excited to then see, well, what is the final system going to look like?
49:38
What's our day-to-day jobs going to be?
49:40
And within weeks, the manual errors had dropped, reporting accuracy had improved infinitely and stock wastage had actually been reduced just because the systems were in place and we were able to improve all the efficiencies around about it and it kind of reinforced how operational improvements rely on the people engagement just as much as on the new system.
50:03
Yeah so it sounds to me like you know we can be the friend you know looking at that and we don't see the names of who's on the call but we see some of job titles and you know I think a lot of technical people, you are on the call and I think my message I guess to all of you is that you know I think somebody like JC can be your friend because you know you know very often you might be exposed taking you know issues and not having support taking them internally within a business freezer so I guess it's that teaming up isn't it?
50:37
It's absolutely that and also I've had experience when I was a group IT manager for the manufacturing company. IT wasn't looked upon as being critical, although they needed it.
50:51
The finance going into those IT was really a struggle to get even new PCs and things like that.
50:59
So you're on your own quite a lot.
51:01
Yes, absolutely.
51:02
So the guys who are on the call here, I can understand that you may have some pain, but by engaging with Johnson & Carmichael we have the knowledge and we have the experience of previous, of being in the same position as you guys and we can then come up with ideas of how we can go to the board and say give them the information, give them the opportunity to make a decision in regards to yeah okay we do need a bigger system, we need a better system and the benefits from getting that system in place. So yeah absolutely I'm on board with that.
51:31
So it's about teaming with you and helping you and the people at Nicole build your business case.
51:37
Okay, there's five to 11.
51:38
We probably chewed the fat for long enough today, Fraser, Luke, thank you.
51:47
And thank you everyone for joining us.
51:50
And I guess our contact details, Luke, will be in the covering email and also a copy of our food and drink report.
51:58
And we welcome you downloading it if you want to have a look, and indeed others within your business potentially completing it, because it's something we do on an annual basis.
52:12
Okay, Fraser, anything else? Final words from you?
52:16
No, I just want to say thank you very much for the opportunity for me to ramble on about the challenges that the food and drink industry have and also to describe what Johnson & Michael can do to help anybody.
52:31
And absolutely we're delighted if anybody wants to reach out, even if it's just for a discussion, then more than happy to come back and do that.
52:39
So you'd be happy to invest the time to understand about the business and situation from Fraser and through the proverbial Teams call.
52:47
Thank you, much appreciated.
52:49
And for those of you who may haven't, well, today's about digital, but anything else around accounting, tax, business advisory, around what we're doing in food and drink, very happy to pick up.
53:02
We've got nearly 1 ,000 people in JC across the UK.
53:07
Luke, thank you.
53:09
Thank you very much, guys.
53:10
Thank you for the work, that both of you guys have put into the webinar as well.
53:14
I'm sure everybody found it very useful as ever.
53:16
And yeah, just to reiterate, of course, we'll be sending out the contact details after this webinar, along with the recording and a copy of the slides, if anybody would like to have a look again. So yeah, thanks very much, guys. I think I'll end it there then.
53:30
Yeah, hope you have a great rest of the week and I'm sure you guys will be doing another webinar again soon.
53:35
Thanks Luke, appreciate it. Thanks Adam.
