The pandemic is pushing more seafood companies to embrace digital technologies in response to data demands from their supply chains, the need for remote oversight of plant floors (think social distancing) and even pivots to direct-to-consumer (D2C) sales.
Calculating the return on investment (ROI) on your digital transformation—including electronic traceability and workflow digitization—can be tricky. That’s especially true for seafood given its unique challenges.
Over the next couple of months, ThisFish will be publishing a series of articles on how to calculate the ROI for digital transformation in seafood processing, culminating in a practical ROI Guide for the industry.
In this first article, I’ll review the existing research on ROI and lay out our framework on how to understand—and ultimately calculate—ROI for the seafood sector. We want to engage industry leaders in this series to help improve our guide and ultimately our insights, so please email any comments to firstname.lastname@example.org.
Painkiller versus Vitamin
The tech industry often talks about their apps and software as being either a “painkiller” or a “vitamin” for their customers. Painkillers are “need to have” while vitamins are “nice to have.” Painkillers can even become so addictive that we can’t live without them in our business.
In the seafood industry, I see painkillers primarily on the cost side of the accounting ledger: labour, materials and compliance primarily. These are factors companies can control and technology can help with them.
In my view, vitamins sit on the revenue side. It’s about gaining a price premium or new customers as a result of your digital transformation. This is harder to control and execute and typically involves digital marketing. They are “nice to haves” and many in the seafood industry have grown skeptical—perhaps even wary—of price premium claims.
Based on our years of experience implementing electronic traceability and workflow digitization in seafood processors, we’ll be focusing most of our attention on the painkillers: the cost of labour, materials and compliance.
Some good, but limited, work has been done already on ROI calculators. Future of Fish has developed a solid Excel ROI calculator and guide for implementing electronic traceability. However, its scope is narrow, since digitization can go beyond just traceability to cover inventory, quality control, productivity and even cost accounting. The Global Food Traceability Center has also produced an online ROI calculator which has the same limitations and also relies too heavily, in my opinion, on generalized assumptions, i.e. what percentage of labour did you save?
ROI calculations for digital transformation can be challenging because they often involve collecting data from many departments: shipping and receiving, production, quality control, inventory, accounting, operations, etc. It’s much easier to calculate the ROI at a single point, such as this ROI calculator from Haarslev for their fish processing equipment.
One of the most elaborate ROI calculators I found was for POMS, which sells manufacturing software for life sciences, biotech, medical devices and pharma. Click here. It’s hard to imagine a one-size-fits-all approach like this working in the highly fragmented seafood sector.
Ancient, But Digital
We want to take a very practical approach to this problem. Our goals, in developing an ROI Guide for Seafood Digital Transformation, are threefold:
- to lay out a comprehensive framework for understanding ROI in seafood businesses
- to provide practical tips for discovering where to find the ROI in your operations
- to give you a tool to calculate your own ROI
Seafood is still lagging behind other protein sectors on electronic traceability and workflow digitization. However, as smartphone usage has exploded globally, many middle managers in seafood production and QC now realize how software can make their jobs easier and more efficient. That’s true for managers of all ages.
So, we hope our ROI Guide will be one more step to help bring this ancient industry into the Digital Age.
- Future of Fish: https://futureoffish.org/resources/snapshots/calculating-return-investment
- Global Food Traceability Center: https://seafoodtraceability.org/