Digitalization in SMEs: a challenge but also a necessity

Insight in data helps entrepreneurs in SMEs to set up a future-proof business strategy. Yet data does not seem to be top of mind; the focus of entrepreneurs is primarily on generating revenue. Are you going to work with data? If so, it can make a world of difference. This is what importer of dog and cat food Johnson Petfoods discovered. In this update we list the advantages of data and digitization for you and show you why you can't really do without data as an entrepreneur in the SME.

Advantages of digitization

Digitization has several advantages. We can classify these into four categories:

• You can speed up processes (and thus save costs);
• You can improve services (thus increase turnover);
• You can gain insights (i.e., make better decisions);
• You can share data faster (which helps with transparency and new revenue models);

Every company owns data. By structuring data, you get information. Digitizing the data and the information can ensure accelerated decision-making and desired transparency. This then ultimately leads to future-proof revenue models, which are also in line with climate and health objectives. As an entrepreneur, do you want to continue to participate in your industry in the future? Then invest in digitization now.

Digitization is not 'top of mind' for many entrepreneurs

Many SME entrepreneurs are busy every day with achieving their turnover and therefore simply do not have enough time to really delve into the opportunities and threats of digitization. But the world around us is changing at lightning speed. Customers today no longer behave like they did five years ago. They increasingly order online, ask for customized products and services, expect convenience and make demands in terms of sustainability. As a result, the business models of many entrepreneurs who are not moving with the times are under pressure. Corona has only accelerated this trend.

Transparency and digitization is a must

One of the many benefits of data is that it provides insight into consumer needs. A current example that appeared in the media not too long ago is about the company Greenyard. This company's strategy is perfectly in line with Rabobank's vision. In their new strategy, Greenyard is looking to collaborate with innovative start-ups, among other things. As an example, CEO Marc Zwaaneveld mentions companies that specialize in collecting data about the food chain. Through relationships with the latter category, Greenyard hopes to gain more insight into customer needs and thus operate 'closer to the customer'.

Making relevant data insightful One of the insights into consumer demand is the importance of sharing relevant data on, for example, nutrients, emissions, climate impact and working conditions. Consumers demand this data from entrepreneurs. As an entrepreneur, don't you want to make this transparent? Then you run the risk of not being able to find your products on the supermarket shelves. We see examples of this at Tesco, Ahold, Colruyt and Lidl. We also wrote an article about front of pack label, where the labels are used to help consumers make better choices.

In the Paris Climate Agreement, agreements were made to reduce CO2 emissions by 50% by 2030. The food sector is also challenged to meet these guidelines. Many producers in the food industry must make their CO2 emissions transparent to their customers. This goes very far, because they are also asked what the emissions are on scope 1,2 and 3 of the CO2 emission.

Producers are willing to change suppliers if they get insight into the data on CO2, among other things. In this way they can demonstrate to their customers how the product can achieve lower emissions.

Mostly for scope 2 and 3 it is difficult to get a good and quick picture of the emissions. This is increasingly becoming a condition and in some cases it already is. Here too, transparency is extremely important. It is becoming part of the business model of companies. And digitalization is the solution here.

Transparency and insight into own business processes

Transforming data into digital insight leads to optimization of cost savings and thus increases profitability. Such as at Johnson Petfoods. This company is an importer of dog and cat food and sells their products nationally and internationally to pet stores. Since last year they have also been selling to private individuals via their online brand store. More insight into the stock position led to substantial savings in purchasing costs. John Sars, managing director of Johnson Petfoods, says: "In the beginning, we mainly steered by gut feeling and knowledge of the market, but now that our company is growing, the need to steer by data becomes much more important." In the past, for example, Johnson Petfoods sometimes bought too little stock and therefore missed opportunities. By working with data and optimizing the stock, for example on the basis of seasonal influences, the company has the right products in stock at the right time. In this way they can always guarantee the highest possible level of delivery to their customers. A new world has opened up for us," says Sars.

Source: Rabobank

More to know? Watch the entire video on how data helped Johnson Petfoods save money by providing insight into supply and demand.