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Six ways ERP delivers value to food manufacturers

INSIGHT ARTICLE  | 

The food industry is integral to the human population and is obviously of great importance to society. Over the past few years, it has evolved very rapidly due to advances in technology, shifts in customer demand, and a growing focus on food safety and compliance. Customers prefer varieties of options to choose from when it comes to food, and dietary preferences are always changing. Health trends are influencing these preferences, as well as lifestyle changes and continued emphasis on sustainability practices. Of course, the recent impact of the pandemic and resulting needs and changing preferences for food have further fortified the importance of this industry.

And with great importance comes great responsibility. The need for complete visibility into all supply chain operations, from source to consumer, is paramount. Furthermore, leveraging technology is essential in optimizing and automating business processes. Implementing a fully integrated, flexible and user-friendly enterprise resource planning system can help businesses drive faster growth and thrive in the industry while providing transparency and lowering operational, financial and legal risks. The following explores six key requirement areas within the manufacturing process, outlines challenges and risks, and covers how ERP solutions can address those challenges to accelerate business growth. 

Requirements and Challenges

Risks

Requirement: Visibility - Food manufacturing is a complex process with numerous moving parts. The movement of materials from the manufacturer’s supplier to the end customer needs to be transparent and traceable. 

Challenge: Movement of materials occurs at various points throughout the day.  This can be within a single warehouse or between multiple warehouses. Businesses can have manufacturing plants spread across various geographical areas, with each plant producing thousands of pounds of products per week. Each touchpoint and its corresponding data within the manufacturing process needs to be thoroughly captured and readily available to share with necessary parties. 

  • Lack of traceability and process oversight
  • Minimal readily available data

Requirement: Efficiency - Businesses are shooting for maximizing production and operational efficiency during the manufacturing process. 

Challenge: Lean operations are becoming more and more prominent and it is crucial to identify possible areas to increase efficiency within operations. Having many manual processes as part of daily operations leads to overall process inefficiency. Efficiency relates to maximizing the quality and effectiveness of the process, and businesses are responsible for finding the perfect balance to optimize efficiency and productivity within the manufacturing process. 

  • Time consuming and resource intensive
  • Human error
  • Longer lead time and machine downtime

Requirement: Enhanced Data Management - For businesses, data is everything, and ensuring that it is organized and in a single, readily accessible location is critical. 

Challenge: Businesses often have several different spreadsheets and databases that contain various datasets; however, as they grow, having data in multiple places can get messy and hinder progress. With all the data needed for manufacturing, it is easy for it to become unorganized. It can be overwhelming to manage and keep track of data if it is stored in multiple places.

  • Lack of transparency
  • Time intensive processes for collection and organization of data

Requirement: Informative Decision-Making - When it comes to manufacturing, personnel such as production planners, schedulers and leadership need a plethora of data at their fingertips to make informed decisions. 

Challenge: Leadership is responsible for forming strategies to enhance operations as those working closely with manufacturing need to make decisions on which products to run. Real-time data is not always easily available as it may come from multiple sources, including email and/or word of mouth. Inventory management is key in the food industry since perishable goods are involved. The perfect balance is required to control inventory levels while accounting for product shelf life.

  • Lack of visibility and supporting data
  • Inefficient inventory processes
  • Spoilage

Requirement: Quality Control - Businesses in the food industry have strict regulatory requirements that need to be enforced. They need to comply with governmental and company standards regarding food safety and labeling, while maintaining customer expectations. 

Challenge: Enforcing standards and managing quality is essential to success and is no simple task. Each batch of materials needs to go through quality tests and be monitored throughout the manufacturing process. In the event of product recalls and/or other unexpected issues, full transparency is integral.

  • Difficulty tracking manufacturing processes
  • Decreased consistency
  • Contamination

Requirement: Customer Satisfaction - The customer is one of the most crucial components of a business and has a direct correlation with its success. 

Challenge: Customer satisfaction drives growth; manufacturing plays a large role in dictating this satisfaction. A commonly used key performance indicator of satisfaction is known as on-time-in-full (OTIF), which means delivering finished goods on time, in their full quantities and without defects. A business is only as valuable as its customers and providing optimal customer service is a necessity.

  • Difficulty locating bottlenecks affecting satisfaction
  • Minimal readily available data for customers


Implementing ERP solutions can address these challenges. Below are specific ways in which solutions can be applied in each area to help optimize business processes. 

Visibility

Having an ERP system in place is beneficial for enhancing visibility and creating proper links within the manufacturing process.

  • Lot tracing capabilities keep track of key data such as lots, IDs, quantities and dates during material movements. 
  • The ability to trace materials forward and backward as they transition from raw materials to finished goods helps maintain a deep level of oversight over individual SKUs and the overall process. 
  • Tracking exact usage and costs associated with every transaction helps analyze detailed item and labor costs, and variances. 
    • Upon producing finished goods, users will have access to production costs all the way down to the individual ingredient level. 

Efficiency

Having an ERP system in place leads to reduced operational costs and drives efficiency growth.

  • Real-time data and analysis capabilities help identify areas within operations where businesses can streamline processes; this, in turn, cuts costs and reduces waste. 
  • Better efficiency can reduce lead times and process times, minimize delays, and ensure those on the manufacturing floor are on the same page. 
  • Automating manual processes increases accuracy and allows workers to focus on higher value tasks. 
  • Flexibility helps ensure that manufacturing processes align with software capabilities. 
    • As businesses expand, they need technology that is scalable and can evolve alongside. 
    • Technology solutions can be customizable to an individual business in the form of enhancements to an ERP system. 
      • Examples of such solutions include custom form designs, mobile solutions, and integrating RFID and Internet of Things capabilities in the system, all of which can provide businesses with a competitive edge.  

Enhanced Data Management

Having an ERP system in place optimizes data management processes and ensures data is readily available for driving strategies and insights.

  • Businesses are able to store all their data in a centralized location, and easily import and export it into the system using respective data entities. 
  • Process manufacturing places a large emphasis on formula and route management and this helps to manage and use that data more efficiently.  
    • Data can be stored for different versions of the same formula, as well as for the same route. 
  • Businesses that produce the same and/or different products at multiple manufacturing plants place even further emphasis on optimal data management. 
  • Better data management means better decision-making and overall efficiency. 

Informative Decision-Making

Having an ERP system in place serves as a great tool for businesses to make key decisions using readily available data and tools.

  • The flow of inventory can be monitored continuously, which allows businesses to achieve the perfect balance between high and low turnover using inventory and warehouse management capabilities. 
    • Planning and scheduling production is no easy task, but having all the information in a centralized location eases the process and makes it more organized. 
  • There are several real-time reporting and business intelligence capabilities that can be utilized with cloud-based ERP systems to help analyze manufacturing operations and identify opportunities to make insightful decisions. 

Quality Control

Having an ERP system in place is a great tool to optimize quality control processes on the manufacturing floor.

  • Tracking materials as they move through the manufacturing process in real-time ensures standards are enforced and data is readily available for necessary parties such as customers and auditors. 
  • When raw materials go through quality testing, results are captured and recorded in the system; any items that do not conform to requirements are placed in quarantine, and marked accordingly in the system. 
    • This ensures the rest of the materials going into manufacturing are not negatively affected.
  • If an unexpected issue arises involving finished goods, such as a recall, the system helps track down the exact path the product followed through the manufacturing process along with its components, which is key to eliminating further risk and addressing the issue in a timely manner. 
    • Product consistency is emphasized during the manufacturing process to ensure repeatability. 
  • Optimizing quality assurance processes can help businesses protect their brand in the marketplace, and demonstrate to their customers that only products of the highest quality are sold. 

Customer Satisfaction

Having an ERP system in place enhances customer service practices and therefore, customer satisfaction.

  • Tracking capabilities and accessible data help ensure there are no bottlenecks in the manufacturing process that hinder the ability to provide optimal satisfaction. 
  • Customers have full visibility into the process, including product usage and quality records. 

As food manufacturing businesses grow, it is important that operations are kept running as smoothly as possible. An optimal ERP system helps support businesses through their growth and allows them to enhance the entire manufacturing process, as well as supply chain operations as a whole. By leveraging people, process and technology, ERP solutions provide key benefits for the food manufacturing process, all of which increase return on investment and minimize overall organizational risk. Whether a business is large or small, there are always opportunities for growth in the short and long term. Optimizing processes benefits a business and, in turn, benefits the customers who are the foundation for its success. 


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