Over the past 12 months, food manufacturers have had to navigate rapidly changing consumer habits and supply chain disruptions, triggering a 28% fall in UK food and drink exports in Q1 2021 compared to 2020. This period of unprecedented change has increased reliance on ERP systems to manage day-to-day business activities as companies recover from the effects of a global pandemic and a major Brexit deal. However, as companies shift to planning out long-term strategies, Andrew Newton, Dynamics 365 Business Central Food Consultant at Columbus UK, argues that food manufacturers must invest in an industry-specific enterprise infrastructure to satisfy their requirements or risk jeopardising their future success.
During the pandemic, IDC research found that ERP systems were the most invaluable piece of technology for many companies due to their ability to unify business systems, processes and operations. But for food manufacturers that handle products with a life of their own, a generic ERP software is simply not enough. Cross-contamination and mishandled products are just some of the complex processes that are unique to the food industry. These companies require a solution that can successfully optimise every aspect of the food supply chain. That means more than just adding custom-build systems to meet food safety standards and procedures – especially as customisations often require extensive time, resources and money to work.
An industry-specific solution underpins compliance and recall readiness to help food manufacturing businesses immediately address any concerns along the entire supply chain. In particular, there are five key areas where food manufacturers can see the benefits of an industry-specific ERP solution:
1. Address the variances of ‘living products’ during production
A standard ERP system can cover most requirements throughout the conversion process, however foodstuff variances will cause severe issues for food businesses. But the uniformity and quality of ‘living’ products can vary considerably during the manufacturing stage – and only a specialist food ERP system can handle these alterations.
Food manufacturers must always consider attributes of food items such as size, field and country of origin. Here’s where a standard ERP system can only provide a limited form of substitution functionality. In contrast, a dedicated food ERP solution with enhanced functionality can support multiple attributes, which is critical when dealing with organic and conventional items.
2. MRP II isn’t one size fits all – you need to factor in the special treatment
Unlike other industries, certain food products have a shorter shelf life and their own natural growing cycles. These considerations can make it extremely hard for businesses to coordinate production schedules with the traditional “make to order” process of generic ERP systems. Perishable foods, for instance, have to be produced daily or even more frequently and are therefore unable to align with the manufacturing resource planning (MRP II) functionality of a generic ERP. This is where individual scheduling algorithms within food-specific solutions can help businesses keep pace with changes in processing time to avoid catastrophic scheduling problems.
3. Guarantee food safety during the ‘goods in and out’ processes with end-to-end traceability
According to research from the UK’s Food and Drink Federation, consumers expect more detail than ever about where their food comes from and how it ends up on their plate. This increase in food consciousness, particularly over allergens and product sustainability, is driving demand for greater traceability across the food supply chain. To comply with new mandates set by the FSA and FDA, companies must now be able to track products in the “goods in” and “goods out” processes. A traditional ERP system can assist with this food traceability to a limited extent. However, a food-specific solution with bi-directional and QA functionality is preferred by manufacturers looking to establish extensive quality and customer safety checks throughout the entire supply chain.
Once products reach the finished ‘goods out’ stage, the foodstuff processes follow the same standard ERP practices as non-food, but a food-specific solution will also ensure ‘best before’ and ‘use by’ dates are catered for. Not only can this avoid customer service and safety issues, but it can also ensure that retailer partners provide the end consumer with a long enough shelf life to avoid wastage at the end.
4. Inconsistencies are inevitable – tackle this with optimised warehouse management
In terms of warehousing, food and standard ERP solutions share similar functionality of a built-in warehouse management system (WMS). However, a standard solution is unable to accommodate the unique treatment foodstuffs require during storage. For instance, businesses must carry out frequent quality checks to monitor changes in condition, such as when unripe fruit becomes ripe – and only a food ERP system can monitor the positive and negative changes.
Changes are also a regular occurrence in the food inventory process due to environmental factors – and effective management hinges on an extensive level of detail. This is where a food-specific ERP solution can go beyond the capabilities of a traditional system. For instance, food manufacturers can access information at the item level, such as attributes and quality specification, and at Lot level, such as in-depth data on residency times, origins and allergens.
5. Pre-empt major shifts in supply and demand with dynamic forecasting
Where most other industries are driven by demand, supply and demand work together in the food sector. These patterns have traditionally been influenced by the seasons but today’s customers expect year-round supply. Manufacturers now need to consider additional complexities during the demand planning process to seamlessly marry expected supply with expected demand – and standard ERP systems can no longer keep pace.
A food-specific ERP solution will provide businesses with greater flexibility in planning and forecasting models to respond quickly to demand increases, such as when raw materials are not available – even if there’s significant demand from the end customer. This enhanced functionality can also help businesses gain better control over how weather conditions impact daily food demand. For instance, food-specific forecasting models can take into account real-time and historical weather data to provide a granular level of visibility and traceability that a generic ERP system simply cannot provide.
Winning the food fight starts with an industry-specific platform
Although food and non-food businesses share many similar processes, companies quickly realise that a generic or custom-built ERP system is not enough to accommodate the specialist requirements of the food manufacturing sector. From scheduling to demand forecasting, food products have a life of their own – and these must be supported by software that takes into account their unique variations and inconsistencies.