The food & beverage manufacturing business makes up multi-billion dollars worldwide. It is a fast-paced industry and extremely consumer-focused. Manufacturers of perishable goods, such as food and beverages do encounter difficulties adhering to rigid regulations, production processes, supply chain disruption, etc.
The operating costs are substantially high, while the margins are wafer-thin, and also, the business are at stake of different risks. Then there are additional challenges on the fronts of planning & scheduling, food safety, quality control, production, packaging, labeling, traceability, and regulatory compliance. The pressures around these challenges form a complex operating environment for the food and beverage manufacturing industry as a whole.
Fighting all of these concerns, food and beverage manufacturers strive towards achieving operational excellence and higher revenues. And, a better way to address these concerns is to get an advanced tool that can help food manufacturers in managing the entire production process from its inception to its completion.
But, what is the solution? Well, it is an ERP system… better a food manufacturing erp software. Continue reading the blog to learn more about these two options, including which one is more suited for the food and beverage business and what sets them apart from one another.
Putting an efficient ERP system in place is important for any business in order to achieve the required objectives and goals. After all, each industry has its own unique set of challenges to resolve and specific requirements that they need from an ERP system.
Speaking specifically of the food and beverage business, the most important thing for manufacturers to remember is that the product always comes first and has a shelf life of its own. Food needs to be regularly examined because of its behavior of changing its properties constantly. Be it the taste, color, texture, nutritive values, etc., everything changes with time, atmosphere, weather conditions, and expiry dates.
Therefore, deploying suitable ERP software should be the first priority for any food business firm. With the use of ERP systems, both a product manager working on the shop floor and a senior management executive seated in an office can see the various operations and quickly resolve any bottlenecks. Companies can increase production and operational efficiency by achieving operational excellence.
Food ERP & Standard ERP systems – What Is It?
An ERP system itself is a powerful tool that helps food businesses perform their day-to-day activities and optimize processes over time. Standard ERP systems use antiquated technology that was once groundbreaking but is now outmoded. Paper-based and spreadsheet-based methods also outgrow the requirements paving way for errors, inefficiencies, non-compliances, and such.
And these errors, ultimately generate the need for an automated system that can streamline and automate all business operations. However, an industry as specific as food has its own unique set of requirements. Even its sub-industries stand different from each other in terms of their processes and requirements. Demanding an ERP that is built specifically for them.
Understanding this, software companies have come up with an ERP that has been tailor-made for the Food industry and is termed a Food ERP.
Food ERP software is similar to any other ERP system, with the exception that the features here are tailored to the food business. It possesses the generic ERP functionality plus the specific operational as well as compliance capabilities needed by the food manufacturers.
It can automate operations linked with the food industry, including quality control, human resources, and financial administration. Food ERP software is also capable of keeping an eye on food safety and developing new food products to satisfy consumer demand and adapt to emerging trends. Not to mention, it ensures timely food distribution and optimizes supply chain processes too.
In short, both options aim at streamlining and optimizing business operations but Food ERP software has more functionalities and capabilities than generic ones.
Food ERP & Standard ERP systems – Differences
Talking about capabilities, Enterprise resource planning (ERP) is a system of integrated software applications that manage day-to-day business processes and operations of all industries. It:
- Incorporates finance, human resources, procurement, distribution, supply chain, and other functions seamlessly.
- Provides 100% visibility of all processes from one central location
- Offers real-time reporting across departments
- Fastens up the business processes by automating workflows
- Stores data centrally on the system
- Allows integration of only a few API systems
These functionalities are no-less, for sure. However, a food manufacturing system includes several other functions in addition to these capabilities, that are not essential as well as important to the food industry –
- Generates bills for the exact weight of the items such as meat and chicken instead of the estimated weight using catch weight management and Lot Strength/Potency.
- Eliminates legal obligations, establishes a high standard of workplace hygiene, and protects employees’ health by adhering to cGMP norms.
- Maintains records of all the vendor’s details, backgrounds, their certifications related to materials through the Vendor Verification feature.
- Helps follow policies that adhere to local and international requirements across the manufacturing life cycle, from procurement through sales and distribution through FDA reports
- Tracks back the entire lot in case of any unfortunate situation in the market and help quickly recall the items back.
Standard ERP shortcomings that are holding your food business back and how does food ERP help?
The food industry differs significantly from other manufacturing enterprises. They operate in a very different and rigid environment. Goods in the global food supply chain move at a rapid pace, owing to the manufacturers’ duty to deliver fresh and safe products to their customers. They have strict deadlines for producing food items because the raw material they use has a short shelf life and changes constantly hour by hour and day by day due to the temperature, climatic conditions, and expiry date.
Lack of focus on core functional capabilities
Standard ERP systems do not focus on the intricate details and operational cycle of the food industry, whereas food ERP software is designed to handle all these specific unique needs.
For e.g.: While manufacturing tomato ketchup, the tomato bought in the morning might differ in the evening if not used. They must ensure that their materials are used in time. Or, meat producers must manage their catch weight, dairy producers should create a tighter temperature control environment to prevent milk from spoiling, bakery producers must arrange their shelf in the warehouse where the early expiry materials are kept at first than others etc. Standard ERP lacked the fundamental functionality that food ERP possesses—managing food operations in precision.
Complex demand forecasting
The food business also faces difficulties with respect to demand forecasting. Speaking of which there could be some raw materials that might not be available throughout the year or, let us say, have a specific availability period, or some whole foods or crops may have demand for one harvest or slaughter that results in demand for other areas with entirely different demand profiles. Weather is another factor that may affect demand.
In conditions like these, a standard ERP again will hold your business because do not take history and patterns into consideration. They are incapable of accommodating and processing the dynamic customer demands and are inefficient in forecasting the food trends that may arise in the near future.
However, food ERP software has a demand planning module that takes into account all of these factors and indicates which materials are low and when and how much should be ordered.
Manufacturing resource planning is a task
Generic ERP systems typically operate in a “made to order” manner, with forward or backward scheduling options. If products in the food industry have longer shelf lives, these regulations hold true.
But when items have limited shelf life, a more complex scheduling algorithm is needed; in such cases, the algorithms of generic ERP systems are insufficient.
Even when the products are dependent on harvest cycles, they are only ready when they are ready. This situation may not always be in line with demand-driven MPS or, when the weather is a factor, because unpredictable weather changes can affect the quality of the produced. Standard ERPs are not built to account for situations like these and therefore could affect processing times and cause troublesome scheduling issues. Here a food ERP system easily maps the requirements and makes MRP smooth.
Supply & demand go hand in hand
Contrary to other industries, where demand dominates, the food industry is driven by both supply and demand. Seasons have always influenced these patterns, with supply influencing demand. Earlier people could not eat seasonal fruits throughout the year. But today’s consumers want what they want and also only when they want. Give them, or they will find it with your competitors. For e.g., Consumers want litchis or mangoes in year through.
Generic ERP software cannot handle such intricacies, but Food ERP solutions are built with supply algorithms to manage these.
Goods in & Goods out
These two processes are mostly the same for the food sector as for other businesses. When it comes to managing raw materials for “goods in,” there are three differences:
- Food-specific ERP software offers improved QC capabilities that enable things to be measured in a variety of units, kinds, or types.
- Allows manufacturers to operate with more than one unit of measure as food is frequently controlled via various units.
- Allows working with more than one unit of measure as food is often managed via multiple units.
Typically, generic ERP systems are ill-suited to handle this. After food has reached the “goods out” stage, it is in a standardized format and is ready to be sold. Food businesses should mention “best before” and “use by” dates, should have proper nutritional labeling, and details of ingredients involved in the packaging to avoid customer service, safety, and compliance issues. Another great functionality that generic ones do not have, but Food ERPs handle with ease.
Hawkeye on inventory and warehouse
Food products require extra handling even when they are in storage. The surrounding environment can also change the status of material and so continuous quality checks to monitor their condition is important. They may even change item codes while in storage (like unripe fruit getting ripened in the shelf itself).
This high level of information gathering may cause issues for generic ERP systems. However, food-specific ERP software is tailored to capture, process, and produce the amount of information needed at the item and lot levels (attributes, units of measure, allergens, and origins).
Manufacturers of beverages, dairy, meat & poultry, bakery, convenience foods & snacks, fruits & vegetables, confectionery, frozen foods, and many more categories are on the hunt for a custom-fit ERP solution that meets their unique requirements. Why? Because even if they belong to the same food super-set, they have their own different processes and specific needs which cannot be met by a generic ERP, but only a food manufacturing software.