With a world of possibilities and ERP options on the market, how can you identify the top ERP system to fit your operations? Shawn Windle, ERP expert, discusses the ins and outs of Food and Beverage ERPs to guide decision makers through the disruptive process of upgrading their business with the right ERP.
The Food & Beverage Industry
The Food & Beverage market has been driven to innovate its products for customer’s convenience but also to bring more value to their employee base with new technology.
Why Is There a Need for ERP in the Food & Beverage Industry?
The Food & Beverage industry is dynamic, forever changing according to trends, available resources, or compliance requirements. Employing the right ERP remains the cornerstone to success for Food & Beverage companies in the 21st century.
In recent years, eCommerce has expanded extensively within the food industry, with companies innovating technology solutions that enable food kit preparation, home delivery, and drive-up service. This is creating a market in need of practices to fit the omnichannel world. The right ERP can provide the technology infrastructure to enhance a company’s offerings.
Main Considerations When You Need an ERP
There are four major considerations to evaluate if your company is considering implementing an ERP.What Do You Need?
First, understand that the ERP is not going to be based solely upon your industry, but on what your organization needs. Different businesses require help and automation in different departments, so it is important to perform analysis to determine exactly what you need. Common issues faced in the Food & Beverage industry are outlined here.
Supply Chain & Logistics Management
ERPs ease documentation of the logistics involved in producing finished goods. Food companies need to track end-to-end production management to ensure consistency and quality. No consumer wants to receive a product that does not deliver on the promises made at the time of purchase, as this hurts reputation and ultimately future sales. Also, customer satisfaction goes down when orders cannot be filled in a timely manner.
Consumer Safety & Compliance
Unfortunately, issues can arise and open the door to recalls, or health and safety organizations can make changes to their policies, requiring changes in operational processes. Food ERP software, when used properly, can ensure that your processes and packaging are in compliance. These tools cut down on costs and detrimental mistakes.
Food & Beverage companies must consider compliance for many entities, including the FDA and OSHA. Leaders must evaluate compliance not only for the products that they are producing but also for the work conditions they are providing to employees. The right ERP can document the business’ compliance with various regulations.
Lot traceability is another essential function required of Food and Beverage ERP solutions. In compliance with different health organizations, companies need to be aware of the product lifecycle from creation to distribution. If there is a recall or public health concern, manufacturers need to be able to track the tainted products and ensure all traces are removed from the public quickly and accurately. Without lot traceability, manufacturers put unnecessary risk on their business.
Accounting & Forecasting
More sophisticated accounting ERP software ensures proper controls and reduces reliance on spreadsheets thereby reducing manual errors and improving accounting back-office productivity. This frees up accounting staff to provide more value-add services across the organization in the way of timely financial reports, budgets, and forecasts. In an industry with perishable goods, companies do not want to order more inventory than necessary; therefore, forecasting is essential to increasing profit margins by removing wasteful spending.Labeling
In the age of health-conscious consumers and more sensitivities to food than ever, labeling has increased in importance. ERP can assist in the production of labels to effectively include all allergens and serving sizes. Consumers are reading labels to be informed about what they are putting in their bodies, opting to avoid products that contain confusing or unclear labels. The right ERP can help companies increase business through label transparency.
Size of Your Company
ERPs are separated into 4 tiers based on the size of the organization. Leaders must know the true size of their company so that they are not spending money on systems with more than they need or purchasing a system that will never meet their necessary requirements.
Processes Needing to Be Automated
Your needs, based on your initial software needs analysis, will determine the direction your company will need to go with its ERP system. Vendors all have different offerings, none of which are one size fits all. Understand what processes need to be automated and which do not form a more seamless process.What Platform Will You Use?
In earlier times, platforms were all on-premise, giving businesses immediate access to their system and data. Now, the trend is moving towards cloud platform solutions. Each platform has benefits and risks associated with its operations, so it is important that leaders consider all possibilities to ensure the success of their projects. To learn more about cloud-based ERPs, read our blog, A Definitive Guide to Cloud ERP Solutions.Warning Signs to Look for as Your Company Grows
It can be difficult to know when to upgrade your ERP, but even if an ERP upgrade or implementation is not on a company’s radar, leadership and employees must look out for signs that their current system is failing them or at least be aware of them.Overloading & Bogging Down Your System
Many times, high activity can slow down a system and cause issues including crashes if the system is too small to handle the company’s transaction volume. In these situations, the wrong system can negatively affect a business’s ability to operate. Slow processes will create unsatisfied customers and tank the business in the long run.
Growth Can Mean More Competition
As a business grows, it can expand into markets with large-scale competitors who have already nailed down processes to increase efficiency. When one can finally break into those markets, one will need a proper ERP system to optimize operations and maximize profits. This is essential to remaining competitive.
Conclusion
A general rule of thumb is to never upgrade or implement an ERP system unless it is absolutely necessary. The right ERP can accelerate a business into success, but only if a company knows what they need and has the resources to put into the project’s success. Considering the ever-changing landscape of the Food & Beverage industry, a carefully selected ERP can increase profits while reducing errors and expenses.