By Juhi John
Your ERP is vital to the success of your organization. This critical tool helps organizations optimize their resources, improve efficiency, and make better decisions by providing a comprehensive and integrated view of business operations. Yet, for food and beverage manufacturers, this tool is incomplete and doesn’t provide all the necessary functionality to reduce waste, increase visibility, and minimize costly recalls.
The answer for many is to build add-ons to enhance the performance of the ERP. But this can be an expensive and time-consuming option. Instead, food and beverage manufacturers should incorporate industry-specific food warehouse management software (WMS) and manufacturing execution systems (MES). However, this specialized software must include key features to maximize profits while enhancing monitoring and control.
Do it yourself?
It is tempting for food and beverage manufacturers to build customized enhancements for their ERP. After all, who knows their industry and requirements better? True, they are experts in their field. But they’re not software engineers, and neither are the members of their current IT staff. Plus, customizing your ERP comes with a host of challenges, including:
- High costs: Customization often requires significant financial investment. Rewriting code and making system architecture changes can be expensive.
- Complexity: Modifying the software code can introduce bugs and disrupt existing functionalities. This can lead to system instability and operational issues.
- Maintenance: Customized systems require ongoing maintenance and updates, which can burden the IT department. This also increases cybersecurity risks.
- Integration difficulties: Integrating the customized ERP with other existing systems (such as point-of-sale systems, accounting software, and more) can be complex and time-consuming.
- User training: Employees may need additional training to adapt to the customized features and workflows, which can be time-consuming and costly.
- Regulatory compliance: Ensuring the customized ERP complies with industry-specific regulations and standards can be challenging.
Unfortunately, customizing your ERP often proves too costly and doesn’t provide the expected benefits. And, in an industry already dealing with tight margins and operational difficulties, organizations can’t afford the additional costs.
Industry issues
Organizations throughout the food and beverage industry already face multiple issues that can lead to financial losses. According to a recent industry study, some of those issues include:
- Business interruption: Business interruption was cited as the biggest internal risk to success by 48% of companies in the food and beverage industry.
- Supply chain disruptions: Supply chain disruptions were identified as the second greatest internal (40%) and external (35%) risk factor.
- Liquidity concerns: More than 40% of companies prioritized increasing liquidity among their top strategic objectives for the next two years to navigate turbulence.
So, how can food and beverage manufacturers ensure their ERP is providing the information and performance that they need without incurring unnecessary costs and burdening staff with extra workloads and responsibilities? Many organizations are turning to technology.
Grab a partner
Instead of trying to customize your ERP, food and beverage manufacturers are turning to software built specifically for this industry. And, as in just about any industry, organizations face a multitude of software choices. Food and beverage manufacturers have specific requirements that must be addressed by this software, including:
- Creating custom labels and digitally scanning all inventory at receipt.
- Tracking each lot from work in progress to finished goods in real-time.
- Getting end-to-end traceability in a single view.
- Tracking inventory down to the serial number or license plate – where a lot originated, its location in the factory, and which customer it was delivered to.
In fact, here are a few key questions you should always ask when vetting systems for your food and beverage operation:
Does the software support Work Orders/Recipes that produce multiple products? How does costing work in a multi-output recipe?
No all-in-one ERP supports multiple output products on a single work order. Whether processing a protein into multiple products, or even just grading produce, it cannot be done on the floor in even the best ERPs.
How does Repack work in the system? How does circular or continuous production work?
Food customers are constantly doing Repack to meet customer specifications: moving from a bigger pack size to a smaller one or switching between different private labels. ERPs, however, don’t allow a product to become itself. In the case of mixed nuts, for example, A BOM can’t be “mixed nuts = mixed nuts.”
This is a huge deal for those with continuous or circular production. But it touches every food or beverage manufacturer because of repack. You need a solution that can solve this out of the box.
Can I buy in pounds and sell in “eaches,” and vice versa?
For protein processors, Unit of Measure (UoM) changes are the norm. Buying in “eaches” and selling in pounds or buying in pounds and selling in “eaches” are things an ERP can’t handle.
How does it manage yield and reporting?
A purpose-built food and beverage WMS will have numerous tools specifically to manage yields and yields reporting for raw materials. This is unique in food and beverage and one-to-many processes that all-in-one ERPs are not equipped to handle out of the box.
These requirements help ensure that the ERP system can effectively support the unique needs of the food and beverage industry, enhancing efficiency, compliance, and overall operational performance.
Of course, any software you choose should work in concert with your ERP. In fact, certain software and providers are favored by some of the most common ERP partners, including NetSuite. These providers know that their systems can’t handle the unique needs of food manufacturers on the floor the way an industry-specific software solution can.
So, doesn’t it make sense to explore software that is not only built for food and beverage manufacturers, but is often mentioned by your ERP provider?
Better together
The food and beverage industry is highly competitive. And food and beverage manufacturers must continue to look for ways to enhance efficiency and improve performance. Trying to customize your ERP isn’t the answer. Instead, organizations must turn to software designed specifically for food and beverage manufacturers. It can help you increase visibility, reduce waste and employee turnover, help you better manage recalls, and more.