Tag Archives: Food ERP

ERP for the Food and Beverage Industry: A Recipe for Success

Looking for a Food ERP Software? In this article, we are going to explore some key aspects to consider when selecting an ERP Software for the food industry.

The Australian food and beverage industry is highly regulated…..HACCP, traceability, quality control – these are just some of the key aspects that organisations operating in this industry have to consider when selecting an ERP system. And the list goes on!

With strict regulation and compliance requirements, it’s important to understand what the challenges in the food and beverage industry are before proceeding any further.

Australian food and beverage industry overview and key challenges

The food industry in Australia is going from strength to strength – with a growing population and an abundance of great locally produced food products the Australian food industry is well equipped for further growth. The industry appears to be split into three core sectors across food processing and food distribution;

Smaller businesses offering food distribution to cafes and restaurants;
Mid-size food processing companies
Larger food processing multinationals.

When considering a new ERP software for the food industry there are multiple complexities – for small and large players. Challenges like traceability of raw materials and finished goods, random weight, weighing scale integration, run/delivery management and sequence-dependent changeover can offer some challenges for ERP providers.

The key for the smaller players in the food processing or food distribution market is to be able to find an ERP provider that offers the required level of functionality and expertise without the associated price tag. The intention of this article is not to recommend any specific ERP application – but more to give general advice on ERP product selection for organizations operating in the food industry.

How to choose the best ERP software solutions for the food and beverage industry

In this short video, we explain the 5 key functionalities that you should be looking for in a modern food ERP software solution for your business.

Things to consider when selecting an ERP software for the food industry

Key takeaways

Functional / requirements – as always when selecting an ERP solution it makes sense to list your functional requirements in each area of the business. This includes functional requirements for finance, sales, purchasing, inventory, manufacturing and all other business processes. In the food industry, your requirements for finance will usually be reasonably standard. As a result, a lot of focus is usually placed on the operational side of the business. Most specifically a lot of focus should be placed on the food industry-specific ERP requirements – expiry dates, random weight, traceability, HACCP etc.

Budget – there are some great ERP products suitable for the food industry available in Australia. These products are offered at very different price points. There is no point investigating a great ERP product for the food industry with lots of reference sites only to find that the implementation would require a budget of three times your intended spend on ERP. Unfortunately, we all need to be realistic and the budget has to play a role.

Generally speaking, ERP products can be divided into three broad categories – tier 1, tier 2 and tier 3.

Tier 1 normally indicates the more advanced, high-end ERP solutions used by multinationals and bigger companies with larger budgets.
Tier 2 is the mid-range sector where many Australian food sector SMEs are looking for ERP products. The ERP players in this sector offer a complete ERP application aimed at medium-sized businesses.
Tier 3 is typically the smaller end of the market – less complexity, lower implementation investment and quicker implementation timeframes.

The challenge with ERP for the food industry is that very often ERP solutions should not be selected purely based on the size of an organization but rather on the complexity of the business requirements. Put another way – what are the business needs? As we have already mentioned the food industry puts forward some relatively complex requirements. The challenge is that a small food processing business can have relatively complex ERP requirements. This will require a higher budget to implement. Even if the ERP software is given away for free experience tells us that more complex requirements by their nature take longer to implement and therefore require greater investment.

Methodology – whatever industry you are in when you implement an ERP solution you need to follow a methodology. The chosen methodology will offer structure and process to the implementation. The methodology should be selected based on the companies’ specific requirements, complexity, budget and size of business. There is no right or wrong answer for ERP implementation methodology. One size does not fit all when it comes to ERP implementation. Agile, waterfall and other ERP implementation methodologies should be selected carefully based on their merits and matched to your companies’ specific business requirements. Remember that ERP is about business – not software. The software is purely an enabler to doing better, smarter, more efficient business.

Timing – implementation timeframes for ERP can range from a couple of months to several years depending on complexity, resource requirements and other factors. Make sure that you set realistic go-live targets which allow for sufficient testing of requirements.

Let’s discuss some of the ERP for food industry requirements in more detail:

HACCP – a food management safety programme. Designed to control food safety through food safety and risk assessment plan. A well-implemented ERP solution can assist with HACCP requirements. Most specifically as these requirements relate to:

Traceability – a good ERP solution will allow batch/lot traceability. This will allow a food processing or distribution company to not only track and trace finished goods but also all components used in processing. This will allow full traceability if there are any product-related issues like contamination.
Monitoring – a principle of HACCP is the monitoring of critical control points. With traceability and manufacturing routing through ERP these critical control points can be monitored.
Procedures – monitoring of procedures and process flows is important in the food industry. An ERP solution can assist with document management and retrieval, automated quality assurance procedures (sample testing of raw materials and finished goods) and the automation of procedures. For example, an ERP solution can force a user to do a QA sample test prior to receiving raw materials into a warehouse.
Data – HACCP requires that food companies have access to data and good record keeping. An ERP solution with good reporting tools makes access to data easy. Even large volumes of data can be kept for several years and accessed at the push of a button.

Weighing scale integration – A common requirement for the food industry is weighing scale integration to the core ERP solution. This weighing scale integration can be relatively simple – providing scales for weighing cartons or boxes in the factory to check the actual weight vs expected weight of a carton of food or raw materials. More advanced ERP implementations might have integrated weighing scale functionality to automate the weighing process as a double-check that the right goods are being shipped.

Proof of delivery – when foods are delivered to a café, restaurant or hotel why not implement an automated and electronic proof of delivery solution on a handheld device – true mobility.

Run management – large and small food distribution and processing companies share a common goal – get your product to your customers on time and in full. Delivery run management involves the scheduling of trucks to make sure that we follow the most economic delivery schedule and that we pack the trucks according. As an example, the items for the first delivery are packed at the back of the truck.

Random weight – one of the more complex areas for ERP solutions in the food processing industry. Random weights indicate that you sell an item (for example rump steak) as a carton (sold by the carton) but you also have a variable weight in each carton. In this instance, the sell item of 1 carton might weigh approximately 10KG’s. The challenge for an ERP software solution is that the weights are very seldom exact. There can be weight loss on the meat and as such a 10KG carton could end up with a net, shipped weight which is variable. There are different ways to handle random or catchweight and your ERP provider will need to be across these solutions.

Reverse bill of materials – most ERP solutions want to treat manufacturing as the building of an item from various raw materials. As an example a bicycle is built from two wheels, a frame, a seat and more. These parts are assembled using the bill of materials. What makes food processing different is that you need a reverse bill of materials. In food processing, you start with one item (a whole cow) and then you cut the item into various finished goods – fillet steak, rump steak, etc. The complexity for ERP is the concept of one item of raw material becoming multiple finished goods.

EDI – if you are selling to the major food retailers in Australia your business will need to be EDI compliant.

We have talked about some of the complexities facing the food industry when implementing ERP – let’s not forget that when we implement a good ERP solution we get a whole lot more than a general ledger and invoicing. A well-implemented and functional ERP solution will open up all sorts of opportunities for improvement:

Instant access to analytics enabling the business to make informed decisions;
mobility for sales teams and delivery drivers (including proof of delivery);
run management to ensure the most efficient delivery to your customers;
on time in full reporting for your customers and suppliers;
better inventory control and
optimized purchase and production planning.

Food ERP Software Demo

Check how a true ERP software that is built for the food and beverage industry looks like in this short software demo of Sage Enterprise Management tailored to the food industry.

Conclusion

It is no secret that the food industry in Australia is going from strength to strength. Although highly regulated there is still room for Australian organisations to innovate on processes and operations to drive efficiencies at multiple levels.

This guide to selecting the right ERP software for the food industry aims to provide a better overview of the key challenges that this type of solution can help you overcome and how.

Do you operate in the food and beverage industry in Australia? Leave a comment below to let us know what challenges you are facing and what key benefits you would be looking for in an Enterprise Resource Planning system.

From Paddock To Plate With Sage Enterprise Management [WEBINAR]

WEBINAR TRANSCRIPT – From Paddock To Plate: Streamline Your Food Manufacturing Business.

Going beyond food safety: What Australian food producers need to have in place to initiate and maintain wholesale distribution relationships with large retailers

Just meeting the approximately 2000 pages of the Food Standards Code covers your food business for the very basics. This base level is meant for small, unskilled businesses such as corner stores, sausage sizzles and restaurants to ensure the food we eat is safe.

Where this base level becomes an issue for a food business is when:

1. They want to know their food is edible and nutritious, not just safe

2. They wish to supply a major customer

3. They wish to export

4. They wish to get product liability insurance

The Food Standards Code only requires food to be safe. It does not cover:

1.Food quality: colour, flavour, aroma, texture, etc.

2.Nutrition: There are no rules on minimum or maximum levels of nutrients in most foods unless you make a claim.

3.Weight: Underweight product is not caught by the Food Standards Code, as this is not a food safety issue.

There are over 100 organisations operating in Australia that have introduced standards in excess of the Food Code, some of these well in excess, to ensure food and food ingredients supplied to them meet their own internal requirements. In addition, many overseas countries have strict rules on the standards to which a food business must be certified in Australia, typically well above the Food Code’s requirements. Most insurance companies will not issue product liability or recall insurance to companies that are only certified by local councils to the Food Standards Code, as this base standard only covers the basics of food safety.

If basic food safety is a given, what else needs to be in place to satisfy major retailers?

Most food safety systems for major retail chains are more business management and Quality Assurance systems than food safety programs.

The focus of these standards is not just on quality assurance or processing areas, but a whole of business standard, covering senior management.

A food safety program must be in place covering all steps of the process and all products supplied, from procurement through processing to delivery.

The food safety program must also cover food quality and regulatory issues (for example, correct species, the correct number in cartons, underweights).

It must also meet the international HACCP standards in its formatting and design.

The answer to meeting the basic food standards as well as the requirements from major retail and distribution chains is Enterprise Resource Planning software. And Sage Enterprise Management has the secret formula!

Brett Mundell from Leverage Technologies talks us through choosing an ERP software solution for the food and beverage industry.

Choosing an ERP software solution for the food and beverage industry

Thanks to the team for going through HACCP and traceability requirements. This leads to the next segment today – choosing the right ERP solution for your food processing or food distribution business.

A lot of what we have discussed this morning relates to compliance. Compliance relies on process, structure and systems. Compliance is only one of many reasons to consider an ERP solution. At the end of the day, a well implemented ERP solution will provide assistance with compliance but there are a number of other business reasons for implementing a new ERP solution:

Improved cash flow;
Better customer service;
On time in full delivery.

Always make sure that the systems you are implementing are delivering real business benefits.

A quick definition – ERP stands for Enterprise Resource Planning and refers to a software solution that consolidates all aspects of your business in a single solution: Finance, Logistics, Customer Relationship Management (CRM), Manufacturing, Service, Reporting. Also included is core functionality for the food and beverage industry – traceability, HACCP, weighing scale integration etc. the assumption is that your ERP solution works across the entire organization to provide you with a single source of the truth and a consolidated view of all operations.

When it comes to ERP solutions for the food and beverage industry – not all systems are created equal. Your choice of ERP ((Enterprise Resource Planning) solution will depend on multiple factors – budget, functional requirements, company size and more. The key, when selecting an ERP solution is to run a comprehensive and structured approach to the selection and implementation process. After all, this is a big investment – in dollar value and time/commitment. Get this project right and your business will reap the rewards – improved cash flow, better information for decision making, improved customer service and better staff retention. But, get the choice of software or implementation wrong and it is a long, hard road to travel. ERP solutions operate across your business and as a result, will have a huge impact on all operations.

We have all heard the horror stories of implementations that have run well over budget and taken years to implement.

The challenge is to run a process of evaluation and selection that leads you through the logical steps of evaluation. Always follow a structured process. This should include:

Your “how and why” are we planning to do this? Map out your reasons for evaluating a new ERP solution, decide on a budget, put together a high level requirements list (functional and technical), put forward your desired outcomes for success.
Talk – Discuss your requirements with similar businesses to find out what has and has not worked for them.
Get online – Go online and do your research. Review multiple systems, on-line demos, system reviews and case studies. This will allow you to narrow down the available choices to five or six potential solutions.
Ask vendors to respond in writing to your requirements list – Once you have narrowed down your “on-line shortlist” send potential vendors a list of your functional and technical requirements and ask them to respond to your questionnaire in writing. Your questionnaire should be brief (15-20 key questions per functional area). As an example you might be asking: has the vendor had previous experience in the food and beverage industry? Has the vendor helped other food and beverage companies with HACCP compliance? Break the questionnaire into functional areas – general overview, finance, logistics, inventory, manufacturing, reporting. Focus this brief questionnaire on your industry and company-specific requirements – HACCP, weighing scale integration, catch weights, expiry dates etc. Remember to ensure that potential vendors will be able to meet your budgetary expectations. There is no point spending time considering solutions that you cannot afford – budget is a key requirement. Place emphasis not only on the software but also the provider – who will supply the implementation and support services? Has the vendor previous experience in the food and beverage industry? What references can they provide?
Arrange a shortlist – From the online investigations and the questions that you have sent to suppliers you should be able to reduce your shortlist to three potential suppliers.
Get demonstrations – Ask vendors to demonstrate their solution for you. These demonstrations should be detailed. Provide your evaluation team with checklists so that they can score the potential providers. The checklist should include important functional areas that you want the demonstration to cover. Remember to let the potential vendors know that they must prepare the demonstration using your data – with specific configuration for food and beverage.
Propose a shortlist – Shortlist one supplier and then go into overdrive with the evaluation process.
Get a scope of works completed by the potential provider – This scope of works is not a full system blueprint or functional design – it’s a 20-30 page document that usually takes 2-4 days to put together to make sure that you and your potential ERP provider have covered off on the high-level functional requirements. After this stage of the evaluation process is complete your ERP provider should be able to give you an accurate assessment of project scope (high level), timelines, resource requirements and risks. This document should form the basis of your final proposal.
Check references – Ask for references in the food and beverage industry. Call these references and have a 15-minute discussion. Have a number of questions ready to ask. How long the solution took to implement? Was the solution delivered on time? What benefits has the company gained from the new solution? Ask about food and beverage-specific requirements and benefits. For example, you might ask about automated EDI for the major Australian retailers and what impact this has had on their business. Learn from this reference call – gain insight into other companies experiences so that you can streamline your implementation process.
Meet the team – ERP implementations follow a structured methodology. This methodology reduces risk during the implementation and helps ensure an on time, on budget delivery. Even with the best implementation methodology available a critical component for success is the team that you will be working with (specifically the ERP reseller implementation team). Ask to meet (interview) the team. Check the team CV’s – how much business experience (accounting, operations, manufacturing) does the team have, how long have team members worked for the reseller, what specific food and beverage experience do the team members have, how long have the team members been working on the ERP product? You are looking to make sure that the implementation team has the relevant experience (business and ERP) and is a good cultural fit with your team and your business.
Review agreements – Check the agreements for fairness. Include the scope of works in the agreement. Reference the budget and scope.
Post-implementation cost of ownership and support – Don’t forget that no evaluation of ERP is complete without evaluating post go-live costs and structures. Include an evaluation of the support desk procedures, what’s included (and not included) in software support.

Specific evaluation criteria for the food and beverage industry include

HACCP
Traceability
Batch control
Weighing scale integration
The list goes on!

Each part of your evaluation process should include a review of food and beverage-specific ERP requirements.

There is a balancing act here. You will most likely be looking for a global ERP provider. The reason I say this is that the global vendors offer a more complete solution and less risk. The global ERP vendors have you covered if you want to expand overseas, they offer the latest technological advancements (because they have the money to constantly invest in research and development). Think of technologies like mobility (access your data anywhere, anytime), cloud, AP automation and more.

Most global ERP providers are “generalists” they do not specialize in one industry. Their products are designed to work across multiple industries. So, what you are looking for is a global ERP vendor that has built a vertical market focus in food and beverage. These vendors and resellers will have a proven track record in the food and beverage industry. A lot of the required functionality for food and beverage (traceability, HACCP, expiry dates by customer, where used reports), will have already been built by the ERP reseller. You are getting the best of both worlds – a global ERP solution with all the latest technology with a deep vertical market function set built for the food and beverage industry.

What does the future hold? Technology is moving at a more rapid pace than ever before. As always, we are not interested in technology for the sake of technology. We want real business benefits from our ERP solution. What we can say is this, more than ever before if you do not embrace technology and the digital transformation you will lose ground to your competition who are embracing technology. Let’s open this discussion a little more:

Data – We receive lots of data from multiple different sources: retail data, EDI data, social media, supplier reporting, CRM and more. Data is meaningless unless we have the tools to sort and analyse data. Get organized with Business Intelligence (BI) tools to give you timely, accurate data for better decision making.

Internet of Things (IoT) – connected devices. As the world becomes more connected we are receiving information from multiple connected devices. This will have an impact on how we manage suppliers, customers and team members. In a connected world, the supply chain is managed with much more accurate and up to date information than ever before.

Artificial Intelligence – Information at your fingertips. As an example, early warning systems to assist with pick and pack accuracy, real-time delivery timeframe updates and customer order recommendations. Real, everyday advantages, will be had from AI.

Digital transformation – It’s already happening – all aspects of a business are being affected including Marketing, Operations, Customers, Finance, you name it!

EDI – Powerful order automation.

AP automation – Automate purchase order planning, purchase order generation, workflow and the associated admin to get the job done right every time, on time.

Expense management automation – Automate expense management to streamline your business.

In summary – a structured approach to ERP selection will ensure that you choose the right ERP solution for your business.

For more information or to learn how Sage Enterprise Management can streamline your Food & Beverage manufacturing business call us on 1300 045 046 or email [email protected].