The SYSPRO Blog

Insights on Business Management Software and ERP

ERP is Key to Improving Productivity and Profitability for Food Manufacturers

erp_technology_food_manufacturingThe incidence of serious food poisoning outbreaks is increasing globally, with more and more significant cases occurring more frequently around the globe. Most recently, South Africa experienced the world’s worst Listeria outbreak, killing over 70 people. The regulators’ immediate response was to target “suspect” businesses, and this led to the entire food and beverage supply chain having to review their processes.

Further government regulations are being enacted requiring more extensive reporting on the manufacturing process, and requiring assurances of better process controls throughout the value chain. This is making the distribution, packaging and traceability requirements increasingly important requiring better controls by the manufacturer, all adding extra cost.

One of the first lines of defense in this environment is an integrated ERP system, with the necessary monitoring and controls to ensure contamination outbreaks are avoided. While the ERP system cannot control staff behaviour, it can ensure that the necessary controls are in place at the required frequencies, and being monitored. If a system failure does occur, it has the ability to immediately trace the affected product back to source to contain the impact.

“Own” the Supply Chain

Another significant change in the food and beverage industry is that previously the manufacturer set price and passed all of his inefficiencies on down the line to the retailer who, in turn added his profit and inefficiencies onto the price and pushed it onto the consumer. Now, the educated consumer is looking closely at “value for money”, and setting a “ceiling” price for the foodstuff, consequently restricting the level of inefficiency they will accept from the retailer and manufacturer.  In this new environment, the retailer and food manufacturers have to reduce costs by reducing inefficiencies to protect their profits. This requires an ERP system to visualize the costs along the whole value chain.  Companies that can do this successfully will gain a competitive advantage and begin to “own” their supply chain, while those that cannot face the risk of not surviving.

Cost Controls throughout the Value Chain

These decreasing profits are compelling food manufacturers to examine their whole value chain, and not just their own manufacturing processes. The result is a new type of collaboration that brings very careful cost control up and down the whole value chain. The ability to understand and “attack” every cost associated with the manufacture of the product is becoming the distinction between profitable and mediocre organizations. The advent of the “global village” allows a producer to source locally or import cheaper raw materials more easily, exposing those businesses without proper cost to failure.

Unfortunately, these financial pressures also introduce the possibility of under-performing organizations cutting corners to inflate profits, and the likelihood of food contamination. To help food manufacturers under these challenging conditions, it’s important for your ERP system to offer the required understanding of the manufacturing operations and supply chains. This assists with tighter cost controls across the whole value chain – from farm to fork – with valuable insights into each product at the click of a button.

Automating your Business is a Necessity

With full integration of Bill of Materials, Estimation, Process Modelling, Work in Progress, Barcode Scanning and Workflow Services, all of these activities are automated. This is what it takes for food manufacturers to improve profitability while accurately measuring performance and driving toward world-class standards of operation.

In the challenging world of modern food and beverage manufacturing and distribution, optimization, integration, and efficiency is key. Automating your business is no longer a ‘nice to have’ but critical for remaining competitive, compliant, and contamination free.

Share this post

Leave a Reply

Your email address will not be published. Required fields are marked *