ERP for food processing: Why industry-specific technology matters

The food processing industry offers some unique challenges due to its complex supply chain, demanding customers, and a combination of risk factors. Food processing businesses must meet demands that depend on farmers, processors and factories, distribution centers, and even the retail shelves where consumers find their products. They must also face compliance requirements with a growing number of strict and important regulations that keep consumers safe.

Food processors can’t afford for that value chain to break down or for their process to fall short of compliance. And keeping everything in balance requires strict processes, clear visibility, and the right technology. That’s why industry-specific technology solutions, like those built on top of a solid foundation like Microsoft Dynamics 365 applications, are critical in today’s environment.

Let's look in more detail at why food processing businesses need operational solutions that fit their unique requirements to maintain a competitive edge and satisfy customers.

It reduces workarounds

When a solution doesn’t allow your team to perform required tasks out of the box, those employees will find other ways to accomplish those tasks. Those workarounds add up, reducing your team’s productivity with tasks that should be integrated into their ERP solution.

This notion is applicable to any subset of the food manufacturing industry, but let’s take for example the requirements of the confectionery industry. The chocolates, candies, and cakes in your pantry are stamped with terms like Sell By, Use Before, Use By, Fresh Before, Best if Used By, and Best if Sold By, right? This label indicates the peak quality of the product. However, most consumers think that this date is associated with the quality expiration of the product.

It’s highly likely that this consumer mindset is the reason retailers prioritize receiving products with what they consider to be an acceptable shelf life based on their receipt date. In many cases, these concerns can turn into a requirement upon receipt.

Confectioners must integrate shelf life into their distribution process. An ERP solution for confectioners should allow for the configuration of lot preference conditions that can identify the conditions where an item’s lot can be used to meet the customer shelf life receipt requirement. This important lot preference configuration is set at the customer level and by item or item grouping. Lot preference requirements for food manufacturers can be considered at any one of these three key levels.

• Lot age or age category
• Lot specifications
• Lot freshness

Food manufacturers who need to take lot preferences into consideration during the distribution process should be able to rely on their ERP system to efficiently administer the process. When a user is assigning picking an item for a sales order line and they don’t select a lot that meets the customer’s lot preference, the ERP system should warn or stop them from continuing, which could save them from a potentially costly mistake.

It increases effectiveness

Traceability of all the supplies, ingredients, materials, and finished products throughout the supply chain is critical for food processors. Manufacturers are expected, even required, to have full visibility of the entire lifecycle of all product and raw materials, from their production to the point of consumption.

But such visibility is difficult for manufacturers to accomplish without the right software and services. They need capabilities like lot tracking for greater supply chain traceability and risk mitigation, production and process management tools, automated data collection, and quality compliance controls.

Food distributors and producers can benefit from leveraging the Internet of Things (IoT) to trace their supply chains and provide visibility to supply chain stakeholders. IoT helps to avoid omissions and automates traceability by furnishing equipment vehicles, refrigerators, and storage systems with connected sensors. Live data from the IoT can feed into the ERP system for real-time review and analysis. This data is then available in the cloud where you can provide access to auditors, trading partners, and customers with secure access to subsets of the information and reports.

Food manufacturers can also leverage data and industry-specific technology to improve other competencies:

• Demand planning – With data, they gain visibility of all the elements that could affect demand. The data helps them to understand customer needs, manage inventory levels, and make more accurate forecasts to optimize cash flow.
• Pricing and costing –Use data to manage your costs, pricing, and margins wisely. You can also adjust procurement, production, and distribution to meet the needs of retailers and customers. This ensures a quality product and accurate costing.
• Complying with regulations – An ERP system for food processing should have functions in place such as lot traceability and management of testing, hygiene, and equipment to help companies keep up with—and stay ahead of—food safety trends and regulations. Companies are then better positioned to respond to market changes, recover from food safety emergencies, and comply with evolving standards.

It improves customer service

In today’s market, customers have a greater array of choices. So, how do you plan to keep your customers happy – and loyal? In the food industry, the value that comes with implementing the right ERP solution will transfer directly to the customer experience. A food business will benefit from:

• Enhanced visibility over the supply chain of the product they purchase
• Products that are carefully monitored through the process for quality
• Meeting regulatory demands (even as they change) thanks to collected data and insights

If an ERP solution does not support your industry's requirements out of the box, then you’ll lose both time and money customizing a solution or creating a workaround. Industry-specific technology gets you up and running faster and speeds the return on your technology investment.

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