The food and beverage industry is evolving rapidly. A whole new set of consumer demands has recently emerged due to changes in interests and technological advances. Trends like health and wellness, shifting lifestyles, changing preferences, food safety, sustainability and technology have all received a heightened amount of visibility. In addition to these trends, we have mounting concerns of ever-changing and new regulatory acts as well as food safety. All of these challenges can be managed with the investment in technologies such as an ERP software system (enterprise resource planning)
Let’s break down how food ERP software can aid in these challenges.
How Can ERP Help?
The growing complexity of the food and beverage industry, as well as the pressures for innovation, can be aided by a food ERP solution.
This tool can help with tasks such as complying with regulations, product traceability and quality control. ERP solutions provide management in areas such as forecasting, planning, inventory, logistics and production. Consolidating all of your data into a single system provides a birds-eye view; you are able to control all business processes from a single, centralized hub. ERP software is used to manage a number of business functions through centralization of data and real-time information. A fully integrated ERP solution can help you build a cohesive and productive organization.
Food and Beverage Industry Challenges and Opportunities
Every business has its own unique challenges, but there are a couple of obstacles the food and beverage industry collectively faces, according to Global Market Insights. When consumers demands change, industries like food and beverage are expected to adapt in response. Let’s break down those challenges.
Inventory Management Complications
Inventory management is one of the most important business functions for the food and beverage industry. Given that the products involved are perishables, it’s vital for business owners to ace inventory management, but mitigating factors can make it difficult to do that.
We have seen an increase in food-related disorders among consumers, such as celiac disease or lactose intolerance. This has prompted dramatic changes in their diet and lifestyle; they are more health-conscious than ever. Shoppers are avoiding added preservatives and gravitating more toward natural, organic foods.
Given the limited shelf life of these foods, as well as other factors like foodborne pathogens, inventory management has become more complicated. An inventory management program can reduce spoilage, track expiration dates and notify you when stock levels are low.
According to Forbes, one of the top trends driving change in the food industry is a demand for greater transparency. Consumers want to know what is going into their food products. Perhaps they are making sure the product aligns with their dietary needs or avoiding allergens, or want to know if their food is raised in sustainable, ethical ways.
As a result, detailed ingredient labeling has been on the rise. This increasing interest in what is going into food products calls for end-to-end traceability to achieve the optimum level of transparency. End-to-end traceability is the ability to track data on products throughout the entire value chain. The challenge of maintaining flawless data records has prompted many companies to employ technology to ensure it is done correctly.
Meal kit services and grocery delivery services are becoming increasingly popular, and these services are typically made accessible through a mobile app. In order to successfully deliver perishable products, flawless time and information management is required.
The food and beverage industry is just now beginning to break into the e-commerce space, but it has quickly taken off since. According to the Food Marketing Institute, online sales are predicted to take over 20% of total grocery retail by 2022 and reach $100 billion in consumer sales. Additionally, the FMI reported that many retailers and manufacturers are not ready for the age of online grocery.
So how do we simultaneously keep pace with these innovations and beat the challenges that come with them? A great solution would be to integrate your ERP system with an e-commerce system; this allows you to oversee important product data in your web store.
Food and beverage manufacturers have some of the strictest regulations in place in order to achieve certain levels of certification. The U.S. Food and Drug Administration (FDA) has authority over approximately 75% of the U.S. food supply. These regulations are known to periodically change, and this is typically the reason for food recalls or a loss in capital for the business. A great deal of accuracy and precision in business operations is the only way to prevent these situations.
ERP Solutions for Food and Beverage Industry
Hopefully these industry-wide challenges get your wheels turning, but before you begin searching for a vendor, you will want to assess your personal business challenges and goals.
The true value of any software system is defined by its ability to meet the many expectations and challenges of any one particular business.
The features outlined below are vital to food and beverage industry ERP. Before you decide on a software vendor, you should make a list of the features your business would benefit from, and make sure those features are included.
The ability to integrate with multiple systems, such as CMMS or CRM, for the various areas in your company distinguishes ERP software against the rest and makes it special. The all-in-one system allows you to locate all of your business data — such as financial, production, inventory or compliance — into one integrated system that gives you access to all of your information in real time. Business analysis is improved exponentially when data from every key area is available to you.
Regulatory Compliance and Reporting
Detailed tracking and tracing are integral to food safety. The level of scrutiny in the food and beverage industry is high; this highlights the importance of having an ERP software solution that automates regulatory compliance. In the event of a product recall or audit inspection, this feature can identify and isolate a problem so it can be quickly solved. This function also boasts product traceability, as it will record what ingredients were used from beginning to end and how they were used.
Process manufacturing is involved in many production tasks. An ERP system performs tasks such as production control, quality analysis and distribution scheduling. Automating your supply chain results in maximized workforce hours and ensured accuracy, which leads to cost savings. The production process is heavily involved in the profitability of your business.
Here are some process manufacturing features and what they can do for you:
- Quality management – This functionality deals with the management of allergens (colors, gluten, etc.), quality testing, inspections and testing plans.
- Shelf life – Look for software that has an automated alert-mechanism to notifies managers when production materials are approaching or past their expiration date.
- Sales and inventory management – Your software system should have the ability to manage stock efficiently, preventing both spoilage and shortage. That data is then linked to sales order data to provide managers with critical information about stock level, stock location and replenishing stock back to optimum levels.
- Recipe control – This is a complex task which handles information like formula, quantity, costing and historical information. Handling conversions is considered a cardinal feature.
An integrated financial system ensures that your costs and expenses are recorded correctly and can provide information in real-time. This is an important key to successful business management because it provides the ability to analyze your company information for informed decision-making from all areas of your business.
Many ERP systems are offered as cloud-based solutions. However, many good on-premise solutions are also available. On-premise solutions require servers within your facility, while cloud-based systems are accessible anywhere that you have an internet connection. With that said, vendors usually offer various subscription options based on your company’s unique needs and requirements.
Vendor Maintenance and Support
Before you make the final decision to choose a vendor, make sure that they offer all the necessary technical and maintenance support in the event of technical issues arising. Additionally, you will want to double check that the vendor has a sound business reputation and will be around long term. This last probe helps avoid the possibility of your system becoming out of date or unsupported if a vendor decides to call it quits. Look for a provider that includes the following services as part of your support contract:
- Remote login support
- Support desk availability
- Regular system updates
- On-site maintenance and support
Selecting an ERP System
So you’re thinking about purchasing an ERP system for your food and beverage organization? Follow these simple steps to get started.
The first step to choosing a system is gathering your requirements. We have an interactive requirements template available for ERP which will help you identify which features your organization will use.
Once you have your requirements in order, the next step is to compare different software vendors. Our comparison report for ERP allows you to compare top vendors based on their performance in different requirements.
Reference Pricing Guide
The last step is to reference our pricing guide which will help you understand what vendors typically charge for their services. After you’ve done that, you should have a couple top vendors in mind.
Now you’re all set to submit requests for proposal (RFP) to those software vendors. You will need to do this to get an exact price quote for your potential solution; platforms are typically priced based on very specific criteria.
The food and beverage industry is performing a balancing act between keeping up with industry trends and innovations while simultaneously abiding by all food safety laws and regulations. Furthermore, there are many different facets of business involved in a food and beverage company — food ERP software centralizes those functions for a more efficient and profitable business.
Still have questions about ERP for food and beverage industry? How has your company benefited from food ERP software? Let us know in the comments section below!