In my previous posts, we examined the ERP software market and specifically, laid out the framework for evaluating vendors and examined best practices for implementing the software. Now, I'd like to take it a step further by exploring how the food industry relies on ERP systems to meet the challenges of today's economic and highly regulated environment. The food sector is of particular interest because it is a very process-heavy and deadline oriented market that relies on technology to drive productivity, operational efficiency, and inventory management.
When the Food Safety Modernization Act was signed in January 2011, it placed added pressure on food manufacturers and distributors to ensure a safe food supply chain. The law gave the Food and Drug Administration (FDA) the power to order recalls of contaminated food and request records from food organizations to provide reports related to the manufacturing, distribution and packaging of any product. So, for example, if your company sells broccoli and the FDA uncovers a problem with the broccoli--whether contaminated, expired, etc.--the government can request all of your records. And if you fail to provide these records, your company can be banned from selling that product. Furthermore, the FDA has the power to suspend and shut down your business.
In response to these challenges and increased regulations, food manufacturers and distributors are leveraging ERP systems to help with record keeping and maintaining track of all purchases, inventory, truck routing, rebates, and more. When goods enter a facility, it is critical to put them through a testing process--test for color, odor, PH levels, and temperature--to ensure the food is safe and edible, and more importantly, in compliance with FDA regulations. By using records, food organizations are able to print out a quality report and if the FDA inquires on whether that broccoli went through a quality test, you can show that you tested it and produce the test results.
ERP systems are also an integral component to ensuring an effective warehouse that enhances productivity, streamlines processes, improves inventory accuracies and reduces costs of food materials. As an extension of this, the layout of a company's warehouse is crucial to the organization's supply chain and necessary to the success of overall business processes. Food organizations have to know their products. They understand that higher moving goods need to be placed by picking lanes that are close to shipping areas. ERP software will tell you how your system is performing--product coming in and product coming out--so be aware of how your product moves and how your product lives. To that point, if you sell refrigerated products, they all need to be in the same area--with ice cream in the freezer, milk in the fridge and a dry area for the bread.
The name of the game is control and visibility, with an effective ERP system as the centerpiece. Once food manufacturers and distributors can understand their products--from the movement and date tracking to inventory management and pricing--they can unlock the potential for achieving improved productivity, industry compliance and increased profitability.
How is your food organization using ERP software? Is your food organization leveraging ERP to its fullest potential?
As President & CEO of VAI, Bob Vormittag is responsible for setting the company's strategic goals, building a world-class executive team, and providing an environment that encourages customer-focused technical and business innovation. Vormittag works closely with VAI's executive team to drive product development and marketing and sales initiatives, which facilitate the company's achievement of ongoing, productive growth.