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The Need For Food ERP in Food Manufacturing

With an industry as vast and complicated as Food Manufacturing Food ERP becomes a no brainer. To speak volumes of this some of the prerequisites food manufacturers with installed food ERP solutions enjoy are as follows: 

  1. Shorter cycle time
  2. Low Labour cost
  3. Higher productivity
  4. On time Delivery mechanism
  5. Real time data

Having seen what food ERP brings to the table, the question is not if food manufacturers need food ERP but to what extent it’s needed?  With need-based manufacturing being the global trend let’s look at the set of factors that affect the need for food ERP:

  1. Scale of operations 
  2. Customizations 
  3. Size of firm
  4. Features and Functionalities 

While these features differentiate the application extent of food ERP there are certain standardized benefits a food ERP system ought to bring to the table for a food manufacturer:

1) Integrated smooth flow of Data

As food organizations grow data integration becomes a hurdle especially when documented on pen and paper. As these documents get lost in transit or misfiled and hence has become an outdated version of data collection. 

Food ERP on the other hand grants complete control over information be it:

  1. Data tracking
  2. Read only/ Analyze information
  3. Getting real time data
  4. Information sharing 

With food ERP food manufacturers can access data at any time any place from any device. Owing to this a food manufacturer’s shop floor employees can do their job much more effectively and in turn productivity increases with lack of wastage of resources

With customized KPI dashboards live accurate data is presented for better decision making. To speak volumes, with real time data food manufacturers can get to know the ingredients in hand and thus determine which orders they can fulfil and assign deadlines based on this data for customer satisfaction. 

2) Effective Key Metrics Mechanism

Getting profit or loss figures is a piece of cake but when dug deep can one determine which products made profit? Which products made losses and why?

Manually job costing can be done but quotes, estimates and margins often miss the mark. 

Food ERP however enables food manufacturers to accurately track cost and issue ingredients in real time. Food producers can determine shop floor personnel performance more accurately and at the same time make accurate estimates and quotes. 

Let’s take an example to speak volumes of this. Say a food manufacturer estimates a particular food item would cost 200$ and instead it ended up costing 300$. Were the ingredients more expensive than estimated? Did quality issues delay and hence added up the cost? Was there an issue in production? ERP helps to clear the air above. Also with historical data all integrated, anomalies can be adjudged as a one time or repetitive. 

Job costing not only gives an accurate estimate of production hours but also results in precise scheduling. This results in on time delivery and hence greater customer satisfaction  

3) Greater ROI via Better Outcomes

Food ERP brings to the table the following outcomes for food manufacturers:

  1. Faster cycles
  2. Better scheduling and transport management 
  3. Boost in sales
  4. Inventory management 
  5. Low labour cost
  6. Better customer service and delivery 
  7. Effective accounting with lack of manual spreadsheets 

Let’s take the following example to determine the extent of this benefit:

A customer who often gives a two-week turnaround to the food manufacturer suddenly asks for a one-week turnaround. The food manufacturer would ideally say yes and work out ways like overtime, hire more workers or disrupt other orders. All this results in higher labour cost and the result still may not be sufficient in terms of on time delivery.

With Food ERP however a food manufacturer can determine beforehand whether the delivery can be done within a week without disrupting the existing production process. With data points like current labour and capacity along with the standard labour and capacity needed to complete the order in a week, food manufacturers can determine whether the available resources are sufficient to complete the order in time or not. Food ERP results in better customer service as sales reps can “track the order real time and feed data to the customer” if enquired upon instead of lingering them with “we will get back to you with that information”. 

4) Become the Golden Goose

When used effectively Food ERP becomes the core of the food manufacturers business. Food ERP takes charge of daily business activities such as:

  1. order taking
  2. Scheduling
  3. Shipping 
  4. Payment 

Food ERP not only enables food manufacturers with current brand positioning but also enables them to make decisions on the future of the business. 

Through tracking daily performances food manufacturers can determine the effective employees vice versa those who need more training. It also helps food manufacturers to determine the performances of suppliers and delivery partners thereby making the entire supply chain accountable. 

Food ERP: Today and Tomorrow

With the food manufacturing industry heading towards a red ocean owing to the cut throat competition, food ERP has become a prerequisite. With low margins and stringent regulations food manufacturers need to make better decisions on which opportunities to pounce on and which to let go of based on resources in hand. A dynamic environment with ever growing internet of things (IoT) has made the future very uncertain for food manufacturers with change being the only constant. With ERP food manufacturers can plan better. By tracing customer needs with data points and evaluating business propositions, food ERP enables food manufacturers to cope with the change in taste and preferences and plan accordingly. 

The Food ERP developers today are creating interfaces which enable food ERP to communicate with third-party IoT devices. For example, nesting software interfaces can allow the food ERP system and nesting software to share data with each other. The food ERP system would send orders and current stock of food to the nesting software which uses this data to determine ingredients usage and cut patterns for individual sheets of ingredients. 

Artificial intelligence and virtual reality technologies have already put a foot in the door in the food manufacturing domain and only through Food ERP can these technologies be integrated in the business. Food ERP is the golden goose for food manufacturers today and if used correctly it’s a one-way ticket to sustainable profits tomorrow. 

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