Expect the unexpected. This is the new mantra of food and beverage (F&B) manufacturers. It pertains to all areas and aspects of the business, but it absolutely should not refer to the ERP solution. The ERP system is the backbone of a manufacturer, especially for food and beverage companies, and an ERP should provide nothing less than reliability, dependability and adaptability in today’s world.
Change and disruption is the new normal. Customers’ changing orders, line stoppages, late ingredients and supplies are not disruptions but normal occurrences in day to day business. Low margins, evolving consumer preferences, changing government regulations, traceability, and a complex and expanding value chain are the major causes of disruptions. The focus of the IT department should be on those systems that improve quality, operational efficiency and overall supply chain effectiveness, which will increase margins, not day to day ERP issues.
Food and beverage manufacturers need systems and processes that provide visibility, control and synchronization of the physical and information supply chains that will allow for the rapid decision-making needed to compete in a changing marketplace. A cloud-based ERP solution connects the supply chain from beginning to end while synchronizing all other business processes and functions. Here are four critical reasons why food and beverage companies should be operating with a cloud-based ERP system.
IT Maintenance Affects Total Cost of Ownership (TCO)
My first experience in food manufacturing started with a quick lesson in finance. Within five minutes of entering the facility, I met the CFO, who said to me; “Steve, if you want to be successful in the food business, you need to focus on the three P’s.” The three P’s? “Yes. Profits, Profits and Profits.”
Historically, food and beverage manufacturers are low margin businesses. Everyone knows that the manufacturing assets are costly and inventory costs are equally high and impactful on the bottom line. What people do not realize is that IT costs are one of the highest expenditures in food manufacturing, and that is typically why IT departments are so short-staffed. On-premise ERP solutions are extremely costly to maintain. When you add the costs of the software itself and all the related hardware, servers and other infrastructure that needed to be in place, the costs add up quickly. In addition, there is a great deal of time needed for the day to day management of all aspects of the systems, which ties up one or more of the IT team who could be allocated to projects designed to assist in the growth of the business.
Cloud ERP is managed by the ERP provider. The provider hosts and maintains the entire IT infrastructure and ensures that the system is always running and that data is secure. All product enhancements are implemented to your current solution, which does not impede any previous customizations. Add in the collateral benefit of less strain on your IT staff and the benefits are endless.
Proactive Quality and Compliance Management
The number one goal of food and beverage manufacturers is to provide safe and quality food. Yes, profits are extremely important, but if a food manufacturer does not first focus on food safety, they won’t be in business long enough to worry about profits. Regulations are changing worldwide. From the Food Safety Modernization Act, which governs United States food production and greatly controls imports from all countries, to HACCP, ISO 9001 and the BRC. In fact, these regulations are being driven by consumer pressure on governments to tighten up the food industry. Recalls can destroy a business. Not having proper documentation, procedures and process maps in place for food inspectors and quality tests can delay the delivery of customer orders. Traceability of ingredients from field to fork is quickly becoming a requirement, not a nice-to-have.
QAD cloud-based ERP supports HACCP, track and trace, documentation management, supplier records, safety procedures, process controls and all the necessary features which turn companies into proactive food safety organizations rather than reactive organizations. The industry demands transparency from food and beverage manufacturers and QAD Adaptive ERP helps companies provide compliance and awareness to issues before they occur.
Cloud-based Systems Drive Better Performance, Accessibility and Security
Cloud ERP solutions typically deliver better performance than on-premise solutions. This translates into more uptime, better system availability and reliability than on-site systems. QAD Adaptive ERP has better than 99.5 percent uptime and provides all the staff and personnel to maintain the system 24/7. QAD maintains the solution and continually provides updates and upgrades so a business is always using the most up to date and advanced version of the software.
Cloud ERP provides high availability, disaster recovery and overall system security and integrity. Today, businesses are concerned about data quality and safety. Food and beverage manufacturers specifically are concerned about hackers and threats to system security and data from their protected trace secrets and recipes as well as the threat of cyber terrorism potentially impacting the food supply. QAD Adaptive ERP is SSAE16 certified to the highest global standards ensuring system safety and integrity.
Real-time Data and Supply Chain Synchronization
The last six months have illustrated more than ever that supply chain synchronization is paramount to a food and beverage manufacturer’s ability to deliver the right product to the right place at the right time. Manufacturers and all other businesses involved in producing and delivering food from the field to the consumer’s table are realizing that in addition to the physical supply chain, there is the information (data) supply chain that needs to be continually in sync. In an era that requires more remote access to systems, better communication with suppliers and customers, cloud-based ERP provides the technology for easy and quick communication. Managing inventories up and down the supply chain and ensuring traceability throughout is more reliable with cloud systems and processes that can minimize human errors and ensure accuracy at all times.
F&B Manufactures Can Prepare for Change and Future Challenges
Managing a food or beverage business in these challenging times can be a daunting task. Many businesses are now global and require transparency to connect information at any time or place across their business network. All indications point to major disruptions like the COVID-19 pandemic continuing into the future as well as posing new challenges on a daily basis. Most manufacturers of food and beverage products, while acknowledging they are in the manufacturing business, will tell you that first and foremost they are artisans, craftsmen and creators of culinary creations. There is a passion in producing the products they make and that is where their focus lies.
Business systems such as ERP and others are necessary in the management of the day to day operations of the business, and these companies realize they need to be proficient in the use of them to succeed. They do not intend to be the experts in those systems, and they shouldn’t worry about their ERP. Food and beverage manufacturers should focus on the craft of creating their products.