Food ERP: production up, not accounts down
By Richard Montgomery, Sales Director of food software specialist, Systems Integration
In today’s world, so much more information and control is required to successfully run a food processing business, especially when it comes to the food production processes themselves.
Why we need specific ERP solutions
For operations teams, finding solutions to overcome the challenges of what can often be very complex food production management processes, is essential if a business is to be commercially successful. However, if they are not involved in the decision-making process when evaluating a new ERP or upgrading a legacy system, they can be landed with a generic ERP solution that doesn’t meet their needs.
So instead of being able to share intelligence across the business, through an integrated system, the operations team are left with having to patch in individual solutions or manual workarounds to solve specific problems. For example, the management of shop floor data capture and information flow across the production process to ensure traceability and production performance; from raw material intake and allocation to recipe management, work-in-progress materials and end of line labelling of finished products.
Accounting and production teams need to work together when they are making major ERP-led business integration decisions.
This is why it is so important for accounting and production teams to work together when making major ERP-led business integration decisions. By moving up to centralised information which can be accessed in real-time, businesses can make in-the-moment decisions based on ‘one single version of the truth’. The alternative to an integrated system is the challenge operations teams face with consulting and reporting on different non-compatible data, often in spreadsheets, where reports are already out of date before they are analysed.
A classic example of how this approach actually harms a business, comes when information is analysed retrospectively, potentially showing losses due to yield or giveaway issues during the previous week’s production process – you can’t make changes in this case, as it’s too late. However, this could have been simply addressed through alerts from real-time dashboards, linked to shop floor data capture solutions, that empower managers to make appropriate production changes in real-time.
This is a common problem, which often can be rectified through an ERP+ solution that includes an MES (Manufacturing Execution System), which can pay for itself very quickly. At SI, because we take a modular approach to this kind of integration, operational teams can choose to solve challenges one step at a time, building an ERP+ solution that solves challenges and supports profitable growth.
Reconcile recipe allocated stock and ingredients in real-time
Another issue I have come across more recently, relates to the complex process of recipe-based food production. Typically, this process involves multiple ingredients that manufacturers will allocate stock from batches into any number of recipes, some of which might only require part of a batch of a specific ingredient.
The problem with recipe-based production then comes with reconciling the batches and stock levels of ingredients. The most commonly used ERP practice in the industry is to calculate remaining ingredients held in stock, by backflushing from the finished goods that have been produced to downdate raw materials, using a ‘Bill of Materials’ conversion. These calculations are then based on a standard of what has been used and not an actual calculated/issued amount. This in-turn creates issues with traceability, stock quantities and batch control – not to mention the ordering of the raw ingredients themselves, especially those that are perishable.
“Automated recipe control for each product, integrating software and hardware, ensures correct quantities of product are scanned, issued and exactly weighed out.”
When you look at these issues through the eyes of an integrated solution, these problems disappear, as firstly all information is recorded per batch, including the weights. Automated recipe control, integrating software and hardware, ensures the correct amount of product is scanned and issued for each different product, exactly weighing it out.
This allows the operations team to see how much raw material is being used and what it produces, delivering an actual mass balance for each batch, complete with the traceability data needed. By then linking this information to a centralised outer case and/or retail pack labelling system, you could complete an automated process that has no manual inputs required, reducing errors and speeding up the whole operation.
So, in my mind, it definitely pays to start the ERP+ equation including an MES, by adding together operations and accounting teams at the outset.
If you require more detail of how this approach works, please don’t hesitate to email me on firstname.lastname@example.org You can also send me any questions on other areas of food production software integration, which I would be happy to answer. In future articles I will be covering topics like QMS and being audit ready, looking particularly at the latest BRC announcements.