When it comes to food manufacturing, success is directly related to maximizing materials and ingredients and appropriately aligning supply with demand. And if you aren’t investing in material requirements planning (MRP), then it’s virtually impossible to encourage sustainable growth.
For food manufacturers, there’s one question that must be answered: Are you utilizing your ERP solution’s MRP functionality to its fullest potential? If the answer is no, then it’s likely because you don’t understand how to properly utilize MRP or because you don’t believe it’s important.
Regardless of where you stand, it’s important that you start maximizing MRP functionality. Below, we highlight a few tips to get you started:
1. Focus on data accuracy
If you put garbage in, you’re going to get garbage out. This is a pretty well understood concept, but it’s amazing how many manufacturers don’t pay careful attention to the validity of data inputs. As a result, the rest of their MRP efforts are compromised because of bad data and often times frustrations overshadow everything else.
The only way for your MRP to generate accurate reports that are worth your time is by inputting accurate inventory information from the start. Before you do anything else, make sure this aspect of MRP is figured out. This is like the foundation of a home: get it wrong and nothing else will be right.
2. Overhaul your approach to raw materials
As any business in the food industry knows, raw materials must be managed properly and carefully in order to stay profitable. Excess raw materials – specifically if they’re perishable and have extremely limited shelf life – can mean big trouble to any food company.
Your MRP will help you identify which raw materials are going to waste and how you can create more accurate orders that eliminate waste. It’s important that raw materials don’t go to waste prior to production or after production and prior to sale. Either way, it can cost you dearly.
3. Make demand planning a priority
Many food companies deal with major fluctuations throughout the year. These variances in demand are often the result of holidays, seasons, events and trends. In order to avoid wasting surplus production (or failing to meet demand), proper forecasting is a big priority.
A good ERP solution with powerful MRP technology should enable you to enhance demand planning and forecasting. Remember, your system will be armed with historical sales data, which should provide helpful insights into future needs.
4. Regularly audit vendors
There’s something to be said for using the same suppliers and vendors. Not only do you get consistent quality and taste in the final product, but there’s also an established rapport that puts both parties at ease over large transactions.
However, you shouldn’t continue to use the same vendors simply for the sake of comfort and familiarity. Perform frequent audits and reviews of historical transactions between vendors. How do they compare in terms of anticipated lead time vs. the actual lead time? Based on this information, you can improve your MRP rather quickly.
5. Understand your capacity
It’s obviously very important that you understand the various production limits at your work centers. Your MRP system should create an anticipated production schedule based on factors like employees scheduled, current supply and forecasted demand. It’s also important, however, to make sure that it takes capacity and space into account as well. The last thing you want is to manufacture more inventory than can be stored and shipped.