For most food manufacturers and processors, the goal is the same: to grow their companies by delivering food safely and efficiently to consumers. These three pillars of business – safety, efficiency and growth – can apply to many areas of a food company’s operations, but perhaps none more directly than supply chain management. A food manufacturer or processor’s supply chain is the heart of its enterprise, and by ensuring that it operates as consistently and accurately as possible, you can be sure that every other part of your business follows suit.
Below, we outline the importance of each of these three pillars to supply chain management and how technology like an enterprise resource planning (ERP) solution can help your food company achieve its goals.
Food safety is prevalent in every facet of food manufacturing and processing. Not only is it detrimental to your brand and your relationship with consumers and supply chain partners if you produce unsafe or contaminated products, but having to perform a recall can leave your company with serious financial repercussions and loss of confidence in your brand.
How do you ensure your supply chain is operating as safely as possible, then? The key is communication.
Think about it like this: your sauce company recently began receiving ingredients from a new supplier. Unfortunately, that supplier sent you a spice mix with an ingredient that wasn’t previously in the sauce you’ve been manufacturing for years. As a result, your labels don’t declare the proper ingredients, and a recall needs to be issued.
Establishing good communication with your supply chain, which could include importers, farmers, processors, packagers, distributors, etc., is imperative to ensuring the safety of every player in the supply chain’s operations. In the example above, the mislabeling error affects the ingredient supplier, you as the sauce manufacturer and the wholesale distributor. Without communication between each of these supply chain partners, everyone’s bottom line suffers.
Instead, having a well-developed strategy in place that promotes the sharing of information back and forth through the supply chain ensures food safety and provides you with more control over the entire manufacturing process. For example, a program that manages allergen hazards between you, the manufacturer or processor, and your supplier should include communication around formulation changes that might include new allergens that were not present in prior recipes (which would have prevented the recall in the example above).
By utilizing a software solution like an ERP, a manufacturer has the ability to account for all raw materials that enter its facility, isolate sensitive ingredients, perform rigid quality checks throughout the production process and ensure vendor compliance. Ingredient source information that lives within an ERP prevents outdated formulations from being used and ensures that updated ingredient records are passed on to all levels of production and to all products using that ingredient.
This ability to communicate not only across departments at your own facility, but throughout your entire supply chain as well, helps ensure that your goal of delivering safe food to your customers is achieved.
Ensuring that your supply chain is running as efficiently as possible is extremely complicated, especially without the help of technology providing you with the insight, visibility and control needed to properly manage your business. One of the key goals of effective supply chain management is ensuring accurate inventory management while achieving each partner’s customer service goals – for this to happen, cooperation among all members within the supply chain is critical.
Here’s an example from our Guide to Supply Chain Management in the Food Manufacturing Industry: If a vendor sells a large quantity of product, it must mean that the vendor is increasing sales and profit. But this increase could be only temporary; it does not necessarily mean an increase in long-term profitability. Large, infrequent orders do not maximize the use of a manufacturer’s machinery, manpower or material. Unneeded inventory, idle equipment and staffing changes can mean that money is left on the table.
Focusing on projecting the correct quantity of materials, equipment and labor, then, is vital to the success of the entire supply chain long-term. Accurate forecasting, anticipated lead times and safety stock are all examples of the type of information a successful food company must share with its partners. We explain each of these examples in more depth in our Guide to Supply Chain Management.
An ERP built for the food industry will provide you with the real-time visibility you need to effectively measure and predict the necessary inventory information we mentioned in the paragraph above. In terms of demand forecasting, for example, an ERP has built-in analytics and reporting tools that help you uncover trends or patterns that more basic systems may not be able to capture. By utilizing an ERP’s predictive analysis functionality to understand market, supply chain and historical data, you have the ability to forecast with a higher demand of accuracy, making it possible to provide suppliers with more reliable notice of demand or product changes, and allowing you to avoid food waste costs or potential shortages.
The ability to drive revenue growth is now synonymous with effective supply chain management. The synchronization of all of the functions of a food manufacturer or processor’s supply chain – food safety, production scheduling, demand planning, logistics, warehousing, etc. – is what leads to excellence in supply chain management and the overall growth of your business.
But a highly efficient supply chain doesn’t just enable growth – it drives it. By utilizing technology to ensure your supply chain is scalable and flexible to new opportunities that come along, you have the ability to take your business into new markets with new products to meet ever-changing customer demands and expectations.
Investing in the right technology is paramount to ensuring the success of your supply chain. The right solution is one that provides you with all the tools needed to oversee the transformation of raw materials from your suppliers into market-ready products for your customers. An ERP solution built for food manufacturing and processing optimizes your processes and procedures every step of the way so you can hit production targets and achieve your business goals.
Aptean JustFood ERP focuses solely on recipe-based manufacturing, allowing food companies to spend less time struggling to make the system work for them, and more time on ensuring the safety, efficiency and growth of their supply chain. To learn more, reach out to us. We’d love to talk.