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An ERP system is a powerful tool that helps your food business perform daily activities, analyse data and optimise processes over time. But why do you need food industry-specific ERP software rather than a generic ERP system designed for the traditional manufacturer?

Here, we’ve outlined seven main areas to help you understand everything you need to know about ERP software for food industry:

Demand planning

Compared to a standard ERP, there are some added complexities that need to be considered for the food industry:

  • Supply driven – Many aspects of the food supply chain can’t be thought about in isolation. Just because there’s demand doesn’t mean raw materials will be available/in season
  • Co-products – Many food products are parts of wholefoods/wholecrops. This means that demand for one fraction of a harvest or slaughter may give rise to other fractions that may have a different demand profile
  • Weather – Perishable food business can suffer greatly if there’s a period of unforeseen weather conditions, ultimately leading to a drop in demand

Master Production Scheduling

From a food perspective, the “make to stock” or “make to order” process applies here, including products that have a longer shelf life. The key details to note are:

  • Supply driven – Specific products that have a natural growing cycle don’t always necessarily align with demand-driven Master Production Scheduling (MPS) – they are ready when they are ready
  • Perishables – Perishable products that have a very short shelf life may need to be produced daily or even more frequently than that. This needs special attention which a scheduling algorithm can provide to go beyond the usual backward and forward scheduling of periodic demand buckets
  • The elements – Whilst weather can be predicted to a degree, it can also change unpredictably. These changes can radically change processing times which, in turn, can cause scheduling problems if your ERP system doesn’t support this

Supply planning

In this area, the focus should be on visibility and agility as enablers of better cost control rather than better and better predictions/forecasts. What you need to know here is:

  • Supply curve may not fit the demand curve – Nowadays, the expectation of year-round supply is higher than ever before. Food forecasting is more likely to be a macro-level-marrying of both expected supply and expected demand
  • Supplier relationships/partnerships are important – When making supply decisions, there are several key factors to consider such as the current quality of stock on hand, prevailing weather conditions and storage capabilities
  • Complex buying/remuneration contracts with suppliers – The complexities at this level are enormous and mistakes can be made when trying to turn traditional supply processes/algorithms into predictive software

Goods in 

The key purpose of the “goods in” procedure is to check that what has arrived is what is expected, record it and get it stored in the correct place. What’s also important to note is:

  • Quantity check – Quantities can be in multiple units of measure i.e. count and weight. Items can be of multiple varieties or breeds, each with differing specifications
  • Extensive QA inspection – Food businesses usually have a large technical/QA departments and incoming products are checked extensively to ensure quality and customer safety. Food industry ERP software therefore must have enhanced QA functionality to account for this
  • Provenance/Origin certification – The “goods in” process for food companies must confirm the products are as stated in terms of allergens and the points of origin for the products. Suppliers are also within the legislation governing those products and what’s on the label

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Manufacturing/production

Food ERP systems need to be able to deal with “attributes” of food items. An attribute might be size, country of origin, grower and so on. The other major takeaways are:

  • Can be highly labour intensive – You often find a food business (especially fresh produce companies) is less automated than businesses with more repeatable and stable processes (although this isn’t always true)
  • Quality can drastically affect efficiencies – Whilst a traditional ERP view of production orders can cover most requirements to capture the conversion process, a food ERP system needs to be able to handle the uniformity and quality variations of ‘living’ products
  • In-progress changes/substitutions to products – Food ERP solutions need to have enhanced substitution functionality. They should be capable of dealing with multiple attributes and holding logic around when x can be a y, but y can’t be an x (think organic and conventional items)

Warehousing and inventory

  • Warehousing – Foodstuffs do have some extra husbandry needs during storage. These are mostly around the need for continual quality checks to monitor changes in condition, as well as creating a temperature-controlled environment for certain produce. Foodstuffs can even change item code whilst in storage (think of unripe fruit turning to ripe fruit)
  • Inventory – Food inventory is complex and inconsistent, driven by its environment, changes all the time and its life can be short. Food ERP systems are usually enhanced with increased information at the item level to include attributes, secondary units of measure and quality specifications

Goods out

  • Standard despatch processes – Once food products reach the finished goods stage, by definition, they’re in a standardised format, ready for sale. The processes here very much follow standard ERP practices
  • Depot date-specific stock – The focus here is on “best before” and “use by” dates on products, such as ones with a short shelf life. Food ERP projects should take care to ensure that this is catered for to avoid customer service and safety issues

The importance of investing in food ERP software

In conclusion, investing in the right food ERP system is key to meeting your business’ specific needs and wants. To transform successfully, you need a system that provides reliability, extensive functionality and helps streamline operations.

But why is that the case? In our guide to food ERP systems, we compare the differences between standard ERP software and food ERP software to show you exactly why food businesses should invest in an industry-specific system.

Download it below.

Why you need food ERP software

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