As the world’s population grows, so does the demand for food and drink. But that’s not all. Consumers want more than just food and drink for sustenance; their demands are now more health, ethically and environmentally-driven. And so enters the rise in popularity of plant-based, allergen/intolerance-friendly, organic and locally sourced or fair-trade food and drink that use less or sustainable packaging.
That’s just consumer demands - a small portion of the current issues in the food and beverage industry.
There are also regulatory standards to meet, allergens to minimise (or ensure their highlighted accurately), waste to manage, margins to increase and the need to be prepared for any unforeseeable circumstances.
It’s no wonder the food and beverage industry is under immense pressure. Juggling all those plates while still ensuring your product quality is high and you’re thinking of new ways to innovate isn’t easy. But failure to do so can lead to some damaging repercussions.
The best way to overcome these challenges is to transform your business. Digitalise with tools/software (such as an ERP solution) and you’ll find it’s much easier to withstand market pressures. But it’s more than just ‘digitally transforming’ – you need the right digital strategy in place and buy-in across your business (from both senior management and the everyday users) if you want to succeed.
This is what this resource will be covering. From some of the biggest challenges faced by the industry and how to solve them to why digital transformation isn’t just a buzzword, we will look at how you can ensure success from it, there’s a lot to know. So, let’s get started.
TIP: Just a heads up – there’s going to be a lot of content. To make it easier for you, we’ve added ‘back to top’ links throughout this resource at regular intervals so you can go straight back up at any point. We also recommend you bookmark this resource or save it to your desktop so you can leave and come back to it whenever.
As the number of laws, regulations and guidelines that govern the sector increase, the trickier it is for food and drink businesses to keep an eye on all of these and keep up with their production demands. Plus, when new regulations are introduced, they often require quick action – yet not all of them are entirely clear which makes rapid responses even more difficult.
For example, the introduction of Natasha’s Law aims to protect consumers with allergies and give them more confidence in the food and drink they buy. For businesses, it calls for more effective traceability and allergen management processes and requires them to include a more comprehensive list of allergens along with their products.
An effective traceability process and tracking tools, such as serialised box tracking, can help ensure food safety.
These tools allow you to closely monitor your food production from field to fork so you can take a proactive approach to risk management. If risks are identified, it’s much easier to trace all stages of production, including the long chain of suppliers and retailers. It also makes it easier for product recall to be actioned quickly and at a local scale rather than national.
Leading on from the above challenge, it’s important for food and drink businesses to efficiently tackle allergen management. According to global law firm RPC, allergen-related food recalls increased by 20% in 2019 (the highest ever in the last five years).
There are also concerns surrounding the dangers of poorly labelled foods. This, combined with the further regulatory changes like Natasha’s Law and the need to decrease liability, just shows how vital it is for food and beverage businesses to manage and minimise the risks of allergens.
There are some allergen-inducing foods that are commonly used in recipes for particular food and drink products so it’s not always easy for consumers to simply stay away from them. Instead, consumers are relying on manufacturers and distributors to have tighter controls over the use of allergens and to disclose this information accurately and in a timely manner with the public.
To efficiently manage and control allergens, you need to be able to add the appropriate allergen data to any item and track this through the supply chain. The right technology can help. For example, an ERP solution can centralise this information so it becomes much easier for you to manage your allergen information in one place.
We’ll be discussing this in more detail in a later section. Keep reading and learning or go right to the section by clicking here.
Product recalls are, unfortunately, not a rare occurrence. There have been many reports of products being recalled due to a variety of reasons, such as allergens not being mentioned on the label, packaging errors and even because they may contain small pieces of plastic and metal.
Recalls are not without negative consequences. When the safety of a food or drink product is called into question, it can lead to bad publicity, loss of customer loyalty, damaged brand image and more. And this is assuming the product is recalled before a customer consumes it.
Judging from the reasons for product recalls, it suggests there’s often a breakdown in the processes facilitating traceability. To tackle this issue, you need to ensure complete traceability in your food/drink production and supply chains. You need to gain full visibility of the entire lifecycle of your products.
Technology can help you efficiently manage your processes and supply chain in a way that minimises or eliminates the risks of recall. And if recalls can’t be avoided, technology can help you detect these instances as soon as possible so you can respond with lightning speed.
From worker wages and keeping up with inflation to ensuring maximum productivity (of both man and machine), all businesses have to balance these costs and the costs of obtaining raw materials with the volume of sales. Labour costs are rising which means you need to increase your sales (while maintaining your quality and staying compliant) if you’re to remain profitable.
Some of these labour costs are out of your control – such as changes to minimum wage and political situations (like Brexit). But, you can work to minimise their impact.
For example, you can ensure maximum productivity and efficiency of your workforce and machinery by:
Read more about the rising labour costs and how to overcome them in this blog.
Consumers are fickle and fads are often dominating many purchasing decisions.
At the moment, consumer trends in the food industry are still health-driven but they also care about their environmental impact and the ethical connotations of the food and drink they consume. Where did it come from? How was it made? Who/what was harmed during its production? Is the packaging recyclable? Is the product sustainable? Does the manufacturer support sustainable/green practices?
You get the gist.
It’s often hard to keep up with these demands because they can be so quick to change – especially when you’re focused on all the other industry challenges.
Investing in the right technology can help by allowing you to leverage valuable data. Then, you can:
Read more on how you can become more customer-centric here.
According to WRAP, in 2018, over 500,000 tonnes of sludge is produced during the effluent treatment and washing and cleaning processes. A further 19,000 tonnes are edible food that’s lost and interestingly, 747,000 tonnes are materials unsuitable for consumption or processing – which is more than the other amounts of waste combined.
And this astounding amount of waste doesn’t go without its connotations. According to a FAO report, 1.4 billion hectares of land (which is 28% of the world’s total agricultural area) and the water volume of Russia’s Volga River are used annually to produce food that eventually ends up lost or wasted.
Discover more shocking statistics and the importance of reducing food waste here.
Manufacturers are losing potential revenue with every tonne of waste that’s produced. Two key factors for this wastage are human error and product change. It’s possible to reduce the impact of both:
Learn more on how to tackle the problem of food waste in manufacturing in this blog. We also discuss the role of an ERP solution in helping to reduce the likelihood of human error and boost the overall efficiency of your machinery.
Supply chains are under pressure due to huge surges in demand. It’s important to scale up quickly if you’re to meet these demands and at least keep up with the competition.
Adopt a data-driven approach by using modern analytics tools and you can increase visibility across your supply chains. These tools allow you to create a data warehouse full of customisable dashboards and key metrics. With these insights, you can make more informed decisions and be better prepared for changes in demand.
For example, if you’re a fresh food supplier, various environmental and labour factors play a role in the yield of your crops. Analytical tools allow you to model ‘what-if’ scenarios based on factors like the weather, how experienced the pickers are and potential transport risks. You can then take this knowledge, assess their likely impact and create mitigation plans.
Read more about how you can improve supply chain visibility and the KPIs to look out for here.
Embracing and adopting digitalisation can help you boost your business efficiency, reach your operational goals and futureproof your strategies. It’s important to think of the long-term impacts of your technological choices rather than get swept up in the innovative ‘fads’.
Here’s a simple guide to building a foundation of a digital strategy for food manufacturers and tips on how to pick out the technology worth investing in from the fads.
When you digitally transform your business, you can save time and money during the new product development cycle and address all of the challenges in the previous section such as allergen management, accurate tracking, quality control and supply chain visibility. This is because digital tools give you access to advanced analytics and enhanced reporting capabilities.
The right platform can even integrate all of these tools so your data is consolidated, not siloed, for easier management. As a result of this, you can benefit from:
Read more about the benefits of adapting your food business to the digital age here.
ERP solutions can be on-premise or cloud-based. Here are some benefits of a cloud-based ERP over an on-premise alternative...
An ERP (Enterprise Resource Planning) solution plays a core part of a digital transformation journey. Some of the main benefits include:
Let’s go into more detail around how it can help to solve specific food and beverage challenges in the next few sections…
Implementing an ERP solution, like Microsoft Dynamics 365 Business Central, can help you ensure accurate tracking and traceability of every ingredient throughout your supply chain. An additional industry-specific solution can help you extend the core functionalities of your ERP.
The Aptean Food and Beverage ERP solution is embedded within the Business Central system and provides you with additional features that are specifically designed to solve challenges faced by the food and beverage industry. Here are a few examples…
Aptean Food and Beverage ERP and Business Central can help you manage and minimise allergen risks by offering features that support this management and keep the process simple, reliable and centralised. So, you won’t need to rely on third-party systems – you can view a single version of the truth.
Some useful features include:
Discover more on how the right ERP solution can manage and minimise allergen risks in this blog.
We’ve mentioned in an earlier section how important it is to have an effective traceability process in place. An ERP solution can facilitate this by allowing you to harness the power of IoT (Internet of Things) and data analytics.
For example, Dynamics 365 can integrate your data into one system so you have a complete, accurate view across your entire food production journey and IoT monitors your machinery. Couple this with Microsoft’s Power BI tool and you can merge data from a variety of sources, regardless of where their source.
This gives you deeper insights into the information you need to prevent production issues, enhance machine efficiency, boost workforce productivity, make more informed business decisions and more.
Business Central and Aptean Food and Beverage ERP will offer quality control functionality. For example:
Read about how an ERP solution can help manage quality control specifically for the meat industry here.
An ERP solution increases the visibility you have over your business processes which can allow you to better manage these processes. Food waste is one example.
For instance, a combination of Microsoft Dynamics Business Central for Food and Aptean Food and Beverage ERP can help you turn your food manufacturing waste into an additional revenue stream. This is by empowering you with enhanced control over your co-product and by-product processes. Find out more on how you can do that in this blog.
Choosing the right technological solutions to enhance your business processes and ensure your products are delivered in the safest, most reliable and cost-effective way is one step. But to make sure your solutions are implemented, operated and managed correctly, you should work with a digital business consultancy.
A consultancy will help you choose the right solution for your business, implement it, integrate any existing systems, offer ongoing support and more.
Here are some tips on how to find the right consultancy partner:
At Columbus, we have over 30 years of experience in implementing, managing and maintaining ERP solutions. We’ve rolled out over 8,600 implementation projects successfully and spend more than 1.7 million hours in consultancy time every year.
All the good work we’ve done for our customers hasn’t gone unnoticed. We’ve won the Microsoft Dynamics Partner of the Year award twice and are a member of Microsoft’s Inner Circle.
Find out more about our business and our values below.
If you’ve got even more questions on ERP solutions for the food and beverage industry and how we can help, get in touch with us today.