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A Beginner's Guide To Food Manufacturing And ERP Software

A Beginner’s Guide To Food Manufacturing And ERP Software

Investing in integrated business software for any company is a large undertaking and not something that can be taken lightly. You need to look at every business process at your company and reconfigure it into this new system. For food manufacturers and distributors this is an especially daunting task, as there are many unique processes that you need to sure can be ported over to a system.

With this is mind, we’ve created this beginners guide to help food companies determine if they’re ready for an integrated solution and what type of software would help them achieve their business goals.

In this guide, you’ll learn:

  • The standard features and functions associated with integrated business software including accounting, sales and finance
  • Food specific functionality like quality, safety, inventory and recipe management
  • The benefits of integrating all of your business practices into a single system
  • Common road blocks growing food companies face that indicate it’s time to look into an integrated system

When does a food company need ERP software?

An ERP implementation is a complex process. For food manufacturing companies, there are very specific signifiers that need to be observed in order to really know when it is time for an ERP. In the early stages of managing a business, getting customers and delivering orders are the most important priorities. Transactions between you and your customers as well as between departments in your facility can be handled manually and with basic business software.

However, once a business starts to grow in size, management needs to start measuring everything related to sales, purchasing, inventory, production and quality. The various spreadsheets or disconnected applications that a company has been using to manage their data will ultimately fall short. Only an integrated system, like ERP software, can offer a single version of accurate data visible to all employees, allowing them to accurate input information throughout the process.

What functionality can ERP bring to a business?

There are a lot of moving parts in a food manufacturing plant. A standard ERP system can bring together common functional requirements like accounting, sales, and ordering. However, by investing in an industry-specific ERP system, in your case food manufacturing, you can ensure additional functionality geared towards your unique business practices like QA, warehouse management, recipe management and formulation.

Below, we briefly highlight the main functionality you should expect from an ERP system built specifically for food manufacturing:

Accounting
ERP software digitizes the following functionality, dramatically reducing user time and error:

Cost accounting

  • Gain greater visibility into how your business is performing by monitoring operation costs
  • Synchronize cost information with the general ledger and allocate costs to different cost centers and objects
  • Spot budget variances as soon as they occur and take appropriate action

Cash flow forecasting

  • Understand your current cash position, forecast shirt term cash flow and monitor cash receipts and disbursements
  • Create multiple cash flow forecasts for different time periods
  • Deliver role appropriate cash flow information via tailored screens
  • Analyze cash flow and take action quickly

Costing

  • Ability to automatically allocate costs from production cost centers to work centers and products for ingredients, direct labor and overhead
  • Setup as many cost drivers as needed and link them with the supply chain
  • Allocate cost from work centers to products with a number of methods like quantity, time and weight
  • After the execution of the product costing, you can analyze the cost of products to their cost components, which are defined according to your needs
  • Standard cost updates, item budgets, job management, resource management and more

General ledger

  • Set up a company and post to the GL including setup charts of accounts and both general and recurring journals
  • Full data export to Word or Excel using style sheets and adding links to external documents
  • Allocations, budgeting, account schedules consolidations, responsibility centers and financial reporting standards, change log, intercompany transactions, dimension, bank reconciliation and multi-currency support.
  • Accounts payables and accounts receivable are integrated with GL and Inventory
  • Track fixed assets such as buildings, machinery, and equipment including acquisitions, depreciation, write-downs, appreciation

Reporting

  • Support for tactical and operational reporting
  • Customizable and detailed reporting in real-time via Excel reduces a user’s learning curve and removes the dependence on IT departments for report writing
  • Schedule reports for automatic distribution via email
  • Full analytical and business intelligence capabilities through Excel or web-based user interface

Sales and marketing

  • Sales order management processing and EDI
  • Pricing rules built into ERP
  • Sales commissions are highly configurable
  • Management of sales rebates and trade promotions
  • Sales forecasting for optimized inventory
  • CRM for full sales team automation; opportunity management; campaign management and marketing lists

Purchasing

  • Order management and EDI
  • Vendor performance management
  • Purchase planning: MRP based on demand or re-order points
  • Automatic creation of purchase orders
  • Management of complex pricing by vendor, customer and item combinations

Inventory

  • Inventory visibility: track at location, zone, bin, container levels
  • Logistics: run planning and shipment load consolidation
  • Shipping and receiving: link paper work electronically to receipt; receive by case; track by pallet; quality audits on receipt
  • Warehouse management: receiving and warehouse putaway; picks and shipments; physical counts and more
  • Lot tracking and recall functionality

Production/shop floor

  • Production scheduling: graphical interface; identify production steps, relate to machine/work center
  • Production planning: create / manage production orders, automatically calculate net requirements
  • Break down finished goods into BOMs, then used to describe products sold together
  • Support for multi-plant production environment
  • Key performance metrics visualize in real time; tailored for each customer
  • Record consumption and output in a variety of way, including integration to MES or PLCs on shop floor and barcode scanning integration in ERP
  • Preventative maintenance fully integrated

What are the benefits of ERP to your food manufacturing company?
While ERP software is no small undertaking, it does bring many benefits to your business, including:

  • Boosts efficiency and reduces errors across departments by automating data entry and processes
  • Real-time visibility into business data and metrics allow management to make actionable decisions in a timely manner
  • Improved data security keeps key company information in the system, not requiring external software and tools to work together / share information
  • Faster and more accurate outputs that lead to happier customers
  • Helps foster a collaborative environment within your company. A single, integrated system helps break down the barriers that keep different departments from working well together

ERP helps foster a collaborative environment within your company. A single, integrated system helps break down the barriers that keep different departments from working well together

Are you ready for ERP software?
Not all ERP systems are the same. When considering whether or not your business is ready for ERP software, these below points will help you understand the type of solution that would fit your needs best.

  • Boosts efficiency and reduces errors across departments by automating data entry and processes
  • Real-time visibility into business data and metrics allow management to make actionable decisions in a timely manner
  • Improved data security keeps key company information in the system, not requiring external software and tools to work together / share information
  • Faster and more accurate outputs that lead to happier customers
  • Helps foster a collaborative environment within your company. A single, integrated system helps break down the barriers that keep different departments from working well together

Summary
In an industry with tight profit margins, fierce competition and strict compliance requirements, having the right business management software is critical to maintaining and growing market share and profitability. ERP software is the right tool for food companies with the maturity and complexity to require measurement, control and continuous improvement of their operations. ERP software that is built specifically for the food industry can lead to significant cost savings and revenue enhancements.