“The main facts in human life are five: birth, food, sleep, love and death.” ― E.M. Forster.
The great thing about a necessity is that, as a supplier, you are always guaranteed an eager market. Food production and distribution falls neatly into this category. We all have to eat, don’t we? However, as margins become tighter, food businesses have been forced to keep a beady eye on the bottom line and pay more attention to reducing inefficiencies.
Manual or semi-automated information systems are no longer cutting the mustard (pardon the pun). Businesses are fast realizing that if you don’t invest in automating with an all-encompassing solution, such as ERP – you will probably get eaten up by the competition (last one, I promise).
The South African food market has taken a pounding recently as a result of the severe drought that continues to plague the region. Staples, such as maize and potatoes, have increased in price by several hundred percent and the price of red meat has shot up. Millions of South Africans who depend on the basics for survival have been hard hit by these increases.
So what does all of this mean for ERP?
SYSPRO has seen a surge in our food industry clientele in the last year. The industry seems to be maturing in terms of its knowledge and use of technology and information systems.
Certain ERP functionality – such as an accurate bill of materials – has proved to be invaluable to food manufacturers.
Manufacturers working with outdated bills of materials run the risk of losing touch with what is actually taking place on the production floor. After implementing ERP at some well-established manufacturers, we have found variances in bills of materials in the region of 300%!
As the market constricts and becomes much more cost and profit focused, attention is on how to save as much as possible. The easiest way to do that in the food industry is through usage. The industry yardstick is yield – which is basically getting as much out of raw materials as possible whilst sticking to the recipe. The key is through reducing wastage around what gets put into the product, or how the product is made.
This can only be achieved through accurate measurement and an equally accurate feedback mechanism. Often when there is a stock variance in terms of usage, it can relate to the way something is being made versus the accuracy of the bill of materials.
Companies using ERP effectively in the industry are those that create a continuous feedback loop to constantly measure performance. They focus on one specific raw input at a time and explore any variations. Food production is not an exact science – there is much opportunity for wastage, and it’s easy for this to get out of control!
Living and working more efficiently is the future, and right now technology is critical for achieving both. The food and beverage industry is just one of the many industries that are using this knowledge to their advantage.