Ready to react

Farm to fork, seed to shelf: ERP across food and beverage. By Nicky Tozer

It is easy to draw parallels between food and beverage (F&B) and other industries. Planning and forecasting, managing a complex supply chain of parts (or ingredients), production, inventory, complex distribution networks and shipping and customer support – all before arriving in the hands of consumers. The processes involved are vast yet intricate, and Enterprise Resource Planning (ERP) software is the glue that brings them together.

However, there is a unique differentiator – not least of which is the fact F&B products are consumed, essential and perishable. These factors place additional strain on F&B companies to track and manage their processes across production, manufacturing, sourcing, packaging, distribution and the chain of custody in order to meet strict compliance requirements.

Food for thought
F&B is also unique. It forms an ever-expanding $5 trillion global industry thanks to consistent population growth. And it is also relatively shielded from slowdowns compared to other industries, thanks to the focus on hygiene during production, and the essential nature of the products meaning demand is dependable.

However, that doesn’t mean organisations across the F&B spectrum are having it all their own way. Many factors are contributing to change.

F&B startups have raised $9.5 billion from private equity since 2013, fuelling innovation in the industry, as consumer relationships with traditional products change. Public knowledge of the sustainability of food production has heightened, while the battle against single use plastics has risen alongside calls for more organic, vegan and healthy options.

Increasing regulations around traceability, clean labelling, and lowering production costs and lead times mean the food industry has to be more flexible than ever.

Is your ERP beyond expiration?
This need for flexibility is putting a major strain on F&B organisations who are relying on creaking, disconnected legacy software systems. Often, to combat the complex workflows across manufacturing and production, F&B organisations have inherited a patchwork of different systems, with varying applications, just to keep operations moving.

But herein lies the problem. Disconnected systems rarely communicate with one another, which can deliver a major headache across a complex supply chain. They may not have the reporting capabilities needed, are unable to deliver up-to-date, real-time information, or have the flexibility to make industry-specific changes or respond to surges in demand. F&B organisations can’t manage what they can’t measure and being able to streamline manufacturing or eliminate inefficiencies in distribution becomes nearly impossible without connected data.

This quickly become unmanageable when you factor in that companies are dealing with commodity products with low margins and can’t afford inefficiency.

A recipe for growth
Integrated ERP business systems designed for the F&B industry provide an essential framework to help manage all every aspect of the business, from manufacturing to supplier management through to financials and marketing. The key to a good ERP system is being able to connect processes and data to deliver real-time insights that enable F&B organisations to manage and improve Key Performance Indicators (KPIs). This allows them to react, adapt, scale, and benefit from information that will improve forecasting and planning, production capacity, productivity, quality, delivery times, minimise waste and keep control of costs. The increased use of IoT sensors in the manufacturing process is enabling F&B producers to spot inefficiencies and measure the quality of produce, and organisations need to be able to spot patterns in that data and feed it back into planning.

A good ERP system will enable F&B distributors to build demand forecasts that reduce excess inventory – which can potentially account for a significant expense where perishable goods are concerned. In particular, with the right inventory management solution in place, F&B distributors can flex and adapt quickly regardless of market conditions and challenges.

Supply & demand
A critical aspect of supply chain management – good inventory management extends from the point of origin (e.g., the manufacturing plant or distribution centre). Left up to chance, inventory management can either tie up cash if handled inefficiently or deliver competitive advantage if handled well.

Achieving optimal inventory levels is a delicate balance. Buy too little and you wind up with stock-outs and unhappy customers; procure too much and your carrying costs and obsolete inventory levels go up. Intent on running leaner operations that aren’t saddled down with excess inventory or plagued by wasteful processes, more F&B distributors are examining their inventory turnover and coming up with management strategies to satisfy demand.

Take the Hint and react
Hint Water, the provider of unsweetened, fruit flavoured water and one of the largest non-alcoholic independent drink producers in the US has used cloud ERP to scale its critical business systems as it goes toe-to-toe with industry giants like Coca Cola. As it now eyes $1 billion in revenue, Hint has used Oracle NetSuite to avoid IT complexity as its business has grown by automating inventory and order management practices with financial and accounting processes from a very early stage.

The ability to use data to gain visibility and move quickly is essential. When Covid-19 struck, Hint realised the difficulty of keeping its water products on the shelves of retail stores. Alongside toilet paper and soap, water was being purchased in large quantities and the auto-replenishment feature between stores and the distribution centres of major retailers became overwhelmed, meaning shelves were quickly empty. With its successful direct-to-consumer background, and visibility into the supply chain and its inventory, Hint was able to quickly pivot to take and fulfil orders directly from retailers themselves to ensure demand was being met, shelves were stocked, and revenue was coming in.

Looking to the Cloud
There’s a clear need for F&B organisations to move from outdated legacy systems to cloud-based platforms that allow for quick, easy updates and integration across their workflows.

With modern business management software, manufacturers and distributors don’t have to balance multiple software systems just to operate. Modern, cloud-based systems are providing an answer. F&B organisations deploying these systems are far better prepared to react to change and compete with the disruption sweeping the industry.

Nicky Tozer is VP EMEA, at Oracle NetSuite. For more than 20 years, Oracle NetSuite has helped organisations grow, scale and adapt to change. NetSuite provides a suite of cloud-based applications, which includes financials / Enterprise Resource Planning (ERP), HR, professional services automation and omnichannel commerce, used by more than 20,000 customers in 203 countries and dependent territories.