Food Logistics

OCT 2014

Food Logistics serves the entire food supply chain industry with targeted content for manufacturers, retailers, and distributors.

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38 OCTOBER 2014 • FOOD LOGISTICS FOOD (and More) FOR THOUGHT T H O M A S R . C U T L E R Leveraging Existing Technology Investments A Top Priority For Food Manufacturers The Survey Says: T he most comprehensive survey of technology usage by North American food manufacturers was recently completed by the marketing research division of TR Cutler, Inc. A total of 512 companies participated in the survey. Respondents ranged from c-level executives to IT managers. All respondents were employed by companies with 100 or more employees with headquarters in North America (including the U.S., Canada, and Mexico.) Here's a snapshot of the survey results: Leveraging existing IT resources: a key finding. Nearly all the respondents indicated that within the past five years their food compa- ny invested significant resources (both financial resources and human resources). The most frequent technology referenced was an ERP (enterprise resource planning) solution. Some of the ERP solutions mentioned by name at least five times included: • bcFood ERP • DEACOM ERP • Epicor ERP • JustFoodERP • Microsoft Dynamics AX ERP • Plex Systems ERP • Ross ERP/Aptean • Sage ERP • SAP ERP • SYSPRO ERP • TGIltd ERP Other ERP solutions were also named sporadically among the sur- vey respondents. Derek Singleton, managing editor at Software Advice, astutely noted, "Not only are food and beverage manufacturers closely regulated, they are also subject to heavy scrutiny by news media." High profile food recalls have raised the public's awareness about food manufacturing, he says. On the positive side, "One of the main bene- fits of food manufacturing software is that it helps food manufacturers ensure quality and accuracy in their products by providing extensive features for traceability and inventory management." However, unlike new food companies or those looking to replace long-standing legacy systems, respondents to this survey are seeking solutions that will augment, interface, and cull data from a myriad of sources, from file cabinet folders to ERP systems' data. Unlikely to change or replace ERP solution in the next three years: a key finding. Less than 10 percent of respondents (8 percent) suggested their food company would likely change the ERP solution within the next three years. That said, 68 percent complained current technology was insufficient to address the needs of audit processes and ever-changing regulatory enforcement. This dissatisfaction was ampli- fied when more than half these food leaders (55 percent) said they had expected the ERP solution would be sufficient to address these needs. Justifying expanding technology solutions require integration of ERP data: a key finding. From the Food Safety Modernization Act (FSMA) to BRC and ISO2200, these food manufacturing firms iden- tified that exponentially expanding SKUs, thinner margins, and supply chain complexities were among the factors driving the need for new technology solutions. Nearly nine out of 10 respondents (88 percent) said current technol- ogy will be insufficient to address the food safety, food quality, regulatory compliance, and supply chain complexities. Most (81 percent) also noted that the increase in global suppliers exacerbated the challenges of meeting GFSI (Global Food Safety Initiative) standards. Full-service supplier compliance tran- scends ERP: a key finding. Food and ingre- dient manufacturers and brokers require a Web-based, full-service supplier, compliance, and regulatory document management solu- tion that automates the management of sup- plier risk, data, and documentation, making them ready for an audit every day of the year. Very few of these document management systems are cloud-based SaaS (software as a solution), which work with inhouse solutions such as quality management systems (QMS), enterprise resource planning (ERP), and product life-cycle management (PLM), to close the loop on upstream risk. Gary Nowacki, CEO of TraceGains, insists that, "Only solutions that integrate with existing technology and provide collaborative supplier management to ease com- pliance with FSMA, GFSI and HACCP remain relevant." Why many food manufacturers have ERP buyer's remorse: a key finding. With such a large percentage of respondents having purchased their ERP solution within the past five years, there is little wonder why buyer's remorse occurs. One reason is that many of these systems were designed for discrete manufacturing. While process manufacturing "add-ons" have been appended to address the unique needs of food processors, these solutions are often little more than a Post-it note. More than 82 percent of those surveyed suggested when "add-ons" are implemented, they do not work effectively and create significant risk and overhead. The fact is that the underlying data model and func- tional capabilities of a process-oriented ERP application are inherently different than those of either a generic or discrete-oriented solution. The discrepancy of currently installed technology solutions: a key finding. Nearly three-fourths (73 percent) of those responding said they were disappointed the currently installed technology solu- tions did not provide accountability and management of ingredients, raw materials and finished products, including co-products and by- products. Most (89 percent) said current technology solutions are insufficient, lacking the ability to predict yields, scale production, cost products and perform product recalls; nor was there capacity to evaluate and predict the effect of variable product characteristics and inventory attributes, including multiple units of measure (UOM) and shelf life. All who responded noted some ERP deficiency in functionality, and nearly all suggested and required customization overhead and ongoing main- tenance that established a long (often multi-year) ROI. Indeed, Nowacki suggests solutions must demonstrate an ROI in less than six months. Ultimately, when solutions are able to maximize and leverage the current technology solutions, food companies will embrace these technologies. Thomas R. Cutler is the president and CEO of Fort Lauderdale, Fla.- based, TR Cutler, Inc. ( C U T L E R

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