There are tough challenges ahead for the food industry. According to an industry survey by Deloitte: “It has never been tougher to build and sustain a successful food and beverage business than it is today. Food and beverage companies face an array of increasingly complex issues and questions—and the manner in which they choose to respond will shape the future of the industry for many years to come.” The challenges of spiraling costs, a complex supply chain, changing consumer preferences and food safety and compliance are some of the major challenges that the industry will have to address.
The food processing industry is characterized by a complex supply chain involving multiple channels from the individual/groups/farms to the manufacturer and to the depot/distributor. Departmental systems often are islands of information and do provide an integrated view of the supply chain. Complete transparency is required across cross functional processes to make real time and fact based decisions. A solution that integrates the processes of procurement, planning, manufacturing and distribution will address this need.
Distribution is another key challenge. Many plants have evolved from make-to-stock operations to a demand driven model where the completed product is shipped directly to retail outlets. Products no longer sit in a distribution center after production. Each order passing through the plant is for a specific customer, and has a defined delivery date.
This means operations need to be managed well enough to ensure that production orders are scheduled and executed on time, and delivery requirements are consistently met. A solution that can handle such requirements is crucial to overcome the intricacies in supply chain integration.
There is a constant pressure to reduce operating costs, improve top line revenue, manage the procurement volatility due to seasonality and tightly integrate planning and execution. Added to this are customer pressures to improve customer service and provide visibility into inventory status, availability and manufacturing schedules. There is therefore a need to balance these often conflicting goals to be able to optimize operations.
Any solution needs to provide a flexible planning system with real time visibility into inventory status of both raw material and finished goods. Such a system will enable the organization to minimize inventory of both raw materials and finished goods, improve customer service and increase capacity utilization.
Food safety compliance has become an increasingly important issue in the food industry, reflected by a significant increase in media and regulatory attention, and associated penalties for targeted organizations. This could lead to consequences like tarnishing the brand image and erosion of market share.
Better process management through quality management systems and food safety standards needs to be monitored during the production process. There is need for traceability throughout the supply chain from the manufacturer to the shelf to address customer complaints.
Today’s consumers run the gamut – from those who want healthier choices to others who want more convenient packaging and unique flavors. This increased volume and diversity of products is causing plants to design their lines based on shorter production runs with more changeovers. Meeting these demands requires operational flexibility.
Companies must be able to easily add new products to the mix, make changes on the fly and quickly implement new operational procedures. These changes must be executed while meeting high sanitation and environmental requirements. All of this has to be done smoothly to reduce time-to-market and limit the impact on operations. A solution that eases operational blocks, improves flexibility to react to market dynamics and remain nimble-footed, is essential.
EXILANT brings in rich expertise in the Food and Beverages segment to help companies address some of these business challenges. For example, EXILANT has implemented an ERP system for Karnataka cooperative Milk Producers’ Federation Ltd (KMF) - the second largest dairy cooperative in India. This has helped the organization migrate from a manual system to a fully integrated system. The benefits include full supply chain visibility, managing stake holders, customers and vendors, managing appropriate inventory positions, controlling manufacturing and combating frequent change of personnel through the deployment of industry best practices.
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