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Open Source ERP Improves Traceability For Less

Fri, 10/15/2010 - 6:59am
Ned Lilly, President and CEO, xTuple

This past August, a recall of over half a million eggs rocked the food manufacturing world. The FDA attributed more than 1,500 cases of salmonella to eggs sourced from a couple of large producers in Iowa. The recall removed the eggs from circulation, but the producers now face a class action lawsuit seeking millions of dollars in damages.
 
That incident, and a subsequent report issued by the Institute of Food Technologists (IFT), highlights the crucial need for effective product tracing systems to protect public health, boost consumer confidence, and manage costs faced by affected industries in the supply chain following a food safety incident. According to the IFT report, “The safety of the food supply requires a comprehensive and coordinated effort among all stakeholders throughout the supply chain from farm to fork.”

Of course, if you're a food producer, your first reaction to news of that recall (right after “thank goodness it wasn't me!”) may have been, “More traceability? How am I going to afford that?” Traceability, also known as lot tracking, requires software that can record ingredients by source and follow those ingredients through the manufacturing process all the way to the store shelf. Implementing lot tracking in a food production system has traditionally been a pricey proposition, but, as this latest recall and lawsuit prove, in the case of an emergency, the ability to track an ingredient back to its source can be crucial. 

Two organizations in the food and beverage industry, Cedarlane Natural Foods and Thymly Products, Inc. are taking initiatives to meet traceability standards by leveraging commercial open source Enterprise Resource Planning (ERP) software from xTuple. Open source is a development method for software that harnesses the power of distributed peer review and transparency of process and delivers better quality, higher reliability, more flexibility and lower cost.

“I had scarcely heard of open source when I joined Cedarlane in 2004, but I was intrigued by the incredible savings offered by moving to an open source solution,” said Daniel Baroco, IT Director at Cedarlane, a natural foods provider offering a wide variety of all-natural frozen foods. Baroco estimates the company saved over $50,000 in its initial implementation, compared to the traditional ERP software alternatives the company also considered. Since then, Cedarlane’s open source ERP software has quickly become mission-critical for the company and has paid for itself many times over. With over 250 finished products, close to a thousand ingredients to make them and multiple locations, Cedarlane depends on xTuple to manage production, including purchasing and inventory as well as sales, customer management and accounting.

ERP software is a popular choice for food manufacturers because it supports the industry requirements of inventory and location control, as well as the crucial ability to track shipments and trace ingredients by lot number. “We can seamlessly trace ingredients all the way back to the beginning, and we have the closest thing I have ever seen to a one-button recall. As a matter of fact, it’s so simple that our plant's quality assurance team runs two mock recalls each year, which is double the industry standard, I believe, of one recall or ‘fire drill’ per year,” added Baroco.

Thymly Products, Inc. is a dry mix manufacturer on the East coast providing specialized ingredients to the food and pharmaceutical industries. According to Harry Muller-Thym, Sr., founder of Thymly, the company’s open source ERP system allows Thymly to tag each product with lot numbers and weights and tracks it 100 percent through the supply chain. In addition to the tracking and tracing, Thymly also takes advantage of the ability to manage perishability of ingredients and finished good by tracking expiration dates and other parameters in the system.

Other key ERP benefits available to food and beverage producers include:

  • Cost savings in inventory: Thymly reduced its inventory considerably within 3 months of implementation.
  • Electronic data interchange (EDI) with customers: Cedarlane developed a fully automated solution to more efficiently manage incoming orders and outgoing invoices with major grocery customers.
  • Better control over cash flow:  By automating invoicing and A/R follow-up, both companies are able to significantly speed up collections. 
  • Integration with other systems: Open source ERP allows for easier integration with other software and production equipment.
  • More visibility into customer and product data: By having all the relevant business information in a single system, companies can make better decisions about product and customer activities, including pricing, distribution and new product development.

In food manufacturing, as in so many other businesses today, open source ERP is driving major efficiency improvements and cost savings. By making “big company” productivity software affordable for even the smallest producers, open source ERP is helping to increase safety and regulatory compliance and make small to midsized food and beverage companies even more competitive in a fast-changing market.

Ned Lilly co-founded xTuple, originally called OpenMFG, in October 2001, with the aim of bringing the worlds of open source and ERP together to solve the unmet needs of small to midsized manufacturers. Ned has worked for a regional technology group in Washington, D.C. and had a brief first career in political media — television, radio and a nonpartisan newswire. He holds a B.A. from the University of Virginia, and an M.A. from George Washington University. He blogs at www.erpgraveyard.com.

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