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Food Industry ERP: 4 Questions Your Business Must Ask

Thu, 01/02/2014 - 12:00pm
Paul Bywater, Managing Director of Manufacturing Solutions, Sanderson

When choosing a fit-for-purpose ERP solution for your food and drink manufacturing business, you need to consider four main characteristics:

  • Proven industry-ready functionality that fully supports all of your business processes. Your chosen ERP system should offer a 95 percent or higher fit to your core and critical operational processes as standard ‘out of the box.’
  • On-going focus on your industry from the solution provider. Your chosen product must continually progress with your industry to satisfy tomorrow’s processes, not just today’s.
  • Rock solid, high performance technology with no ‘existential’ dependencies. Avoid the dependency risk of choosing a sole technical provider for all technology components — e.g. operating system, database or communications technologies. As the dominant players in these fields are rapidly changing, seek flexibility for the future.
  • A supplier with proven industry expertise. Your supplier must understand, describe and deliver appropriate solutions for industry best practice, not be led solely by you. This adds value from day one.

It’s important to make sure that all of these characteristics are present in your chosen ERP solution. You can do this by asking the following questions:

1. Is that same ERP system sold into other industries (and/or by other suppliers)?

If so, the probability is that the ERP system will be too generic or will require heavy modification to suit the specialized processes involved in the food and drink industry. Neither of these are positive indicators.

In the circumstance where resellers (or some “authors”) are offering other people’s software and components as either contributions or as third party add-ons, be very conscious of:

  • The possibility of multiple ‘versions’
  • Even the potential for multiple contributing authors

These reduce your investment protection while driving up the cost of ownership. You need to be aware of the snags, support and upgrade problems that multiple elements and authors can add; so identify and quantify — and check the actual experiences of customers.

2. Does the software stack up in breadth and scope, and does it also have solution integrity?

This is critical. For example, a simple check on what the system’s named modules actually cover will show you if that includes food and drink industry basics such as:

  • Forecasting
  • New Product Development (NPD)
  • Recipe Management
  • Allergens Management
  • Compliance (HACCP, EFSIS, BRC v6 satisfaction, etc.)
  • Food Standards, Quality Assurance & Traceability
  • Nutritional Roll-Up
  • Supermarket Trading
  • Real-time roaming applications (pick, place, QA transactions etc.)
  • Factory Floor Data Capture (weigh scale integration, touchscreens, counters, labelers etc.)
  • Van Sales

Remember, you will still need to verify such modules have competent and pertinent content, but as a first filter this exercise will be very useful. Additionally, if a supplier advises you to expect only a best fit of 75 to 85 percent fit to your processes and needs, then remember that a true fit for purpose solution will actually provide 95 percent or more and walk away.

Action: Avoid any solutions without these critical modules, and still test assumptions that the remaining systems will do what you want in these areas — see proof of it in demonstration and in appropriate and pertinent references.

As a food or drink manufacturer, the business benefits of such modules being available are very significant. If such functionality is missing, you will incur significant cost through development or third party add-ons — which undermines your investment protection — or you will be well behind the competitive edge of your competitors. Solution integrity is also critical.

Action: Ask for clear statements in writing from potential suppliers as to which modules (or included functionality) are actually “other party” in authorship, implementation, helpdesk/support and maintenance/upgrade. Is the solution coherent, or a patchwork assembly?

When you find third party functionality, you find complexity and hidden costs; determine who implements, trains, supports and upgrades these pieces, and who owns the on-going integration responsibility. (It may be you). These are common sources of implementation difficulty and unanticipated on-going additional costs. The closer to the core of the solution, the more they can compromise your ability to upgrade from old version to latest versions, the more serious the risk to your investment protection and the more fraught the implementation.

Screen out the more generic and less focused ERP solutions.

Action: Remove the “80 percent” solutions from the 95 percent or more solutions.

Action: Remove the “assembled” solutions from the “comprehensive and coherent” solutions.

3. How many food and drink industry customers of that ERP system has that supplier delivered to and given support?

If fewer than 20, the supplier may be too small or too diversified to be a strategic long-term partner. It is important to check each element of that question to avoid any wrong assumptions about their commitment to the food and drink sector.

Action: Most businesses only seek references after all the effort of going through the selection process to pick a final shortlist. Don’t wait – get references established up front.

You do not have to actually visit references yet; just determine at the first pass:

  • How many?
  • Who?
  • Scope of project?
  • Where?

Carefully check that these are for the same software you are being offered and that the scope was equivalent because many ERP solutions go-live in the back office but don’t make it the factory floor.

Action: Qualifying that the same software is live doing what you want it to do on comparable factory floors filters the industry-focused solutions from those that only have generic back office functions.

Also validate that the software you are having demonstrated is the same version that you will reference at live customer sites, plural.

Action: Qualify suppliers with their reference implementations in other countries.

Those references were likely implemented by people based in those countries and their project expertise and knowledge is most likely still over there — you don’t want to be their learning curve in the country, at your expense. Ensure you are comparing like with like for competency and experience.

Action: For resellers particularly, check the suppliers’ provided references were delivered by their current people, and that these same people will be delivering your project.

4. How many non-food and drink customers do they have with that solution?

If the answer is one or more, then it begs the question: How genuinely is the supplier focused on food and drink? What proportions of their customers are in food and drink vs. other sectors, and how many other industry sectors do they cover?

Action: Use search engines to determine if the “food industry specific” software (and supplier) you are being offered has aerospace, textiles, engineering etc. customer stories out online for the same solution.

You may find an alleged food specialist supplier actually has more customers in local government, retail, engineering, textiles etc. than in food and drink. Because of this, you can be sure that not all suppliers will be readily familiar with (or able to cater for) the competitive edge needs of your business, and how they are achieved in low level operational improvements. Simply, they may not know enough about how food and drink manufacturing differs from all other types of manufacturing to deliver the service you need.

Action: Ensure that you meet the intended implementation team as part of the process and that you have these proven food industry resources reserved (in writing) for your project. It is vital to avoid being given an implementation team who are just available, rather than expert in your industry.

As with the software, you can appreciate that selecting exclusively ‘Fit for Purpose’ suppliers for your ERP project has critical importance on the key aspects, namely:

  • Cost and ROI
  • Effort and delivery
  • Risk and achievement

Action: Recognize if a solution or implementation could be a “jack of all trades” and therefore lacking the deep operational support your business expects or needs.

Making the upfront effort to separate true fit for purpose solutions from the more generic systems now offered to food and drink businesses will pay you back hugely — both in saved money and a vast amount of saved effort.

Action: Ring fence the project focus — and save yourself lots of time and wasted effort.

Do not be alarmed if you can only find a few genuinely fit-for-purpose solutions for your project — there are many more marketed to the food and drink industry than can really “cut the mustard.”

Paul Bywater is the Managing Director of Manufacturing Solutions for Sanderson.

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