5 Signs Your Food Business is Ready for an ERP
Is your business growing? Congratulations! Perhaps it’s time for your company to invest in a tool that will allow you to support your development in the long term. Up until now, you certainly must have used basic accounting software and Excel files which started your growth. But these tools quickly hit their limits when your sales volume increases. Certain signs are telling: do you feel like you don't have much control over your production and traceability? Do you have poor visibility on your results? Are your clients sometimes unhappy or have you even lost certifications or labels? An ERP system provides many advantages that can help you tackle these issues. Here are 5 signs that your food business is ready to invest in an ERP.
1. I use multiple applications. One per department and they do not interface with each other.
A few years ago, Excel, Sage 500, Acomba or a first-generation ERP were certainly enough to manage your operations and track your results. But now that your food business is in full growth and that your sales volume is increasing, these tools no longer meet your company’s needs. They are slow, are missing features, make it hard to enter data and are the cause of other inconveniences. Whether they are outdated or poorly adapted, these tools are a source of lost productivity for your teams.
Take Excel for example. It is uniquely prone to human error as all or most data is entered manually. Without integration nor centralization, data needs to be entered multiple times. For example, if one of your employees creates all their quotes in Excel, orders are almost certainly generated in another document or system. A real efficiency loss!
Telltale signs: Errors, time loss, bugs, communication problems happen daily.
- Benefits of an ERP for food businesses: they are integrated software, what this means is that all of the features a food business needs are provided within the same system. Not only does this allow you to centralize all your data and improve communication between your departments, but also automate certain tasks based on clear and established processes.
The numbers speak for themselves. Finance Online posted on their blog a graphic from a study done by the Aberdeen Group on reasons why SMEs prefer ERPs over separate software solutions. Here are the results.
2. I do not have visibility on the overall performance and profitability of my SME.
Another problem: since your software is not integrated, your data is complex and hard to analyze. It is then nearly impossible to calculate the profit for your projects or your production costs. This results in a lack of visibility on your company’s global performance. Outcome: you are not alerted to financial problems and you make reactive decisions rather than proactive ones.
- Telltale signs: Your invoicing, paying suppliers and employee payroll are all managed separately with software that does not interface with each other. Result: to generate custom analyses, you have no choice but to ask a programmer.
- Benefits of an ERP for food businesses: All of your data will be centralized and collected in real-time in the same system, which will allow you to generate reports and analyses for every part of your company. Good news: you won’t need to ask your IT team again! Most ERPs offer dashboards and custom KPIs that show you a visual representation of your data.
3. I have trouble getting an accurate view of my inventory in real time.
Inventory management is critical for a food business. Without a system tailored for it, it is hard or even impossible to accurately know in real time which products are in your warehouse. Additionally, your operational costs are significant and you lack agility when managing your stock and promotions. Do you know how to evaluate waste, losses and overstock? Are you able to anticipate customer demand that changes based on prices and seasons? Does the inventory value in your financial reports match your physical stocks’? If you're not sure about the answers, it may be time to invest in an ERP!
- Telltale signs: Your data is not updated in real time; your stock reports are not accurate because of human error or even because some of your data was lost. This situation is often synonymous with your employees having to do extra work because they need to spend more time checking the accuracy of each file. And if one of your employees in charge of inventory leaves your company, chances are slim that your other employees won't be confused by their documents!
- Benefits of an ERP for food businesses: An ERP will allow you to make better business decisions and minimize losses so you can continue to grow. Your inventory will no longer be a mystery to you. You will reduce manual tasks through automation and streamline your processes. These features are synonymous with efficiency and error reduction. They are a key advantage in a competitive market like food is.
4. I have trouble guaranteeing the traceability of my products.
As a food producer, manufacturer, or distributor, your company is faced with challenges specific to your industry. In addition to managing your customer's orders, controlling stock and planning production, you also need to comply with stricter and stricter standards required by your sector. But without a system tailored for this, getting visibility on your entire provisioning chain is difficult or even impossible.
- Telltale signs: to ensure you are complying with these standards, a lack of visibility can certainly push you to recall all of your product lots for one day rather than only the affected lot. But this is not the last nail in the coffin!
- Benefits of an ERP for food businesses: An ERP system will allow you to trace your products from receiving raw materials to the distribution of the finished products. How? Through specialized features like barcodes, label and expiry dates management.
5. Lot recalls take a long time and are complicated.
Labelling errors, undeclared allergens, food alterations and bacterial infections, there is no reasons to recall lots. In a 2011 report, an American association, the “Grocery Manufacturers Association” estimated that a majority of companies that did recalls posted average losses of $10M or more.
Even if these figures are not especially recent, they nonetheless show the threat that recalls are to your continued growth. This is particularly the case when you are using management software that cannot handle a large sales volume.
Whether these costs are direct (transport or re-routing lots, product disposal, storage) or indirect (lawsuits, fines, loss of sales, tarnished brand image), they could be significantly reduced by using an ERP.
- Telltale signs: laborious. This term perfectly defines your lot recall process that often costs you time and money that you cannot accurately estimate. Your employees use Excel files to generate labels and human errors are common. You are also not getting results. You routinely go over deadlines.
- Benefits of an ERP for food businesses: ERP software can help you easily follow your products in real time as well as see their expiration dates. You can also significantly reduce the time you need for recalls and its associated costs.
Do these challenges speak to you? Then, as you can see, the missing or outdated features of your current tools are costing your business. As described in this article, using management software with features aimed at the food has many advantages. But before you start your ERP project, it’s key that you define clear goals to properly evaluate its profitability and calculate your return on investment.