There’s something special about manufacturers and distributors who sell food and beverages vs. those that produce other products. Not least of which is the fact that these products wind up inside the end customer.
That puts additional strain on food and beverage manufacturers and distributors to track and manage their processes spanning manufacturing, recipe management, packaging and the chain of custody. All of which come with a bevy of external standards they need to meet, such as the US Food Safety Modernization Act (FSMA).
These businesses need real-time data that enables them to build demand forecasts that reduce stockouts and excess inventory (potentially a huge expense for distributors working with perishable goods). They need to communicate with trading partners around audit trails and track lot and serial numbers to document the full lifecycle of their products. Internally, manufacturers and distributors need to be able to share container, pallet, location, forecasting, scheduling and unit-level data with stakeholders, while collaborating on a common platform.
Unfortunately, many food and beverage distributors are forced to track these processes in aging, disconnected systems. Many others are younger businesses relying on entry-level systems that cannot scale and adapt to growth.
Modern, cloud-based systems are providing an answer. As we’ve noted before, the time has come for distributors to move to the cloud. For one thing, cloud-based business management systems avoid the problem of “version lock” with on-premise systems that make upgrades too disruptive to the business thanks to customizations that have to be reworked with every upgrade. Cloud upgrades come multiple times a year and customizations carry forward automatically, meaning businesses are always on the latest features. Moreover, manufactures and distributors running on cloud-based systems avoid the missed opportunity costs that come with a system that can’t adapt to growth. They’re also able to adapt to disruption sweeping the industry, from ecommerce transforming B2B business and global growth, to growing complexity across supply chains and logistics.
In some ways, food and beverage distributors and manufacturers relying on older, on-premise systems face even greater challenges. The Internet has opened greater opportunities to ship directly to consumers, opening new markets and business models. Meanwhile, many consumers have taken a much greater interest in the sourcing of ingredients and additives thanks to increased awareness around GMOs, sustainable sourced food and the startling rise in food sensitivities.
As a result, the stakes for mistakes in food manufacturing are particularly significant. For example, no food or beverage manufacturer wants to go through a product recall, but the sad fact is that they do happen and businesses need to answer to the government agencies that are taking an increasingly greater interest in the manufacturing process through regulations and, more importantly, to customers, who can break a company if things aren’t handled right. Once again, the underlying systems and their ability to adapt to change and grow are paramount for navigating this change.
Ultra Consultants has outlined some of the requirements food and beverage manufacturers and distributors face in selecting an ERP system in a recent blog.
Ranga Bodla is the industry lead for wholesale distribution at NetSuite.