Don’t Get Stalled by Compliance Complexity Software for the Food and Beverage Industry White Paper Table of Contents SYSPRO for the Food and Beverage Industry 2 The Industry 4 Food Safety 4 Regulatory Compliance 5 Brand Protection 5 Automated Traceability 6 Barcoding 7 How SYSPRO can help 8 About SYSPRO 10 Page 2 | White Paper SYSPRO for the Food and Beverage Industry Today, food manufacturers are facing tougher challenges than ever before. In order to meet the Food & Drug Administration’s requirements for recordkeeping and lot-traceability, food manufac- turers must have the ability to track and identify all ingredients in each product, from initial ingre- dients purchases through manufacture to finished goods, shipment and final customer delivery. Manufacturers are forced to accelerate time-to-market despite being faced with constant changes in tastes and trends in a regulated industry. These demands and constraints drive food manufac- turers to look to software systems to facilitate business process re-engineering to help eliminate non-value-added processes, increase productivity and comply with governmental regulations. To meet the stringent requirements of the Food Safety Modernization Act and the Safe Quality Food Standards, companies must be able to identify and trace every single ingredient consumed in the manufacturing process, from receipt through processing, packaging, and shipping to the cus- tomer. So how can today’s manufacturer avoid the complexity of regulatory compliance that can ultimately stall their growth? The answer is simple. With the right Enterprise Resource Planning software solution. The ability to manage production quality is essential to food and beverage manufacturers. ERP systems must provide the capability to track real-time data on all aspects of manufacturing and supply during production, and archive the data for future reference. Quality management enables food and beverage manufacturers to track inspection results, non- conformance and supplier management, and other best practices. For transparency, the quality functions should provide seamless integration with supply chain management functions to give manufacturers a complete view of their quality performance. SYSPRO meets the requirements of the food and beverage industry by providing highly tailored and congurable Enterprise Resource Planning (ERP) software that can help address key business needs. SYSPRO has been selected by companies across the globe to address common business issues through the system’s industry-specic functionality. Excellent tracking of products by lot is critical for us. SYSPRO gives us the tools to meet the current and foreseeable HACCP requirements. Barbara-Ann O’Brien – Manager, Bonté Foods, Canada The Industry Critical issues facing the food industry include heightened levels of regulation in the form of quality, docu- mentation and traceability, customer demands for variety and innovation, low profit margins and shelf life management. Consistent quality of raw materials cannot be guaranteed, necessitating dynamic recipes and variable processes. Forecasting in the final stages of production centers around packaging sizes. Demand is driven by food consumption, which depends on population growth and demographics. Compa- ny profitability is dependent on efficient operations because products are commodities subject to intense price competition. Large companies have advantages in distribution operations. Processed foods are marketed into three different channels: consumer, food service and food processing. Marketing for consumer products is often through food brokers, who place product with grocery chains. Local operators may sell directly to local chains. Food service and processing sales are handled by a sales force and wholesalers. Many processors produce private-label brands under contracts with local and re- gional retailers. Food Safety Food safety is the primary concern of consumers, with Salmonella, E.coli, SARS, mad cow disease and genetically modified organisms cropping up around the world. More than 76 million illnesses are caused by food contamination every year in the United States alone. Government food safety regulations are not con- fined only to aspects such as expiration dates and packaging, but also extend to traceability of the product throughout the entire supply chain, from raw materials through manufacturing to shipment and final store delivery. The capability to track (farm to fork) and trace (fork to farm) details per product or per lot is critical in the food industry. Tracking be- gins when raw materials are received. The date and time of receipt is recorded along with the product name, shipping data and lot number. For a man- ufacturer, consumption must be recorded to link the consumed material to the end product lot. This includes ingredients, packaging materials and all equipment that touches the product. The operating personnel who are involved in the manufacturing or distribution process should also be tracked. The key people are those who receive the material and those who run the process since they have the greatest impact on the safety and security of the final product. For food manufactur- ers and distributors, shipping information must be recorded, including lot numbers and selected ship- ping details. The ability to trace ingredients, parts and lots to the source is very important in the food industry as demonstrated by the recent contamination of pet food in the United States. More than 60 million cans of dog and cat food were recalled on March 16, 2007, by Menu Foods of Streetsville, Ontario, manufacturer of store brands for companies such as Wal-Mart, Kroger and Safeway, and for brand- name pet food companies, including Iams, PetCare and Science Diet. The company recalled gravystyle foods made from Dec. 3, 2006, to March 6, 2007, after hearing complaints that an unknown number of cats and dogs who ate the food had kidney fail- ure, and about 15 died. The contamination was traced to wheat gluten from a company in China. The Food and Drug Ad- ministration acted against wheat gluten from Xu- zhou Anying Biologic Technology Development Co. in Wangdien, China. The pet food was determined to be tainted with the chemical melamine, which somehow became mixed with the Traceability Complete tracking functionality affords ex- tensive visibility up or down the supply chain, thereby providing the means to expedite recalls, should the need arise. Order Templates SYSPRO provides a number of sales order pro- cess-ing options, including order templates and recent orders for repeat customer orders, which process hundreds or thousands of orders per day by fax or phone. Electronic Data Interchange (EDI) Exchange business transactions automatically and electronically in standardized formats between trading partners. Compliance Manage regulatory requirements including HAC- CP, GMP and SQF with fully integrated process- es based on raw materials receiving, production, packaging or shipping steps. Provides electronic signatures with transaction audit traceability. Load Planning Manage your delivery schedule, loading processes and service promises. It aims to improve your pick- ing, planning, scheduling and delivery of orders. Recipe Controls SYSPRO’s recipe management solution helps or- ganizations manage recipes, ingredients and prod- ucts while supporting them through all stages of the development process. Forecasting SYSPRO’s Inventory Optimization (IO), together with Inventory Forecasting, Families and Group- ings, and Requirements Planning provides the tools and processes to optimize stock levels, ensuring stock is in the right place at the right time, and re- duces obsolescence. Production and Shop Floor Reporting Anticipate and reduce bottlenecks, improve con- trol of production processes, and increase visibility to respond quickly to demands. Capture real-time shop floor information, increasing eficiency and re- ducing operating costs. Dashboards and KPIs Deliver reporting tools and a business intelligence platform that provides access to relevant, real-time data across your organization. Page 3 | White Paper Page 4 | White Paper Regulatory Compliance With the U.S. Food and Drug Administration (FDA) having authority over more than 80% of the U.S. food supply, the U.S. Bioterrorism Act of 2002 has more impact on the worldwide food industry than all other regulations combined. The Bioterrorism Act pertains to all companies that manufacture, process, pack, hold, transport, distribute, or receive regulated food products. The Bioterrorism Act has significant impacts on food manufacturing operations: Food companies must establish and maintain a record of the source and destination of ingre- dients and products. This is called the “One-Up, One-Back Traceability” rule. Trace-Back: For all products intended for human consumption, the processor must maintain the source identity of all the ingredients contained in that product. Trace-Forward: For all ingredients received, the processor must be able to identify the diffusion Automated Traceability To address the brand protection and mock recall demands of customers, automated traceability systems have become a requirement for food processors up and down the food chain. For many food processors, their current challenge is to find a solution to traceability that is both cost-effective and a good fit for their current business operations. With an automated system for traceability, incoming materials, manufactur- ing operations, inventory management and customer shipments are all traced in a manner similar to that of established accounting systems. In an accounting system, the general ledger (GL) serves as the central repository of all financial transac- tions. In automated traceability systems, the electronic batch record (EBR) serves as the central reposito- ry of all operational transactions. Automated operational systems are often linked directly to production lines and to inventory (through barcode and RFID systems) to streamline the flow of critical data directly into the electronic batch record. This reduces the risk of errors during data entry and also speeds the flow of information to support real-time visibility and analysis for company executives. The advantages of an automated production tracking system are significant: n Instant Traceability An automated traceability system provides end-to-end traceability for every action that can impact food, starting with orders placed with suppliers and ending with the receipt of finished goods by customers. At any point in the supply chain, a food processor is able to trace back to the source of all ingredients and trace forward to the disposition of all finished products. n Confidence With instant traceability, food processors can gain the confidence of customers, auditors and regulatory inspectors. By establishing the confidence of these constituents, processors can establish a competitive advantage that can add real, measurable value to the business. n Improved Bottom-line Performance With an integrated production tracking system, food processors have the ability to improve the financial performance of the company. Detailed visibility into product line costs and profitability, manufacturing efficiency, inventory spoilage and many other operational metrics can expose hidden opportunities for improvement. Additionally, improvements in forecasting, scheduling and order fulfillment can have a positive impact on customer service. The same automated system that addresses the “overhead” requirement of traceabil- ity can also be used to improve bottom-line profitability and competitiveness. of the ingredients in all intermediate and fin- ished products. n Processors are required to cre- ate tracking records at the time of processing. They must maintain the records for a minimum of two years and they must make the records available to the U.S. Food and Drug Administra- tion (FDA) within four hours if requested. Food importers must notify the FDA at least one day before a shipment arrives in the United States, disclosing details on the shipment and the contents and estimated arrival time. Regulatory compliance is not just about the regu- lations. Regulations focus on both minimizing risk through Hazard Analysis and Critical Control Point (HACCP), and responding to incidents through re- calls. How aggressive a food company becomes in compliance efforts should be based on the risk level. of an incident. Categories that process or sell fresh product (for example, seafood, meats, fruits and vegetables, and dairy) are at higher risk of hav- ing an incident occur. Brand Protection Food suppliers are expected to prove that they can consistently deliver high quality products to ensure they do not put their customers’ brands at risk. In light of recent high-profile food contamination events in the news many food processors now find themselves measured on their ability to help customers protect their brand equity. Historically, food processors have competed for business based on metrics such as price, product consis- tency and customer service. In today’s highly competitive market, the processor that can demonstrate the most reliable means of brand protection can have a significant competitive advantage. The demands for brand protection begin at points closest to consumers in the food chain and then cascade back all the way to the food source. Every participant in the supply chain assumes the risks of poor quality control, regard- less of which partner in the supply chain may cause a problem. One of the ways that food processors are being tested for brand protection is through food safety audits and mock recalls. Many processors that supply the national retail chains are now conducting mock recalls on a quarterly basis. For a food processor, the cost of a failed mock recall can be catastrophic. Compared to the initial warnings that might be imposed by the FDA, a customer may switch to another supplier based on the failure of even one mock recall. Page 5 | White Paper Page 6 | White Paper Barcoding Compliance requires linking ingredients to end-items. This is best accomplished by real-time recording of lot numbers and the actual quantity consumed. Using bar coding, computer-based batch sheets generated by the ERP system will link consumption to end-items with accuracy. Management should consider data-collection methods that lower the time and costs involved. Barcoding can strengthen regulatory compliance, improve manufacturing lot tracking and traceability, develop visibility into operations and streamline and automate many of the distribution processes. Barcoding benefits include: n Automated regulatory compliance and integration into the ERP Facilitation of target-product recall and minimized exposure Significant reduction in time required for a recall, from several hours to minutes Increased food safety through ingredient tracking Improved inventory accuracy n Reduced manual recording Increased visibility and more accurate costing information Improved yields across manufacturing processes The benefits of using barcoding for data collection are speed and accuracy. According to studies, entering bar- code data is at least 100 times faster and more accurate than traditional manual keyboard entry, producing a dramatic increase in efficiency and productivity for any operation. When barcodes are used in the business process, procedures are automated to improve efficiency and increase productivity. As a result barcoding can yield tremendous return in a short period of time and often eliminates the need for additional warehouse staff. How SYSPRO can help Food companies today must increase efficiencies, reduce costs and ensure compliance with food regula- tions across the entire supply chain. Companies using SYSPRO can react rapidly to changes in customer demand through access to real-time supply chain information. SYSPRO provides a totally integrated enter- prise business solution that encompasses: CRM n ERP n Planning and Scheduling Business Analytics deliver efficiencies through maximizing throughput and resource utilization by leveling off production peaks and troughs. Improved decision making is based on what’s sched- uled and what’s running, capacity, resources, labor, work orders, overloads, skills, potential problems, set-up, tear down and pegging. SYSPRO enables a manufacturer to decide where to make the product with what resources, and to specify sequence sched- uling thereby improving throughput. This functional- ity provides the ability to synchronize and integrate a variety of manufacturing techniques all within one fully integrated software system. SYSPRO provides all the facilities to control both short and long production runs; however, since the batch size of a particular product can vary from a few units to several thousand units, SYSPRO will calcu- late the dynamic elapsed time of an operation or job. Environments include assemble-to-order, blend-to- order and finish-to-order through make-to-order. (continued page 9) E-Commerce SYSPRO can improve customer service levels with real-time visibility across the entire enterprise, on- time deliveries and quick response to change-orders. Flexible pricing options, plus the ability to manage promotions and deductions allows profit margins to be optimized. The ability to plan truck loads and routes further improves service and efficiency. Fully integrated financials ensure that costs and expenses are accurately recorded to provide at-a- glance information of the bottom line. The ability to analyze your company information is the key to success. SYSPRO Analytics provides informed de- cision making, with the ability to slice and dice the data from all areas of your business. Easy manipu- lation of the views with drill down to detail provides the insight and flexibility required to run a successful business in a rapidly changing world. Having the right product at the right time is particu- larly critical for the food industry. SYSPRO Inventory Forecasting is a powerful tool that helps plan for the right mix of products, while reducing inventory and facilitating optimum inventory levels. SYSPRO In- ventory Forecasting is easy to use and flexible and has the ability to determine the best algorithm to use, per item; it takes the guess work out of fore- casting. SYSPRO manufacturing modules offer an array of features for estimating, master scheduling, factory scheduling, labor performance, costing, purchasing, receiving, backflushing, material verification and capacity and material planning. SYSPRO’s powerful lot and serial tracking functionality provides the at- a-glance “source to sale” tracking required by the food industry. The SYSPRO manufacturing suite of applications enables manufacturers to keep finished goods in inventory at an absolute minimum and Page 7 | White Paper Page 8 | White Paper How SYSPRO can help SYSPRO Barcoding Solutions provide an integrated data collection solution for all inventory, warehouse management, sales, purchasing and work in prog- ress transactions, reducing data entry time and in- creasing operational accuracy and eliminating the need to perform post-processing paperwork. SYS- PRO Barcoding is a Web application which means it can operate on any piece of hardware utilizing Inter- net Explorer, such as a desktop PC, laptop computer, cell phone or a handheld barcode scanner. SYSPRO Barcoding enables realtime tracking of inventory from the time raw materials are received through all phases of manufacturing and distribution. Man- agement always has an up-to-date record of inven- tory and work-in-progress. Barcode scanning also enables real-time shop floor data collection to track production and capture labor and overhead costs. SYSPRO’s Lot Traceability module as well as to oth- er modules facilitates the ability of manufacturers to trace parts and lots. This is very important in the food industry to guarantee public safety and to com- ply with government standards. In addition to en- abling users to trace items from their source to the current location while maintaining assurance certi- fication and tracking expiration dates, the module enables one-to-one tracking between component serials/lots and parent item serials/lots. This gives SYSPRO offers you: Design Control - Extensive design control system allows you to manage incoming/receiving and in-process inspections, electronic digital signatures, materials and quality dispositions along with complaint tracking and non-conformance reporting Document Control - Maintain an accurate and up-to-date system with SYSPRO document control, engineer- ing change controls, process instruction sheets, maintenance and repairs, as well as health and safety Purchasing Control - Manage your approved vendor list, inspections, work in process (WIP) and audit trails, as well as get insightful reporting on trend analysis, supplier performance and corrective actions Traceability - Comprehensive inventory management system enables better batch/lot and serial tracking, lot traceability, shelf life expiration monitoring, FIFO/ LIFO, bar code identification, and more inventory and distri- bution control capabilities Compliance & Regulations - Facilitate compliance with recall processes, ISO compliance and other the strin- gent requirements of regulators domestically and abroad. manufacturers the ability to track which component serial numbers were used in the production of a par- ticular parent serial number and which component lot numbers were used in the production of a partic- ular parent lot. The module, also maintains a history of traceable items for accountability and customer service follow-up and keeps detailed notes about inspections. SYSPRO Electronic Signatures enables manufac- turers to secure transactions by authenticating the operator who is performing the transaction. This is useful for businesses that require Sarbanes-Oxley compliance or those who simply need to control who in the company is allowed to process various trans- actions. Electronic Signatures ensure the integrity of transactional activity within SYSPRO, logging who did what and when. Electronic Signatures can be configured against a list of key business processes on a transaction by transaction basis to provide se- curity access, transaction logging and event trigger- ing. Transaction logging enables users to generate an audit file of completed transactions. Event trig- gering enables users to send an email notification or run another application following the successful processing of a transaction. Page 9 | White Paper SYSPRO is a global, independent provider of industry-built ERP software designed to simplify business complexity for manufacturers and distributors. Focused on delivering optimized performance and complete business visibility, the SYSPRO solution is highly scalable, and can be deployed on-premise, in the cloud, or accessed via a mobile device. SYSPRO’s strengths lie in a simplified approach to technology, expertise in a range of industries, and a commitment to future- proofing customer and partner success. SYSPRO has more than 15,000 licensed companies in over 60 countries across six continents. About SYSPRO SYSPRO provides a unique combination of robust, scalable solutions that ensure minimal risk and a high return on investment. 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