(Editor’s Note: This is an online-only article attributed to the June/July 2018 issue.)
With product lifecycles shortening and the number of SKUs increasing, how do food and beverage manufacturers keep up with traceability requirements? From more varied forms of packaging, regional mass customization, seasonal products, and other variations, this is more of a challenge now than 10 or even five years ago. Each new SKU involves new vendors, new processes, different equipment, and other risk factors that must be accounted for and mitigated.
The CDC estimates that each year, roughly one in six Americans—or 48 million people—get sick due to foodborne illnesses, with another 128,000 hospitalized. With human health at stake, it’s little wonder the industry faces multiple regulations. Just within the U.S. market, key regulations include Good Manufacturing Practices (GMPs), the Food Safety Modernization Act (FSMA), and Hazard Analysis and Critical Control Points (HACCP).
Compliance Not as Easy as ABC
One element these regulations have in common is the idea that food safety is driven by the establishment of well-documented procedures, including who touched which material in each step of the manufacturing process. This regulatory emphasis on procedures creates a natural fit with enterprise software because these are the systems that carry out most of the critical enterprise procedures—the management systems that food and beverage companies use to manage procurement, production, product information, quality assurance, maintenance, distribution, and other functions.
1. Finding the right fit: ERP that integrates the chain of custody. ERP systems are broad in functional scope, but when it comes to support for regulatory compliance in food and beverage, core ERP often isn’t broad enough. This is because most ERP systems lack integrated applications for quality management, quality assurance, and enterprise asset management (EAM), which are often delivered as whitelabeled software or through third-party integrations.
The best way to envision the software scope needed for food and beverage regulatory compliance is to think about the “chain of custody” in producing and bringing a product to market. The manufacturer needs to develop and maintain the product and related labeling information, procure the raw materials, test materials for quality, manufacture the product, test it for quality again, and distribute the product.
While some of these processes can be handled by an ERP system that supports recipe management and batch/process manufacturing, there remains a need for solutions such as quality management and EAM to ensure quality procedures are followed, and that production equipment that touches the product is cleaned and maintained as required.
By contrast, a “pure-play” ERP suite tailored for the food and beverage industry includes all of these things and more as part of a complete application suite. Pure-play ERP eliminates cost and organization risk of systems integration projects to extend ERP with the required functionality. It also avoids the problems that result when an ERP vendor whitelabels software from another vendor and sells it as part of their application. What happens when you upgrade? Will that whitelabeled software be compatible? Will it deliver on your needs as they change over time, or will that require custom coding? For food and beverage manufacturers, a pure-play suite should span quality management, EAM, project management, document management, and business process modeling—in addition to core manufacturing resource planning and finance. It should include roles-based user interface and dashboard features that make it easy to surface necessary information by employee role.
2. Fragmentation the enemy of traceability—get integrated. While many companies have implemented ERP systems, these solutions in some cases are fragmented. Many enterprises, for example, will use one ERP system for enterprise financials and order management, but use a different system for production management and another system for maintenance. This increases the integration overhead in forging a comprehensive solution while also making it much harder to bring together the information and metrics that make up a comprehensive traceability system.
Additionally, since food safety regulations emphasize the need for auditable, proven procedures, compliance is aided by integrated functionality for document management and business process modeling. These cross-application functions are vital in supporting the workflows and documentation involved in the food and beverage industry, such as quality management, quality assurance, and nonconformance reporting.
A pure-play ERP suite can help organizations easily manage this cross-application functionality in one place. With integrated project management, enterprises finally have a tool for managing the cost of quality and the resources they put into food safety programs.
3. Traceability needs a deeper dive into product lifecycle management. ERP systems for the food and beverage industry need to have rich functionality for recipe management as well as batch/process shop floor control capabilities. Systems designed for discrete manufacturing industries structured around bills of materials and assembly tracking may not be able to handle food and beverage manufacturing without the addition of a best-of-breed solution for batch execution.
However, the suitability of an ERP system for food and beverage industry compliance runs deeper than just batch execution. The structure of how a product will be produced, and the quality control steps for that product, may begin earlier as part of the product lifecycle management (PLM) phase. Here is where an ERP system with PLM features comes into play, helping define recipes, control plans, and labeling information and making that information readily available to the ERP system’s functions for production management, procurement, and quality management.
For batch distribution, an ERP system with traceability allows the company to know exactly which lots went into each shipment. The system can also track data from carriers on shipment temperatures or link to data from Internet of Things sensors as part of new collaborative approaches to “cold chain” visibility—letting businesses know exactly where each product is at any given moment.
4. Compliance is king—for the government and for the customer. At the core of most food safety regulations is the ability to provide a solid chain of custody over what was involved with each product shipment. The record of how products are produced and what went into them should be consistent and easily traceable from PLM and on through procurement, production, quality management, and distribution. Having all this data in one system, while being able to quickly retrieve it with a few simple queries, provides full traceability not just for regulators, but for customers too.
Instances where formal recalls occur or where government regulators visit a plant might be few and far between, but customer audits and traceability requests are commonplace. That means the most important reason to have a complete recall management and traceability feature is to satisfy not the regulator—but the customer. Fortunately, the same traceability foundation you need for regulatory compliance serves customer demands as well, letting the customer know the full product supply chain, from farm to fork.
Striking the Right Balance
With an integrated pure-play suite that spans all of these four points, you can provide thorough answers in minutes or at most a couple of hours, rather than the days or several hours it might take with bolt-on solutions or spreadsheets. You can also create user-specific dashboards that contain key compliance and traceability data and metrics. The goal is to confidently and efficiently deliver authoritative information on products—and that is exactly what the right food and beverage ERP solution will help you do.
Leedale is a senior advisor for North America at IFS. Reach him at [email protected].
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