FE Tech Flash Vol. 3 No. 3
ERP grows globally
According to AMR Research, ERP software sales are expected to surge, mirroring growth in the late 1990s. Vendors have improved ERP systems, and buyers are recognizing the need to increase investment in higher quality information systems. In the 1990s, most of the spending came from customers replacing old systems with ERP suites. Today, however, there is a healthy mix of new customers, consolidation projects, add-on applications and deployment to additional users.
Two key reasons for the increased growth in ERP software, according to a report from the Aberdeen Group, are manufacturers’ needs to boost sales in new global markets and find ways to lower manufacturing costs. The report, The Role of ERP in Globalization: A low-cost approach to reaching new markets, says that 79% of companies Aberdeen interviewed view global markets as a growth opportunity, but of these companies, half are feeling the pressure to reduce costs. Of those companies seeking to reduce costs either directly or by providing the necessary flexibility to ship from more cost-effective locations, 74% are also seeking growth opportunities.
The Aberdeen report finds that companies that automate and streamline workflows across multiple sites including suppliers, partners and manufacturing sites produced a 66% improvement in reducing total time from order to delivery. Companies that coordinate and collaborate among multiple sites, operating as a vertically integrated organization, have achieved more than a 10% gain in global market share. The report warns that while ERP is not a panacea for market penetration, companies without a sound technology architecture to support global operations may find their growth seriously stunted in the near future.
Companies interviewed for the study ranged in size from smaller than $50 million to greater than $1 billion in annual revenues.
Buy, buy, buy!
Buying and selling businesses in the food industry in 2006 was big business. According to the Food Institute, 348 mergers and acquisitions were completed and an additional 102 were announced but not yet completed before the year ended.
The Food Institute’s Food Business & Mergers 2006 says activity was up 7.7% from 2005, but still remains 13.6% below the total five years ago.
Food processors accounted for almost one-third of the total number of completed mergers and acquisitions in 2006, while investment firms and banks claimed nearly one-fifth of the transactions. Transactions carried out by banks and investment firms contributed to the overall increase in food business mergers and acquisitions.
Peanut butter recall extended
According to ConAgra and FDA, ConAgra has extended its recall of Peter Pan and Great Value peanut butter beginning with the product code 2111, which is printed on both brands. The recall now includes product made in a plant in Sylvester, Georgia, dating back to October, 2004.
FDA first warned consumers on February 14th that Salmonella was found in some peanut butter. According to the Centers for Disease Control, 425 people have fallen ill to Salmonella that was traced back to the peanut butter.
Ethanol elevating corn prices
According to a recent Associated Press article, the demand for corn is driving up grocery store meat prices. Ethanol, which consumed 20% of last year’s corn crop, is expected to take 25% of this year’s corn crop and is blamed for pushing up grain prices for meat and poultry producers. Corn currently sells for about $3.20 per bushel.
But the matter may not be as simple as it looks. In an article published in the Wisconsin State Farmer, Randy Fortenbery of the Department of Ag and Applied Economics at the UW-Madison doesn’t see the harvest time spikes in corn prices being related to ethanol plant demand. Rather, he told Wisconsin ag board members that speculators and large commodity buyers probably drove the market higher. He believes that investors got out of the energy markets and into basic commodities.
However, the USDA says big changes are ahead. According to Keith Collins, chief economist, USDA, “Add the demand for biofuels to the strong foundation for demand for food, and US agriculture faces very profound shifts in crop production in 2007. Driving this change is the remarkable increase in corn prices, as the market revalues corn from its traditional feed and food uses to its value in biofuel production.”Collins says corn crops in 2007 are expected to increase 8.7 million acres to a total of 87 million acres, the largest increase in 60 years. Collins, speaking at the USDA’s Agricultural Outlook Forum 2007, says the corn forecast for 2007 is for a yield of 12.2 billion bushels, but will still be short of what is needed without dipping into already low stocks. Crop farmers can expect to see around $3.60 per bushel.
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People, Plant and Industry News
B&G Foods is acquiring Cream of Wheat and Cream of Rice hot cereal brands from Kraft Foods Global for $200 million in cash. The brands generated net sales of approximately $60 million in 2006.
Crown Valley Winery’s new champagne plant in Farmington, MO, is opening this month. The facility will produce sparking wine using two fermentation processes: the traditional Champagne method and the Charmat method.
Chase Industries is buying Staples & Stevens, a Tampa, FL-based subsidiary of Burch Corp. that manufactures swinging, sliding, sectional and vertical lift cooler and freezer doors.
Vector Packaging created a special division, Oak Brook, IL-based Vector Packaging International, to serve the needs of meat and dairy processors in Mexico, Guatemala, El Salvador, Nicaragua, Cost Rica, Honduras, Panama, Venezuela, Columbia, Ecuador, Peru, Bolivia, Chile, Brazil, Uruguay, Argentina, Paraguay, Dominican Republic, Puerto Rico and Jamaica. Executive Vice President Marino Gonzalez Diaz and Director of Customer Services and Logistics Xenia Roman will head the expansion into Latin America.
APV, part of the Invensys plc group, appointed David Todman to the role of global sales director. He is responsible for the global marketing team at APV. He joined the company from Alfa Laval where he most recently served as global key account manager with regional responsibility for Western, Central and Eastern Europe.