At its highest level, software for food manufacturers is designed to coordinate all the flows of goods, services, and money as they move through the supply chain. The organization and optimization of these flows into a food company and out to the final customer require an intensely managed software infrastructure.
There are two issues driving a food company’s software strategy. The first is traceability records for product quality, safety, and recall. According to ARC Advisory Group Analyst John Blanchard, “Though consumers are becoming less brand loyal, as a result of 9/11 brand value and brand risk went way up.” Food companies are being challenged to develop electronic information flows that quickly identify and quantify questionable product and notify final users of a recall or withdrawal.
The other issue, according to Blanchard, is that “many of the food companies who have done ERP implementations are now finding the ROI they were seeking elusive. While the basic business processes are now in place, they are discovering that the 65-75% of their assets are in their manufacturing operations.” As a result, asset optimization is emerging as a strategic issue and new software functionality is being developed to more closely integrate and optimize manufacturing operations.
Tools for optimizationCompanies working on integrating plant systems should consider industry standards and the requirements of suppliers and customers as they develop their internal improvement projects. Improved information flow and optimization comes from linking internal and external planning to plant execution systems. Here are software tools used to manage food manufacturing:
- Advanced Planning and Scheduling (APS) integrates demand forecasts with plant production resources to optimize production and inventory control.
- Manufacturing Execution System (MES) operates and monitors the production systems within a plant operation.
- Enterprise Resource Planning (ERP) ties the internal planning and execution systems together.
- Laboratory Information Management System (LIMS) measures actual production to product specifications.
- Supply Chain Execution (SCE) tracks and manages supply chain activities.
- Transportation management optimizes the movement of inbound materials and outbound finished goods.
- Product Life Cycle Management (PLM) moves products from marketing ideas to R&D to production.
- Enterprise Application Integration (EAI) uses a toolset to communicate electronically with internal systems, suppliers, and customers.
The more food companies invest in these software infrastructures, the quicker they will be ready to exploit information technology to improve their manufacturing processes and corporate performance.
Sorting out the optionsThe food industry is more diverse than one might initially think. Not only does the industry process significantly different kinds of products, the nature of the processing also includes significant variation. For example, the manufacturing software requirements of a company that processes meat are very different from a company that assembles burritos. The meat processor has to be concerned about the cost optimization of disassembled parts; the burrito assembler is more concerned about the optimization of the upstream supply of materials. In reality, each food company has to determine its unique software requirements and select from the best options offered by the software vendors.
Software is moving to the center of the food manufacturing process. According to AMR Research Analyst Kara Romanov, “Food companies considering new software should concentrate on the details of production and supply chain. For example, a limited number of ERP vendors can adequately address issues like catch weight, formulations, and the impact of variable quality, food safety and others. These issues vary by category but are critical to success. The issue is not only what the system can do, [but] how it is accomplished. The devil is in the detail.”
Applications in actionFood companies are now moving toward integrating manufacturing operations including quality control, product development, and production planning into cohesive systems that will interface with other internal systems and supply chain partners. Following are some examples of how technology is being leveraged to improve asset performance.
The food manufacturing process starts with controlling the quality of agricultural commodities. Warburtons Limited of Great Britain is managing raw material with software produced by Linnet–The Land Systems Company in Winnipeg, Manitoba. The software captures quality and performance characteristics before raw material enters the factory. The increasing need to maintain identity preservation of food products is extending manufacturing software up the supply chain to gather information that will be needed throughout the production process.
There have also been developments in the management of materials inside the factory. Traditional supply chains are driven by demand (sales orders and sales forecasts) and therefore “pull demand” or raw material through the process. Conversely, push supply chains determine the optimum way to process raw materials that “arrive” in unspecified quantities and qualities to match existing demand. Miller Brewing deals with their unpredictable production output challenge by using SCT’s iProcess.sct Advanced Scheduling solution. Using the iProcess.sct solution Miller can plan and schedule within a push and a pull supply chain model, or a mixture of both. Production decisions can be made going backward or forward through the supply chain.
New product development is key to the success of many branded manufacturers. Rich Products is leveraging PLM to integrate product development throughout its enterprise. Rich’s solution, called Optiva from Formation Systems, provides a unique integrated product development engine while facilitating collaboration among business functions involved in the entire product lifecycle including R & D, marketing, manufacturing, testing, and regulatory compliance.
Sopheon’s Accolade software is another player in the PLM space. Accolade is a flexible, Web-based software system that automates and streamlines the new product development process. It is being used at Cargill’s European Research & Development group in Bergen op Zoom, The Netherlands, to help navigate the complexities of the development process more quickly and effectively, and to get the right products to market faster. Sopheon helps Cargill make the right product development choices by predicting whether a given project is likely to succeed or fail.
New sourcing alternatives have proven valuable to food manufacturers who are looking to optimize inventory assets. Pennsylvania-based packer Furman Foods wanted to identify additional suppliers to source beans. Using strategic sourcing tools from ecFood, they prepared specs and identified potential suppliers. The resulting Internet auction had ten suppliers bidding for Furman’s business with resulting savings of 19.5% on navy beans and 12% savings on the pinto beans.
Another challenge for many manufacturers is to sort through all of the data that is collected in MES systems. Procter & Gamble recently purchased Intellution’s iHistorian from Emerson Process Management. Other players include OSIsoft and AspenTech. Plant historian products take manufacturing data from literally thousands of points throughout a production facility and act both as a permanent repository for this information and as a hub to which a diverse array of applications can be connected. Downtime monitoring, asset utilization and other analysis tools all require the real-time data housed within historian software to perform their tasks.
Dakota Growers monitors every process of the supply chain from the seeding and harvesting of the wheat until the pasta product is delivered to the customer’s dock. The company chose QAD MFG/PRO to increase the efficiency of its supply chain. With the assistance of QAD, Dakota Growers developed custom EDI gateways to connect its warehouses and consolidate three IT systems into one. As a result, the company now handles its own logistics operations without a third party.
For other food companies, network software has emerged as an alternative to the enterprise software model for moving materials to and from factories. Designed to eliminate the hidden customization, infrastructure and implementation costs of enterprise software, Nistevo is a hosted Web transportation application. Companies including Church & Dwight, General Mills, McCormick & Co., Nestle USA, and Seneca Foods are using Nistevo’s collaborative logistics network to increase transportation efficiencies through online supply chain visibility, contract management, execution, and collaboration.
Integrating manufacturing information across diverse systems is a critical problem for most food companies. Seattle-based American Seafood Group, which operates a large fleet of processing ships, uses a Microsoft’s BizTalk Server 2000 EAI tool to collect production information from each ship and generate enterprise production and inventory information.
New vendor landscapeOn the factory floor, Invensys, who owns Foxboro, Wonderware, Baan, Triconex, APV Systems, and Eurotherm Controls has reorganized its market approach to focus on production management technologies and services in a few vertical industries, including food.
In April 2001, Fisher Rosemont Systems morphed into Emerson Process Management. Intellution became a division of Emerson Process Management in May 2001. Intellution provides an industry-standard software platform that collects, distributes, controls and manages information from the plant floor throughout the enterprise.
Among other vendor changes, Siemens, with the purchase of Compex, has become a major player in the LIMS and PLM area and Rockwell Automation purchased the RPS Suite from Sequencia. Microsoft purchased ERP vendor Great Plains Software along with adding new EAI functionality in its BizTalk 2002 Server.
Overall, manufacturing software in 2002 has become more robust, but still requires significant effort to achieve intended results. There are no comprehensive solutions that solve a food company’s electronic record keeping needs for product recall or that can be described as “shrink–wrapped” manufacturing optimization solutions. Each manufacturer still has to first pick and choose, and then integrate software from diverse vendors to create a viable plant system. The pressure on food manufacturers to gain greater control over manufacturing through the use of technology is both more important and more difficult.
The new software guide for 2002Food Engineering’s Essential Guide to Manufacturing Software has been updated to include more vendors, but provides somewhat less information about the specific products they offer.
MRP/MRP II vendors have been combined into the ERP category. The Plant Historian category has been added to identify vendors who have tools that “store and distribute” production data. The EAI category has been added, but only vendors that have other food industry applications are included.
Our goal is to provide a comprehensive list of the vendors selling into the food industry and give a perspective on the functionality of their products. The vendors listed may not sell to all segments of the food industry. There are some vendors in the ERP and Supply Chain Logistics areas who have discrete products that are suited for packaging and warehousing but not for process manufacturing.
Enterprise software gives corn flour producer the edgeGrupo Minsa, the world’s second-largest producer of corn flour in terms of installed production capacity and sales, has rolled out an enterprise software system at six of its 11 plants and is already seeing benefits. With headquarters in Tlalnepantla, Mexico, Grupo Minsa also has operations in Central America and the U.S.
To streamline and centralize its production, inventory and customer order processes across its plants, Grupo Minsa implemented the commercial procurement, production and financial modules of Protean 3.2 from Baan.
The enterprise system enables the company to deliver orders within strict deadlines and budgets, allowing it to seek higher margins for its exported products. Grupo Minsa can also navigate within its system and call up all the transactions related to the commercial and customer processes.
“Protean has given Grupo Minsa the tools to effectively evaluate our production costs, creating savings of ten million pesos (approximately $1.1 million) per month. This means that we can now lower the prices of products, resulting in higher sales volumes and increasing the total profit of the company. We have seen a dramatic reduction in fixed operational costs. For example, we have been able to reduce customer order reception costs significantly: manual orders now only cost 200 pesos, call center orders stand at 50 pesos while automatic phone operator customer orders cost just ten pesos,” said Alvaro Caballero, IT Manager, Grupo Minsa.
It also enables Grupo Minsa to collect data from the plant floor for quick analysis, helping the company to identify and respond to problems rapidly. The solution also helps the company with its lot tracing capabilities, eases report writing and data mining needs, and helps eliminate duplications of effort and tasks. Centralized planning also allows Grupo Minsa to order only the packaging materials required for the coming month, reducing inventory and outlay on idle stock.
Protean offers production, formula management, inventory management, procurement, planning, scheduling, product costing, asset management, customer order management and financials capabilities. As a result Grupo Minsa has centralized its customer service process, creating one national operation where it previously maintained six, one at each plant.
For more information:
Richard Howells, Baan Process Solutions, (617) 928-5915.