Food and beverage processors today are focused on a singular goal: staying alive in this economic downturn. According to Peter Brandt, SAP’s VP Industry Solution Marketing, in today’s economic environment, there are four factors that make it even tougher to survive: intense competition, globalization and emerging markets, price setting by retailers with clout, and less consumer disposable income.
More consumers are preparing meals at home, including lunches they bring to the workplace, says Karin Bursa, VP of marketing for Logility. Consumers also are purchasing more private label products because they want to shave dollars off their grocery bills. “I would say it’s basics and fundamentals,” she adds. In the last few years, processors have been focused on new product introductions, but now maintaining brands and promoting them in a new light-for example, “green”-is key.
Without track and trace tools, processors could be in jeopardy. “Hello, did not every company that has had a major recall go out of business due to the recall?” warns Tom Huls, VP marketing and sales at CAT Squared. “Not tracing and tracking is the quickest way to ensure closing your company,” he adds. Tracking, of course, is important so finished goods can be found in case of a recall. Tracing ingredients, however, is more problematic. First, it operates under the assumption that your suppliers have good tracking systems. Second, it assumes that these suppliers will send you specifications that accurately describe their product, and have not knowingly sent contaminated product. Third, while tracking systems are relatively inexpensive to install, tracing systems cost more to implement.
Paul Hernandez-Cuebas, CEO of Integrated Management Solutions, says the real issue for small processors and packagers is they can barely afford tracking, but tracing can be out of reach. “These companies don’t like to address the recall issue because it adds expenses. They intellectually understand they need technology. They want it, but they will not make the technology investments to get it,” he says. But cost isn’t the only issue. Tracing requires a dramatic workflow change including record keeping and bar coding.
For John Bellini of Bell Foods, a rapidly growing food processor in the New Orleans area, installing a tracking system was a big step. “We knew the software (from Integrated Management Solutions) would help with shipping and receiving errors and capturing catch weights, but we didn’t know it would cut our time in inventory in half,” explains Bellini.
High Jump Software has several customers in beverage distribution, says Chad Collins, VP of marketing and strategy. “They are very concerned about track and trace from a different perspective,” he adds. For example, one concern is product freshness. It’s an important issue for brewers who don’t want product losing quality by sitting on a shelf too long. Tracking also provides an excellent marketing vehicle to identify which product innovations are a hit with consumers at the time of purchase, adds Collins.
Tom Kozenski, VP of product strategy at Red Prairie, says there is no reason why technology in the supply chain shouldn’t extend right to the POS (point-of-sale) device. “When we get the recall, we’ll stop the trucks, put inventory on hold in the warehouse and shut the item off at the POS device,” adds Kozenski.
The best way to avoid a recall is through continuous compliance monitoring, says Marc Simony, director of marketing at TraceGains. “Most processors know what their suppliers are up to,” says Simony, “but do they know what their suppliers’ suppliers are up to?” Suppliers should be monitored for compliance with critical business rules, and processors should be able to receive digital compliance reports and COAs (certificates of analysis) on incoming ingredients.
The “suppliers’ suppliers” Simony describes allude to an intricate and complex supply chain or a “supply web.” “The spider web is analogous to the way we think of it: the notion of a chain into a network,” says Brandt. This network encompasses a continuous supply chain from the consumer to the base sources of ingredients. In order to work, this web requires planning, supply, demand and sales operations solutions. But could a system determine whether it’s the lettuce or the tomato coming from separate farms that contaminated a salad mixed by a third-party processor and then sent to different distributors? Brandt is optimistic. But, he says, the challenge will be bringing all parties online with interoperable software.
Besides playing a role in “farm to fork” visibility, effective supply chain management can free up capital and provide vital marketing information, according to Danny Halim, VP of industry strategy at JDA Software Group. Halim says it’s important to balance service level with inventory, which should save money by cutting unneeded inventory and by manufacturing to demand. This will reduce changeovers and increase efficiency. Through POS devices, processors can get a handle on vital marketing information: who’s buying what and in what locations. This information can be fed into the product lifecycle management (PLM) system to aid in new product designs/planning and production scheduling.
PLM in practice
PLM grew out of the aerospace and automotive industries where it was necessary to link product design with bills of material (BOMs), procurement, process design, costing, manufacturing, etc., according to Daniel Staresinic, worldwide director of consumer products and life sciences for Siemens PLM. Today, PLM is used by large processors, and medium-sized processors also are finding it useful. In short, Staresinic describes PLM simply, “Build the right product and build the product right.”
Staresinic says PLM is concerned with a view of the product as designed. PLM accurately communicates that design intent, which includes ingredient and process specifications, to all system applications needing the data. There is a connection between PLM and MES (manufacturing execution systems) and that connection is part of the specification management system and part of LIMS (lab information management system). The lab has to understand the design intent of the product and the analytical methods prescribed for assuring the product is indeed the right one and safe to ship.
In a world where processors are facing a time to market of eight weeks, PLM/ERP projects are becoming an important tool to get new products out fast and to keep track of existing products, says itelligence’s Director of Industry Solutions Johann Heydenrych. “In the PLM system is idea generation, conceptualization, initial BOMs, recipes, nutritional requirements, etc. At some point, when released and approved, the recipe and BOM will pass over into the ERP system where it becomes part of the normal daily activities,” adds Heydenrych. Most ERP systems can’t handle nutritional ingredient changes that require label reprinting, but this is a normal task for best-of-class PLM systems.
PLM can benefit from new tools for the research/design phase and in communications. Software as a service (SaaS) tool Elsevier’s illumin8 is a Web-based research tool that can help food designers locate ingredients and their suppliers, check allergy issues and find patents and copyrights so processors can avoid any infringements.
Just as FDA has both e-mail and RSS (really simple syndication) feeds to keep users up to date with recalls and other regulatory information, new Web-based technologies will add to the versatility of PLM, says David Cahn, VP of product strategy at CDC Software. Cahn is looking at technologies such as SharePoint Portal, Twitter and RSS feeds to disseminate new product information, recipe enhancements and other key data to partners in the value chain.
ERP: Beyond bean counting
In the past, ERP provided all the accounting functionality most any company needed. But ERP suppliers, especially those in vertical markets such as food and beverage, are adding functionality processors need. Advanced ERP components-such as lot traceability, electronic data interchange (EDI), document flow management and quality management tracking-work together to facilitate a smooth transition of the critical, current data between trading partners, says Harold Katz, SYSPRO technology enabling manager. Besides supply chain (SCM) and customer relationship management (CRM) functionality, ERP systems can connect with LIMS in real time to receive triggers to stop production/shipping the moment a problem is found in the lab or QA.
LIMS contains all the basic properties of the raw materials, and that data should live in the ERP, says Jay Deakins, president of Deacom. If the LIMS data weren’t tightly integrated into the formulation system, and if the ERP’s formulation system wasn’t integrated into costing, purchasing and inventory, then it wouldn’t be possible to understand the costs of the ingredients, especially ingredient changes, says Deakins.
Energy- and resource-saving tools
“Many companies are making investments to reduce energy and raw material usage,” says Jamie Bohan, Honeywell Process Solutions senior marketing manager. “Controlling these costs is critical in meeting financial targets and will leave these companies in stronger positions in the recovery and beyond,” she adds. Bohan pointed to a food industry application that decreases energy usage in spray dry applications and brings them on line faster, leading to a higher throughput.
For small companies, you can’t improve the process or save energy unless you add some digital instrumentation to monitor the process, says Stellar’s Director of Automation Services Tim Clark. Getting the data electronically saves steps and reduces errors that the old-fashioned clipboard and spreadsheet create. Clark also advises companies to get a historian and look at the trends. Opportunities to save money may emerge.
Improving process equipment efficiency saves money. An Emerson Process edible oils customer was able to save 77,000 Euro per year in energy costs, says Nell Burden, industry sales and marketing. After improving the automation and controls on a heat exchanger with DeltaV software, the heat exchanger’s efficiency was improved from 50% to 90%.
Operations and performance software is really positioned to allow food and beverage manufacturers to start small, perhaps just with performance monitoring, says Kelly Kunkle, Wonderware product manager. He adds, processors can keep tabs on equipment performance and add operations modules to model the process. An incremental MES allows customers to start small and grow the system, which lowers risk and increases the chances of successful deployment.
While overall equipment effectiveness (OEE) provides metrics for packaging line efficiency, throughput and machine performance, in many cases bottlenecks are not machine related, says Eddy Azad, president and CEO of Parsec Automation Corp. Bottlenecks often are related to process, labor, planning or supplier issues. The problem with OEE is that changeover is accounted for time not scheduled to operate.
Maybe you can’t afford a new line or facility. Maybe you don’t need it -if you could better manage your existing assets. There are plenty of software tools that can help you run both machines and manage human assets and save energy as well. In addition, there are tools to trace product from design to sale, and track it as well. You probably can’t afford to be without the latter.
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