ERP Implementation in Food Industry

Improve Food Safety and Traceability

With the rise of increasingly stringent FDA and USDA regulatory requirements, companies in the food and beverage industry are being forced to change their internal business processes and leverage new technology to help them meet evolving industry compliance requirements for product safety and lot traceability. To achieve more tightly controlled product safety and improved visibility to ingredient and product lot history, companies in the food and beverage industry should consider four critical ERP software requirements when engaging in an ERP selection project, including: 1. Forward and Backward Lot Traceability. Lot tracking and traceability is an essential business requirement for manufacturers and distributors alike. A fully-integrated manufacturing or food distribution software solution that features both forward and backward lot traceability can track the lot numbers of raw ingredients received into inventory, when these ingredients were received, when these raw ingredients were consumed in manufacturing, the lot numbers of the raw ingredients that went into producing each finished good and / or intermediate product, the lot numbers of all finished goods and / or intermediate products and their manufacture date, and when a customer was shipped a particular finished good lot. 2. Automated Quality Control Processing. For businesses that must meet regulatory agency requirements, quality control procedures must be put in place at each step along the supply chain. Quality control personnel must be able to document ingredient and finished good quality testing results and be able to retrieve this information in an efficient manner. An ERP software solution with integrated quality control features, operations and provide a single electronic data source for ingredient and product quality information. ERP solution should provide builtin or user definable quality control workflows and processes. These workflows, which consist of automatic alerts, testing, analysis, and electronic signatures, can help prevent many product safety problems from occurring in the first place. 3. Integrated Wireless Warehouse Management for RFID and Barcode Scanning.

Barcodes can be generated and scanned for work orders, pick tickets, and packing slips. Upon scanning the barcodes, the scanning devices would communicate directly with the ERP system as to when a given raw ingredient or finished good lot is being picked, when finished goods have been produced, and when finished goods are being packed and shipped to customers, giving organizations the ability to trace lot numbers for ingredients and finished goods at each step of the production and shipping processes.

4. Product Shelf Life Management. An ERP software systems ability to track ingredient and finished good shelf lives and expiration dates is an important functional requirement for companies in the food and beverage industry engaging in an ERP selection project. Sophisticated ERP systems should allow for both first in, first out (FIFO) and first expiry, first out (FEFO) inventory management methodologies on a product-by-product basis. The system must be able to account for ingredient and finished good shelf lives and be able to allocate inventory for production and customer orders based on a given ingredients or finished goods expiration date to ensure ingredients and finished goods do not expire while in inventory and to minimize the total inventory write-off for the organization due to expired product.

Direct Store Delivery (DSD)

Manufacturers use the DSD business model to distribute goods directly to the points of sales in the supply chain, such as retail stores, bypassing any retailer or wholesaler logistics.DSD means that a manufacturer delivers store by store, services the shelves or displays, merchandises the product, adjusts pricing, displays point of sale material, and then moves on to the next store. This delivery model is used extensively in the consumer products industry for fresh products such as milk and bread where minimizing the number of days that products spend in the supply chain is a concern. DSD is a strategic growth area in the food industry, as the model delivers a broad range of business benefits to all parties of the value chain. DSD is a need from ERP Solutions. Cold Chain Management Food companies today have to deal with several factors that affect the way they can manage the "cold chain" for their refrigerated and frozen foods. Due to the rising prices of energy, it has become necessary for food companies to effectively manage costs on everything from the warehouse to freight and transportation. That's why many food companies are turning to Warehouse Management Systems (WMS) which was primarily used to eliminate paper-based processing, perform real-time location management and automate existing warehousing practices. WMS now includes task optimization, proactive alert notification, freshness tracking and advanced lot, code, and date management. These advances have enabled food companies to find much more efficient, safe and cost-effective ways to store and transport goods. WMS solutions today provide sophisticated inventory controls. They can also include RFIDenablement and superior product rotation, freshness, lot control, catch weight, date control and even variable aging capabilities. Thus Enterprise Resource Planning (ERP) systems, many of which come with their own WMS modules, are the answer to their emerging cold chain challenges. Managing Large No. of SKUs

MULTIPLE AND VARIED PRODUCTS

In a mass-customized society, where consumers want it their way, with the quality and cost levels that they have come to expect; pressure is created on food and beverage manufacturers who have the difficult task of meeting the ongoing evolution of consumer demand. Some consumers want healthier choices while others want more convenient packaging and unique flavors. This increased volume and diversity of products is causing plants to design their lines based on shorter production runs with more changeovers. Thus SKUs are added regularly due to diverse needs while promotional SKUs are launched for a short period. Meeting these

demands requires operational flexibility. You must be able to easily add new products to the mix, change recipes on the fly and quickly implement new operational procedures. In addition, you must execute these changeovers while meeting high sanitation and environmental requirements. All of this has to be done smoothly to reduce time-to-market and limit the impact on operations. In order to handle the different SKUs smoothly, ERP system becomes an important requirement.

Brand knowledge management

Consumer packaged goods and food & beverage companies are focused on growing their brands profitably. However, brand value can be easily diminished by inconsistent messaging, awkward appearance or misaligned product launches. Managing competitive information, price shops, syndicated data and primary research on a single platform makes information easily searchable, resulting in better brand and category analysis, and ultimately better product decisions. Sharing this information with development partners, like an advertising agency, helps ensure that brand communications are consistent and aligned to the brand promise. ERP enables to manage brand assets by delivering the right images, logos and approved copy to each trade partner.

SUPPLY CHAIN INTEGRATION

Distribution is another key challenge. Many plants have evolved from make-to-stock operations to a demand driven model where the completed product is shipped directly to retail outlets. Products no longer sit in a distribution center after production. Each order passing through the plant is for a specific customer, and has a defined delivery date. This means you must manage operations to ensure that production orders are scheduled and executed on time, and delivery requirements are consistently met. This requires ERP.

SUPPLY CHAIN COLLABORATION

Supply chain collaboration is becoming one of the competitive area for industry, where costs and inefficiencies can be significantly reduced by sharing documentation and inventory levels online. Collaboration in the supply chain is providing ERP with an opportunity to redeem its tarnished reputation for budget blowouts and overlong implementations, by allowing organizations to truly integrate all data and processes into a unified system. Wholesale distributors, importers, manufacturers, their suppliers, resellers and retailers all are benefiting from the two-way traffic that supply chain collaboration has become.

Need for ERP By GCMMF Logistics in collection involved the following;ie.8 million liters of milk per day are to be collected from about 10,600 separate village cooperative societies and approximately 2.8 million milk producing member. Logistics also involved coordination of storing, processing and distribution of milk. Supplier logistics involved weighing of milk, determining the fat content and Calculation of the purchase price. A need was felt to look for a strategy to make its operations competitive and streamline the collection and production processes of Milk products with the help of ICT tools.Amul decided to leverage on the strengths of an ERP System and took major initiatives in this direction in 1994.

Amul studied its existing functions and operations to formulate an IT plan for organizing its growth in the long term perspective. Major importance was given to integrate the existing applications with ICT Tools i.e. Information Communication Technologies through redesign or re-organization of existing software applications. The focus was to provide a seamless flow of information leveraging for the enterprises decision making process. Amul also recognized the need to connect its regional and field offices through e-media. Thus the Company decided to go for the implementation of ERP as in order to keep pace with dynamically changing business environment.
IT Infrastructure of GCMMF Amul assigned the ERP software development project named as Enterprise-wide integrated application system (EIAS), on a turnkey basis to Tata Consultancy Services. The EIAS system covers operations like market planning, advertising and promotion, distribution network planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management. Amul has also connected all its zonal offices, regional offices and members dairies through VSATs for seamless exchange of information. Each of Amuls offices is connected by e-mail and all of them send a daily report on sales and inventory to the main system at Anand. Also, sales offices, C&F points and wholesale distributors of GCMMF have been connected through the Internet for timely exchange of information. The customised ERP EIAS is designed in such a way that it can be plugged into various points of the supply chain and external system. Moreover, the software is platform independent and can work on any operating system. Amul is also in the process of Webenabling the entire supply chain so that it can capture key information at the source, and use the same for decision-making. This would include the likes of transporters, membermanufacturing units, oil packing stations, suppliers, depots and the entire field force. Says Hegde, In the co-operative space, this is the first instance of an integrated system. The same system is going to be linked to each member dairys ERP system in order to get information about a variety of details. For example, details like milk procurement, production and stocks ready for despatch, wholesale distributor orders, secondary sales, direct consumers and demographic census data are available on the click of a button. This has proved to be extremely effective in streamlining the demand versus supply data activity on a continuous basis.

Amul started implementing the ERP in phases Automatic Milk Collection System units (AMCUS) at village societies were installed in the first phase to automate milk producers logistics. AMCUS facilitated to capture member information, milk fat contents, volume collected and amount payable to each members electronically. PROCURNMENT CHANNEL

On an average, around thousand farmers come to sell milk at their local co-operative milk collection centre. Each farmer has been given a plastic card for identification. At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine. The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine. Both these details are recorded in the PC. The computer then calculates the amount due to farmer on the basis of the fat content. The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

 Amul also connected its zonal offices, regional offices and members dairies through VSATs for seamless exchange of information. The customized ERP- EIAS has been implemented across the organization integrating various operational departments. In addition to EIAS, Amul is also using Geographic Information Systems (GIS) for business planning and optimization of collection processes.

Indian Institute of Management Ahmedabad supplemented Amuls IT strategy by providing an application software Dairy Information System Kiosk(DISK) to facilitate data analysis and decision support in improving milk collection.

on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases. Besides this, farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. Using the same system, the farmers can even have access to a multimedia database on innovations captured by Srishti, an NGO working with IIMA. As a large amount of detailed history on milk production is available in the database, the system can be used to forecast milk collection and monitor the produce from individual sellers. Going forward, there are plans to introduce features like Internet banking services and ATMs which will enable milk societies to credit payments directly to the sellers bank account. In line with this vision, officials at Amul are looking at upgrading the plastic cards which are being currently used only for identification purposes, to smart cards which can be used to withdraw cash from ATMs REAPING RETURNS Radical changes in business processes - eliminating middlemen and bringing the producers closer to the customers. Improved delivery mechanisms and transparency of business operations. Due to this process, AMUL is able to collect six million litres of milk per day Processing of 10 Million payments daily, amounting to transactions worth USD 3.78 million in cash. Huge reduction in processing time for effecting payments to the farmers from a week to couple of minutes after implementing the ERP. Controlling the movement of 5000 trucks to 200 dairy processing plants twice a day in a most optimum manner. Practicing just in time supply chain management with six sigma accuracy. The decision making process has rapidly improved since real time data is available on the click of a button. Easy monitoring of crucial management practices like demand versus supply with the help of ERP .