ERP systems have been a crucial component of the technological environment for food industries for many years. But what functions should an ERP system have, and what part does it play in digitalization?
This post is an overview of ERP systems that are beginning to replace the core management system of the food processing industry.
Why are ERP systems necessary in the food industry?
Software for managing businesses is referred to as Enterprise Resource Planning (ERP). A food company’s business activities, including buying, accounting, finance, personnel management, manufacturing, and logistics, may be managed and optimized using an ERP system. In short, the system keeps your business operating—processing orders, monitoring and improving recipes, billing, scheduled productions, and more.
Good ERP systems can give all departments and participants in a food company consistent data and do not require any third-party software for critical functions. This makes sense as it results in swift and efficient operations: when a client’s order is received via an online store, the system instantly confirms stock availability, alerts the production scheduler, and starts item selection without interruptions or distractions.
For larger food manufacturing organizations, it is beneficial for its ERP system to include the production processes in order to take over the role of a Manufacturing Execution System. These systems can automatically collect and process operational data, enhance machine performance, or calculate equipment performance, which reveals areas you can optimize.
The ERP system is a key building element for business in the food service industry since it combines commerce, product management, and production automation. The widespread usage of ERP systems is hardly unexpected given that it has by far the most advanced IT and technology environment.
What part does ERP play in the digital transformation of the food businesses?
The primary element in data processing tools is the ERP system. It has always been, and there has never been a time when it was more crucial than now. What used to be just a tool for operational business assistance has become a strategic building block due to the megatrend of digitization.
- Every digitalization effort involves the ERP system since it serves as a hub for data and processes. ERP data drives improvements in your supply chain, administration, manufacturing, expense vs. profit margin, or sales. For example, when dairies want to track their batches or when you want to create a B2B online store/restaurant for your clients. The same goes for building a smart food factory or integrating blockchain and artificial intelligence into your digitalization strategy. Without a background ERP system, none of them would be possible.
- The optimal foundation for continuous improvement is sound data management using ERP. It is used by food companies for both routine tasks and to optimize daily operations based on digital production data. Examples include choosing which product goes into which production unit, employing advanced planning and scheduling, or reducing operational losses. You can even automate decisions with the help of machine learning and by fusing data from other systems with that from the ERP.
- Not to mention expense savings. The significance of this subject can be shown by looking at the margins in this area. In contrast to the 49.4% market average, the gross profit margin for the food processing sector in 2019 was substantially lower at 22.05% (This data was obtained from CSIMarket.) You will have a difficult time operating your business if you don’t use the available digitalization options and don’t comprehend how to use an ERP system to cut costs. Many companies are only getting started regarding the value-adding procedures used in the sector.
Why is size important for the ERP in particular?
Generally, a company’s size will also influence which ERP solution is best for it:
- A straightforward, preconfigured standard system such as MyDiecteur (Basic ERP) would probably work well in SMEs or food start-ups. As a result, the investment expenses would be kept low, and they can ideally avoid hiring an IT team.
- Medium-sized businesses frequently require more specialized solutions to address the food production processes they have evolved over the years (Industry ERP). An industry ERP’s basic version includes key industry-specific functionality and may be customized to suit each user’s needs.
- The greatest match for food manufacturing organizations would be specialized systems for their production facilities (Factory ERP). At the same time, a superordinate ERP covers all HR, finance, and controlling operations.
It will be extremely difficult to complete your project goals if you choose an ERP solution that does not match the size and nature of your firm. The software cannot grow with your business because you have to live with its high degree of complexity or because it is not flexible enough.
MyDirecteur is an ideal solution for small to medium-sized organizations whose focus is more oriented towards easy accountability, customer management, staff management, inventory management, and financial reports about their business.
Whether it’s bread goods, dairy goods, meat, or beverages, ERP provides the perfect foundation for digitalization. For streamlining your business strategy, growing your customer base, or just making your production more efficient.
It is also true that, as of right now, just 22% of food firms handle data and material flows on the shop floor using an ERP system. This is because of the continued usage of several obsolete or inappropriate systems. As a result, digitalization would push one organization or another to adapt, as transformation is impossible without an up to date ERP software.