Applying Epicor ERP To Food Industry Businesses

Transcription

1 Applying Epicor ERP To Food Industry Businesses Created By: Datix Inc. This special report explores the application of Epicor ERP software to midmarket food industry businesses. The report takes an in- depth look at specific issues facing these organizations including; food traceability, FDA compliance, inventory management, and scheduling. The text drills down into the exact types of solutions that Epicor ERP software could provide to mitigate risk and increase profit for these businesses. M a r c h C o p y r i g h t D a t i x I n c. A l l r i g h t s r e s e r v e d 1 CCop

2 Introduction Epicor Business Software is an enterprise resource asset capable of performing a substantial amount of data analysis and compliance reporting for food companies. Recent changes in food quality and contamination prevention mandates have changed the face of food manufacturing, supply chain, packaging, and distribution. New federal regulation coupled with demands from major retailers, are forcing food industry entities to streamline, revamp, and reform their product supply and traceability utilities to be extremely fast and nearly 100 percent visible. The new challenge for midmarket manufacturers is rapidly becoming how to optimally adapt to this changing environment through the use of agile management resource software. Is Epicor ERP software the right fit for this industry? We will examine Epicor software viability as a key fit for companies desperately needing to scale back product time to completion, labor hours, and non- conforming materials in inventory as well as increase inventory turnover rates all of which performed for the sake of improving food product quality, safety, and traceability. We re going to evaluate the practical application of Epicor ERP in these challenging conditions, and unpack some of the features and modules available for food manufacturers that could help mitigate risk and increase profit. A Background of Food Industry Risk The U.S. Food and Drug Administration has recalled nearly 110 million pounds of food product and issued over 400 recalls since 2010 (13). On average, recalls cost a single food supply chain nearly $10 million dollars annually due to sunk product costs, legal fees, and brand damage (5). However, an article from Supply- Demand- Chain Executive discusses an index report revealing companies spent approximately $25 billion on food recalls in 2013 alone. In total, the U.S. food industry saw a 52 percent increase in recalls between the third and fourth quarter of The risk of a recall could prove life threatening for to the midmarket businesses of this industry (8). To mitigate those risks and costly others, these businesses are in dire need of a definitive solution that is both profitable and eliminates risks forwarded onto the market. The features and modules inside of Epicor ERP could provide the ability for food manufacturers to automate processes and modernize business practices ultimately preventing costly recalls. New Federal Regulation and Epicor The Food Safety Modernization Act of 2011 avows 1 out of 6 people (48 billion) suffer from foodborne illnesses; more than one hundred thousand are hospitalized; and thousands more die. Prior to its signing, several regulatory departments were granted food safety oversight. Business- specific audit groups inside the food industry varied in defining the breadth, depth, and precision of food traceability standards leading some companies to mishandle materials and produce poor consumer goods. Today, the FDA is the supreme, single source of food safety compliance auditing and rarely allow for variation in traceability schemes of food companies (11). To ensure materials traceability initiatives account for even the most granular transaction, Epicor software guarantees product veracity for each and every material in production from lot origin to retail. In addition, Epicor is agile enough to perform a full- scale audit report well under the four hour benchmark outlined in the mandate (4). Large retailers like Walmart and Kroger, are denying the sale of products from suppliers incapable of complying with modern food safety requirements already. Walmart demands its suppliers conduct a mock recall in less than four hours once a year in order to sell in their stores (10). Epicor s version 10 is built on agile technology, which enables greater collaboration among silos and superior responsiveness over most ERP systems on the market today.

3 Epicor collects and carries out full scale reporting of labor, cost, inventory, machine, production and shipping. Also, users can link and embed quotes, complaints, maps to suppliers, RFP, and audit history to any job order. Any issues of non- compliance can be easily sorted by customer, product, or employee responsibility (16). Companies integrating the system into their infrastructure have the ability to mix and match cloud, on- premise, or remote servers to access real time data from any electronic source in the organization. The freedom of choice grants businesses to specify which areas of the supply chain need to be more external facing, in terms of visibility, and which finite details in a job order form will need custom tracking schemes and documentation links. Optimizing the system s business process to match specific benchmarks nearly eliminates the risk of being out of spec in an audit and is adding value to brands. Firm Objectives cost- saving functionality. Systems are outdated, overly reliant on Excel, and incapable of managing complex data schemes in real time. While companies may bare the initial expense of a project, Epicor version 10 is quickly becoming an industry choice for long- term profitability. At its very core, E10 is a uniform approach to lean out labor, material, and overhead costs most associated with the deterioration of a food business s bottom line and credibility. The results of an Epicor 10 integration include proven higher gross margins, compliance, and sustainability. A June 2014 commissioned study conducted by Forrester Consulting, titled The Economic Impact of Epicor ERP, revealed Epicor software enabled a composite organization to achieve risk- adjusted monetary benefits of more than $3.8 million, with a risk- adjusted ROI of 103 percent, and over $1 million in productivity savings bringing the total economic benefit to more than $5 million (3). Firms have three primary objectives of product tracking infrastructure: a) improve supply management b) facilitate trace back for food safety and quality and c) differentiate and market foods with subtle or undetectable quality attributes. Each objective varies based on the depth, breadth, and precision of each supply- chain partner s initiatives (3). Food safety experts recommend deploying a comprehensive ERP solution, like Epicor, in order to eliminate capital- intensive methodologies and boost the food industry into a profit- sustaining conglomeration. Many companies have implemented management software in the past; however an interesting parallel shows as consumer demand has increased over the last twenty years, midsized food businesses have become more asset constrained, with nearly no available funding for projects that yield long- term growth. Some ERP software versions released prior to 2013 lack the capabilities responsive enough to stratify data across entire production networks and perform The study also revealed companies reporting a 15 percent reduction in average inventory times and increased inventory turns. Companies saved 2,500 hours per year in production control. And increased sales productivity and improved customer satisfaction through more accurate sales forecasts and order fulfillment while complying with international trade standards (3). Solving Compliance Challenges Epicor version 10 is a robust, scalable network of interrelated modules analyzing and regulating procurement actions, machine data, materials tabulation, sustainability, benchmarks and more. Legislative mandates require food companies provide individual product traceability documentation, in an electronic format, for two years. Comprehensive prevention technologies inside Epicor enable food businesses to leverage the asset as an electronic source. The events carried out in the system work as an administrator of day- to- day operations and keeps record of those events

4 given specific metrics- such as length of time. It is especially beneficial for companies to evaluate and prevent hazards before they occur. Materials Traceability Failure to integrate electronic traceability schemes into business processes will result in swift action taken by the FDA. The agency is granted authority to place an embargo on products to prevent a recalled event (11). Next, food companies may be required to hire professional agency consultants at $250 per hour per consultant to conduct a hazard analysis audit. Generally, the FDA sends officials to assist in modifying infrastructure in order to comply with benchmarks. Food companies failing to abide by the criteria risk terminating operations for specific products or all products (5). From inception, traceability orders derive from a bill of materials (BOM). The bill of materials lists the raw ingredients, sub- assemblies, intermediate assemblies and quantities of each ingredient needed to produce the end product. A multi- level BOM incorporates single- level components, like salts, and material requirements with internal and external data routing steps for complete measurements, visibility, planning, scheduling, and costing (2). A comprehensive lot recall analysis tool correctly identifies and controls raw materials, packaging procurement, product transformation, raw material consumption, and distribution. Many global traceability standards suggest the one- up- one- down approach: for every event that occurs in production, a record of the prior event and the next event will also be recorded. Epicor food companies also have the ability to validate the certification of compliance at each juncture of these processes from each of its suppliers. Epicor 10 then retains the information until industry mandates, or companies, require renewed documentation. This eliminates risk from the entire supply chain, promotes credibility of the company and exceeds the minimal FDA compliance benchmark (16). Redefining Quality of Food FDA protocol requires companies to record events of non- conformity in detail with batch and lot tracking documentation attached. Non- conformance documentation can become very complex, especially for producers having already survived a recall. However, Epicor administrators can develop an additional field easily accessed through a job, job order, or query to link contingency and traceability documentation to non- conformance reports. The most significant part of this best practice is it can be automated in each arena of production (11). Total Quality Management (TQM) The Quality Assurance module ensures audit trail visibility of all inventory transactions for at least two years. It lessens the probability for missed or short orders, and also, hinders the chance valued partners perform non- compliance complaints against manufacturers. Food processor are supported with instant records access to an unlimited number of customers and contacts from a single database. The Advanced Quality Management module eliminates manual sorting and filling that leads to incomplete record keeping. It can be automated to enforce traceability controls throughout the entire firm ultimately providing inference materials to comply with economic adulteration mandates and create new internal policies. TQM is most effective in its evaluation of unforeseeable hazards. The module compares inventory samplings against science- based metrics to guarantee product quality and edibility. Epicor measures the natural toxins, drug residues, biological composition, decomposition, and parasitic organisms against FDA benchmarks; then displays the results through user- friendly dashboards. Likewise, innovations in technology are allowing users to drill down to the most

5 granular details of production to mitigate risk in even the network s modules via a straightforward question and answer most minor transactions. evaluation. The utility enables users to formalize all configurations prior to circulation and approval, and includes Even food packaging and wrapping businesses, with their detailed audit trail logs noting ID and approval dates. core ability to produce materials for distribution, must Configuration responses are stored with other product equally include as much in- depth detail from their information for historical auditing and accuracy. manufacturing processes as food producers. Batch manufactures become more profitable by approving To make this information easily accessible cloud technology the production of private label goods in facilities. In 2013, a can illustrate the data in real time and can be accessed from research study conducted by ReportBuyer reviled 80 percent any mobile device. Epicor users identify this tool as an of products sold in large retail stores were private label essential way for supply chains to increase visibility to the products. FDA and upstream partners. Documentation of the measurements can be transmitted within minutes to any One feature of Epicor on the fly configuration allows public requesting authorization. The credibility built with businesses to differentiate product lines by configuring those publics can create an advantage for those supply chains recipes from a job order screen. From here users can assign over others in the industry. In addition, FDA incentives allow new order numbers and initiate new label printing. The products to move much sooner to store shelves, resulting in function can be customized to display a range of options to surges of revenue with fewer errors. trigger fulfillment orders surprisingly fast. It is a value- added Minimizing Production Costs Compliance data must include an in- depth annexation of all ingredients and processes as they relate or indirectly relate to specific recipes. Even more so, how and when raw materials are added must be included in the documentation. Many companies use RFID tags in and out of procurement for users to prompt product data. From there, multi- level users are enabled to review each product s BOM, history, and certifications. All inventory tracking data is quickly completed with a hands- off approach and less direct cost. Other unforeseen production issues include anomalistic weather patterns, supplier non- conformance, and production bottleneck. Plant operations can be highly seasonal and depend on the growth cycle of various crops. Authorized business users may configure recipes to carry on production in the event of the aforementioned scenarios. Product configuration is an out of the box utility for Epicor users. The configurator rapidly modifies recipes in the feature to ensure recipe modifications are risk free and properly labeled to avoid a recall (12). Disparate management software failing to harness the complex business processes of food producers risk causing a recall. These systems fail it fails to alert users of critical nonconformities which can occur in multiple stages of production as problems permeate throughout the supply- chain. Scheduling The right mix of strategic business processes has a very high impact on batch operations and the bottom line. Using real time data, managers can effectively automate planning and scheduling functions from end to end of production. FDA benchmarks are beneficial in this case, as well. As records mount over the course of two years (as defined by the FDA), Epicor analytics are vindicating where in the distribution channels demand was highest, where non- compliance issue were most frequent in the supply chain, and system, then communicates the change to the rest of the calculates costs of all production events. This allows food

6 businesses to better estimate production schedules and revamp capacity needs where products fail to meet benchmarks. The scheduling module minimizes materials in storage and assists in avoiding stock outs, missed opportunities, and sunk costs. Lot- sizing and scheduling in food manufacturing is more complex than other discrete processing environments. A master production schedule allows companies to control production times elapsing between workflows from a BOM query to distribution. Jobs are characterized by route, processing requirements, and priority. If companies choose to manufacture big- box retail items to spec, then there is strong possibility excess inventory will become mismanaged in storage facilities; shrinkage may occur or expired products may cause harmful bacteria to spread to materials ready for production (1). When companies want to push products faster to market, a MPS elongates the availability products can remain on store shelves which allows these firms to offer fresher items, as well as attain greater market share and brand recognition. Using a master production scheduler (MPS), policy makers are significantly improving lead times and rapidly increasing ROI. master production schedule (MPS) integrated into Epicor. It is a solid fit for batch food production- - even more so for resource constrained medium- sized businesses dependent upon short- term liquidity (1). The Educational Society for Resource Management says the tool should represent what the company plans to produce expressed in specific configurations, quantities, and dates. It is not a sales forecasting tool that represents a statement of demand. However, complex business intelligence software is an ideal integration for food companies who plan for seasonality and consumer demand. What s an even greater advantage is the ability to automate scheduling across the entire network for large or small user groups. BI trend analysis and scheduling systems work in tandem with one another to lesson the probability of short or missed orders and improve service quality (2). Labeling More than 60 percent of FDA recalls are due to labeling errors, according to Food Engineering Magazine. The agency requires five pieces of information on a food label: product identity, nutrition facts, ingredients (and/or allergens), net contents, and signature line with the processors, distributors, or importer s contact information (7). On-The-Fly Configuration On- the- fly configuration functions give food companies a single source of ingredient modification management and the ability to remain in their production budget. In the long term, forecasting issues are a problem for some food enterprises choosing to divide the annual demand by The article quotes Warren Gilbert, owner of FSS Corp- Food Safety Specialists. Gilbert explains label- related recalls may be initiated for a number of reasons unrelated to a majority of recalls such as improper labeling of potential consumer allergens. Instead, Gilbert believes it could be due to an incorrect ingredient deck, or expiration declaration, and labels not being up- to- date (7). the number of forecasting periods without taking into Food companies can benefit from using recipe data coupled account seasonality, market trends, carrying costs or cost of with marquee food safety measures to label products more production. Companies are most successful when advanced accurately. Unfortunately, improper food labeling is a leading scheduling systems yield consistent outcomes. Basic cause of recalls. Epicor offers a plug in software called Bar- forecasting techniques, combined with user understanding of tender to reduce incorrect label making. In addition, batch forecasting processes, are best practice in today s demand manufacturers producing private label items may leverage economy. The recommended solution is a comprehensive

7 redound labeling and tracking efficiencies to retailers at higher costs of production for more money. In early March of 2015, Bear Creek Smokehouse performed a recall of approximately 3,700 pounds of beef due to label misbranding of an undeclared allergen. Products contained soy, a known allergen not declared on the product s label. The company or FDA had received no reports of adverse reactions from consumers; however the agency performed an effectiveness check to make certain the product was no longer available to consumers. Bear Creek Smokehouse stands to lose an estimated $60,000 in sunken product cost at the retail level (14). The Bartender Software highly valuable tool that can be easily integrated into Epicor ERP 10. It is a high performing asset that controls continuous inkjet printing and label generation in order to reduce improper labeling and product recalls. The tool is ideal for high speed coding on materials, boxes, and shipping orders no matter the complexity. Best- before dates, date codes, lot numbers, and other tracking data can be applied on the fly as materials move through production (4). The cost savings for integrating a user- friendly tool, like Bartender Software, is significant. Labeling can easily be fashioned without spreadsheets or intensive man- hours using the right processes and technology. The secret is repeatable processes based on best practices. Many organizations use antiquated processes with an ill- equipped ERP, and stand- pat with that approach until it fails. What s alarming is that these errors could ultimately cost the organization hundreds of thousands if not millions, or worse; bankrupt the manufacturer completely. Duel Units of Measure For food companies who deal with variable weights or duel units of measure, supporting strong weight management is critical. In the master materials record, producers define whether a material is a standard material or catch weight material. In food production, companies have the option to sell goods individually wrapped or in bulk to buyers and are assigned weights to ensure all orders a filled to order capacity. Products then move through shipping with an assigned RFID tag and information label to ensure products attach the various materials tracking information and conform to buyer standards. A catch weight is more than a simple unit of measure for food producers. It usually consists of two independent units of measure, the base unit of measure and the parallel unit of measure. Catch weight requires identification of a lot, sub- lot, or serial number in order to apply an actual weight to an item, container, or product for order consistency and proper labeling. An ERP administrator will also need to route these weights to multiple transactions including WIP, purchasing and receiving, sales orders and shipments, invoicing and returns. Batch Security Heavy regulation placed upon the food industry requires companies to integrate a batch control system to meet the regulatory and legal requirements surrounding their operations. The food manufacturing industry requires an all- encompassing batch traceability system integrated into the many networks of a food industry value chain to be allowed to operate in most markets. The Epicor 10 Warehouse Management module is an automated utility performing quick and secure batch control functionality. The module performs easy and reliable batch traceability and recall procedures, out of the box; effectively monitoring materials from the receiving customer through production, to shipping and warehouse process, manufacturing, and finally back to the supplier of raw material origin, or vice versa. Product tracking data is then routed to a label preparation database for accurate product labeling (16).

8 Batch control systems are beneficial to each member of a value chain. The tool provides batch templates to define batch criteria for specific items, product groups, suppliers, and more. Users can input batch number series, relevant batch dates (expiry, best before, ship before, manufacturing, receipt data) potency of a batch, user definable information and code files. A serial number option allows the module to provide a more granular level of control and allocates characteristics of each stock item to be tracked. The function can be linked to other management processes to review service history, location, and preventive maintenance schedules. Users can also run a sanity check, to issue jobs for the removal of expired batches. However, the single most significant capability of a Warehouse Management integration, is how it empowers food companies to perform a full- scale recall of non- conforming products in minutes (16). Food supply chains are surrounded by intense, but a much needed overhaul of industry objectives and business processes. With increased federal regulation and changing technology inside of the stakeholder environment, it s important for food supply chain entities to support agile software with business actions based in best practices and repeatable processes. In short, Epicor ERP processes support business practices and maximize efficiencies all while making it easy for the end- user. Ultimately, the best software in the world cannot overcome cumbersome or antiquated processes or mitigate the risk that lies therein. Businesses should evaluate their needs according to both software functionality and business processes, and leverage experts who can help them understand how to build these proper processes around the goals they have for their business. Improvements to warehouse security through a network of electronic means, creates transparency for compliance audits, automates tracking procedures, provides a better basis for quality control and material management, and significantly improves supplier and customer relationships. Conclusion Mid- sized food companies will survive or fail based on their capabilities to trace materials in each arena of production from source to consumer and effectively control the quality of those materials with a less capital- intensive approach. Companies have until July, 25 th 2015 to implement comprehensive, electronic utilities in order to comply with federal regulation. Many food industry companies are at risk of a failed FDA audit and product recall due to disparate systems unable to accord with new legislation. The FDA has reached a milestone with the ability to hold food companies accountable for the lack of critical control measures and prevention inside their infrastructure; and with recalls on the rise, those restrictions will only become tighter.

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