Best Food & Beverage ERP Systems to Tackle Supply Chain, Safety & Compliance Challenges

Climate change, product recalls, labour shortages, wastage, and sustainability demands are just some of the many challenges facing food and beverage manufacturers and distributors today, culminating in year-on-year shrinking profit margins.

Compared to other manufacturing areas, which have seen an investment growth of 5% since 2019, investment in food and drink manufacturing has fallen by 30%, although it remains the UK’s biggest manufacturing sector, generating £29 billion annually for the UK economy.

To guarantee the best chance of survival, the food and beverage sector needs to be forward-thinking. Whether that means diversifying supply chains, targeting new food habits, or tightening existing manufacturing and distribution processes with the use of advanced tech systems.

That’s where an industry-specific food and beverage ERP (enterprise resource planning) system can help.

Food and Beverage ERP Software is designed to specifically cater to the needs of food and drink manufacturers and distributors, providing a suite of specialised and standard modules such as Accounting, CRM, Inventory Management, Recipe Management, Product Lifecycle Management, and Product Traceability.

Best Food and Beverage ERP Software Solutions

3 Leading Challenges Facing the Food and Beverage Industry

1. Rising Costs of Raw Materials For Manufacturing

In the year leading up to March 2024, food production costs increased by 9.2%, with a further 2.1% increase expected by 2025. The reasons behind this increase include inflation, soaring energy costs, and the rising cost of raw materials.

This increase in raw material costs is a combination of factors:

• Climate change
• Material shortage
• Labour shortage
• Geopolitical tensions
• Transportation / Production delays and halts

Coupled with soaring energy costs for running production machinery and equipment, profit margins for food and beverage manufacturers continue to shrink.

2. Ensuring Food Safety Standards & Compliance

From procurement and manufacturing of raw materials to labelling and inventory management, processes impacting safety, transparency, and traceability should be of the highest standard. Failure to do so can result in revenue and brand-crippling consequences, such as enforced product recalls.

Product recalls can single-handedly put produce manufacturers out of business. Studies have put the cost of food recalls between $1 million and $10 million in direct costs.

Beyond finances, manufacturers risk damaging brand reputations that have taken decades to build and losing the trust of a loyal consumer base.

Food and beverage sectors are heavily regulated in terms of safety, compliance, and transparency. Businesses need to obtain food safety certifications (such as HACCP, GMP+, FSSC 22000, and BRCGS) to demonstrate compliance with the highest safety standards. There are also food safety checklists to follow, like the one provided by the UK’s Food Standards Agency.

3. Meeting Sustainability Expectations

The demand for sustainable practices in food and beverage production is at an all-time high. Sustainability in food production and manufacturing has been at the forefront of Net Zero targets among the UN, Climate Action 100+ investors, and the Paris Climate Agreement.

In 2015, the food and beverage industry alone accounted for 34% of all human-caused greenhouse gas emissions (as a result of the ‘food system’ supply chain that includes agriculture, transport, fuel production, waste management, industrial packaging, farming, and livestock production).

In the UK, the food and drink sector is responsible for 22% (158 million tonnes) of its carbon footprint.

Expectations for companies to meet set sustainability targets going forward include:

• Sourcing raw materials locally
• Reducing waste
• Using renewable energy sources for transportation and manufacturing (such as electric vehicles and HGVs)
• Using recycled packaging
• Procure lower-carbon materials/ingredients
• Improving manufacturing energy consumption (sustainable refrigerants, renewable electricity, etc.)

Specialised ERP Food & Beverage Modules & Capabilities

A food & beverage ERP is a specialised, and in some cases configurable, system designed to provide manufacturers with the capabilities to address industry-specific challenges. Modules (and sub-modules) that target business processes include:

• Recipe/Formula Management
• Warehouse Management
• Supply Chain Management
• Inventory Management
• POS/e-Commerce integration
• Materials Planning
• Order Fulfilment
• Maintenance Management
• Product Lifecycle Management
• Expiration Management
• Product Traceability
• Quality Management/Control
• Catch Weight Management

On top of these more specialised features, an ERP system provides out-of-the-box integrated applications and modules for finance and accounting, human resources management, sales and marketing, project management, and more.

Each module of a food and beverage ERP encourages specific benefits and capabilities, such as:

• Easy and targeted recall management
• Supply chain and producer overview
• End-to-end product traceability
• Allergen and nutritional tracking
• Scheduled crop and livestock yields for maximum optimisation of produce
• Weight / Catch weight calculations management
• Labelled (barcoded) inventory management and storage
• First-Expired First-Out (FEFO) distribution and expiration date management for reducing waste
• Automated and scheduled food safety testing
• Balancing consumer demand with production, shelf life, and holding costs
• Avoid downtime with scheduled preventive maintenance of manufacturing equipment
• Forecast demand to avoid products expiring on shelves and overstocking finished goods

What Opportunities Can a Food & Beverage ERP Provide?

Scalability of Production & Distribution

An ERP system is a single end-to-end platform that centralises all business processes from payroll and HR to order and inventory. Unlike applications such as Microsoft Office, QuickBooks, and Excel Spreadsheets – which can stunt growth opportunities for SMBs, the scalable possibilities of food & beverage ERP Software seem limitless.

Management of a Diverse Supply Chain

Diversifying your supply chain may seem complex, considering the amount of information and documents required. However, an ERP system is designed for this type of complexity. It provides food and beverage manufacturers with:

• Automation: Schedule the placement of orders based on thresholds such as forecasted demand and optimal yield time.
• Quick order placement: Having access to order demand forecasts and real-time warehouse stock levels (using IoT sensors), procurement managers can quickly and easily order raw materials on demand.
• Sustainable calculations: With AI-powered ERP solutions, you can easily understand if one supplier is better than another in terms of sustainability scores and make quicker decisions based on automated recommendations.

Our expert’s view…

“By diversifying suppliers, fostering strong relationships, automating processes, and securing long-term procurement contracts, companies can build resilience and ensure stability in their manufacturing and distribution processes. Proactive and strategic approaches are essential to navigating these complexities and sustaining growth in an ever-changing market.”

Paul Vera, Plant Manager at Mad Mexican

Meeting Changing Food Habits & Entering New Markets

An opportune way to combat the rising costs of raw materials is to expand and enter into new markets. Through industry-specific ERP modules such as Recipe and Formula Management, manufacturers can tweak recipes and introduce new ingredients to do just that.

Addressing new food habits and allergens includes producing products that are vegan-friendly, dairy-free, gluten-free, preservative-free, and generally more health-conscious.

Reduce Wastage, Recalls & Spoiled Goods

This is where an enterprise resource planning system shines. With applications for inventory, warehouse, and traceability management, food and beverage manufacturers can avoid huge losses.

Through on-demand forecasting and real-time inventory management, overstocking and understocking issues are addressed. While with proper expiration date management and on-demand labelling systems (as well as FEFO distribution practices), the risk of spoiled goods is dramatically reduced.

How an ERP Impacts Each Stage of the Manufacturing & Distribution Process

1. Procurement/Supply Chain Management: An overview of where materials (ingredients, packaging, etc.) are sourced from, including contact information, safety certificates, costs, invoices, storage details, date of manufacture, and transportation tracking information.
2. Manufacturing: Running manufacturing processes with detailed data on demand forecasting and order fulfilment, while planning production with recipe and formula management.
3. Asset Management & Maintenance: Scheduling predetermined inspections of equipment to avoid unplanned downtime, resulting in delays, while ensuring all mission-critical assets are readily available.
4. Packaging & Labelling: Barcode tracking processes are used to avoid mislabelling (which is common with manual packaging efforts) and ensure the right information and ingredient lists are attached to the corresponding products.
5. Warehouse/Inventory Management: Using FEFO and expiration date management to ensure warehouses are correctly stocked, meaning products are correctly tracked and separated by analysing data on incept dates, allergens, batch numbers, and expiry dates.
6. Distribution: Detailed overview of delivery schedules sorted by use-by dates and easy location of all relevant documents to be supplied with deliveries, including inspections, ingredient origins, storage locations, temperature control, and allergen information.

Food & Beverage Operations Benefiting From ERP Integration

Food and beverage ERP systems can benefit all types of producers, manufacturers, and distributors operating in the sector. Although implementation success can be tricky (almost 75% of ERP implementation processes fail), several operations have benefited:

• Undercover Snacks: Improved the analysis of business performance without increasing staff size, using NetSuite ERP to run inventory scenarios and forecast demand.
• Heaven Hill Distilleries: Reduced finished goods inventory and lead time on customer orders after implementing IFS ERP system.
• Coda Coffee: Swapped MS Office and QuickBooks for NetSuite ERP to improve sustainability efforts with multi-subsidiary and multi-inventory management capabilities.

Industry-specific ERP Software is aimed at various operations within the food and drink sectors, such as:

• Dairy
• Meat, poultry, and fish
• Beverages
• Bakery and confectionery
• Fresh produce
• Farming and agriculture
• Frozen and prepared foods
• Canned goods
• Ingredients (such as spices)