Posted by Dawn Aldwinckle on September 2nd, 2013
Getting the balance right in stock fluctuations
Inventory is one of the biggest costs for any food and beverage distributor, so keeping a tight control of stock levels is essential to staying efficient. A surplus of inventory sparks costs in storage and waste, that ripple effect is then felt throughout the business as funds are diverted away from other departments – while too little inventory fails to meet customer demand and damages reputation.
Older Enterprise Resource Management (ERP) software solutions are not flexible enough to cope with the fast-changing demands of the food and beverage industry. With the development of new technology such as ERP in the Cloud and Software-as-a-Service, IT for distribution companies is no longer restricted to office-based functions. Time spent on daily processes, such as administrative paperwork and warehouse task delegation can all be reduced, while using mobile devices hugely improves the scalability and flexibility of any distributor.
Implementing intelligent IT, like an advanced ERP software solution, gives distributors an overview of stock status at any given time with easy reporting. Whereas older software – or even manual processes – would require collation and analysis of data before reports, new ERP systems deliver detailed reports in minutes. From tracing down the status of a particular order or batch, identifying when orders are due for fulfilment and how the logistics schedules match up, to creating forecasts for potential seasonal demand fluctuations, processes are much faster and more accurate. Efficiently responding to external changes is what keeps your company afloat. “If the rate of change outside your organisation is greater than the rate of change inside your organisation, the end is in sight,” said US businessman and author Jack Welch click to tweet.
The flexibility of automation
While business processes may have been manually streamlined to enable full functionality, these changes often don’t take in to account company-wide growth or fluctuations. Managing one warehouse compared to several is akin to babysitting one child for a few hours compared to having quintuplets full-time. The theory is the same, but the management needs to be as slick as possible for day-to-day functions to be viable and allow the flexibility to grow.
Automating processes such as collating historical buying data ensures simple and easily-adjusted demand forecasting. Distributors can respond quickly to fluctuating product demand without having excess stock or simply a lack of stock available.
ERP software automates previously manual tasks such as monitoring stock levels and creating logistics schedules for timely distribution. It can even be used on-the-go to reduce the administrative paperwork required by delivery drivers, as they access the software on a mobile device to provide real-time delivery status updates.
Using variable projection scenarios with previous stock requirement data allows food and beverage distribution controllers to anticipate inventory fluctuations and have contingency plans for unforeseen circumstances. The now-infamous “horsegate’ saga has highlighted the importance of full visibility and traceability of stock. Automated systems enable lightning-quick batch location visibility for recalls, while contingency plans can be put in place quickly for alternative stock distribution in case of emergencies.
Automation in action
Food wholesaler Natural Balance who managed to maintain a 100% distribution rate is a great case study. A lucrative new contract resulted in a rapidly expanding business and a large increase in product demand. Managing their seven warehouses across the UK, the company began distributing their products to Tesco stores across the country, requiring complex inventory management to meet customer demands.
Natural Balance implemented an ERP solution which allowed them to manage a wide range of volume requirements and seven-day delivery options, as well as updating their accounting processes to complete monthly instead of quarterly accounts. As the company had little requirement for custom modules, the standard version of the ERP software was suited to their needs, delivering a cost-effective solution for streamlined inventory and distribution management.
Understanding ERP for food and beverage distribution
While a standard ERP build worked for Natural Balance, ERP software covers all aspects of supply chain requirements. From MRP modules to Business Intelligence or KPI dashboards, the options for an integrated solution are endless. Food and beverage manufacturers, distribution controllers and wholesalers face unique challenges: perishable stock control, forecast planning, differences in legislation, are just a few examples. These can all be managed with customizable elements of an ERP solution.
We understand that finding the right food-sector ERP system can be challenging – so we’ve crafted a guide, Prioritising ERP in the Food and Beverage Industry, to help make those decisions easier.