The United Nations Environment Programme has highlighted around only 9% of the 9.9 billion tons of plastic that has been created since the 1950’s has been recycled. In addition, around half of the plastic waste generated globally which poisons marine life, contaminates food and clogs our waterways is a direct result of consumer packaging.
Thanks to the digital revolution, today’s consumers are more informed than ever before – and they are using this information to inform their buying choices. As a result, they are increasingly making buying decisions based not only on the quality of a product or brand, but on ethical considerations such as sustainability, the manufacturing process, and the impact of the product on local communities in the supply chain and the environment. Unilever CEO, Alan Jope, when addressing the Deutsche Bank Conference said: “Two-thirds of consumers around the world say they choose brands because of their stand on social issues, and over 90% of millennials say they would switch brands for one which champions a cause.”
Therefore, it is essential that food and beverage manufacturers are able to give consumers the information they need, but also to trace every ingredient that has gone into creating their product. Manufacturers need to have a comprehensive view of where their ingredients come from, allowing them to assess their environmental impact and carbon footprint. Failure to adequately meet traceability requirements and demands in the food and beverage industry can be devastating to a business’s reputation and can incur significant costs. However, traceability across an entire supply chain is a complicated process.
IFS has developed a solution – IFS Enterprise Resource Planning (ERP). By using IFS ERP, a manufacturer can capture and store the data they need in a central database, allowing them to provide full traceability and accurate product labelling for point of sale. In this article, we look at the key benefits provided by using IFS ERP in food and beverage manufacturing and the business case for sustainability and traceability.
Improving supply chain visibility
A recent report from Unilever demonstrated that 21% (more than one in five) of consumers surveyed stated they would actively choose to buy from brands which made their sustainability credentials clear in their marketing and on their packaging. The value of this share of the consumer market represents an opportunity of €966 billion – there is a clear business case for making your supply chain clean and clear. IFS ERP helps manufacturers build an agile and lean supply chain, balancing efficiency with responsiveness. The software provides an integrated planning tool, which gives you a complete overview of the entire supply chain, and this allows you to very quickly make changes in response to changing customer and market demands. Direct store delivery (DSD) and support for scan-based trading (SBT) allows for more streamlined distribution, smaller inventories, cost savings and much less paperwork.
ERP Solutions for Reducing waste
Around 20-30% of the world’s food is wasted each year, which can have a significant impact on sustainability, but also your profits as a manufacturer. Unilever’s Chief Marketing and Communications Officer Keith Weed, outlined:
“Research confirms that sustainability isn’t a nice-to-have for businesses. In fact, it has become an imperative. To succeed globally, and especially in emerging economies across Asia, Africa and Latin America, brands should go beyond traditional focus areas like product performance and affordability. Instead, they must act quickly to prove their social and environmental credentials and show consumers they can be trusted with the future of the planet and communities, as well as their own bottom lines.”
However, the IFS ERP solution can help you manage every stage of the process, including inventory, shelf-life of products and production planning. You can use the software to calculate how much food is wasted, and where exactly in the process this waste comes from. For example, packaging errors, leaking, decomposition or damage in carriage. The IFS ERP system can identify and track how much of your product is wasted and when, allowing you to address the issues causing wastage. When you utilise IFS ERP correctly, you can greatly reduce food waste and increase the efficiency of your operations.
Making your operations more efficient
If your processes are not as efficient as they could be, you are losing revenue. As you well know, the margins in the food and beverage industry are minimal, and so optimum efficiency is vital to the success and profitability of your business. One of the key issues for the food and beverage industry is responding to sustainability demands from consumers and to regulations. The industry must be agile, but also optimally efficient – two difficult concepts to balance. However, Unilever provides an excellent example and have stated that since 2008, they have avoided costs of €600 million through eco-production. By reducing waste, minimising the use of raw materials and natural resources, as well as cutting their energy use, the brand has created eco-efficiencies, reducing costs, improving margins and meeting consumer sustainability demand.
The IFS ERP can help to eliminate delays and errors, making your processes more efficient by collecting real-time data. After gathering these insights, you can make strategic decisions driven by data, which is timely and accurate. Having real-time data available to you greatly improves decision making and responsiveness, helping you to meet sustainability and traceability demands quicker and better than ever before.
Similarly, the IFS ERP solution can make a massive difference to your inventory management. Improved inventory management can speed up your operational processes and reduce costs. Excellent inventory management in the food and beverage sector can lead to enhanced supply forecasts, better order management, and improved operations overall. Furthermore, better inventory management can improve picking, sorting and packing, reducing your carbon footprint.
Forecasting supply, demand planning, logistics, and route optimisation
One of the issues that is unique to the food and beverage manufacturing industry is how changes to processes are made ‘on-the-go’ in order to respond to changing customer demands and needs. The IFS ERP allows for data exchange without human involvement. The software can automatically make changes to your production line, ensuring products are delivered on time.
Furthermore, the IFS ERP solution can assist with detecting whether there is any room available for your product load, as well as ensuring that the optimum conditions for transport are met. Delivery routes can also be optimised for both efficiency and speed. This can ensure that there is minimal waste from spoilage, trailers do not run without a load, and that the impact on the environment is minimised.
One of the biggest issues regarding the impact of the food and beverage industry on the environment is quality control. The food and beverage manufacturing industry is characterised by manufacturing, in large quantities, products with a short shelf life. Because of the highly regulated and sensitive nature of the industry, quality control is essential to prevent waste and ensure obligations are met. The IFS ERP solution can help to automate production, ensure quality and consistency and enable timely dispatch. The solution can also help to ensure that the right materials are consumed, labelled and packed correctly too. Wastage can be dramatically reduced, and there will be a lesser need to recall and rework. The impact of errors in quality control can not be underestimated, as the entire process may need to be repeated at a cost to both your bottom line and the environment.
Sustainability is incredibly important to your customers, and as a result, the success of your business. With consumers and retailers alike concerned with not only the harmfulness of the product after it is consumed, such as excess packaging, but also the harm to the environment in the process of manufacturing, manufacturers cannot ignore sustainability. Not being able to prove your sustainability credentials can have an impact on sales and market share, not just because the consumer makes purchasing choices based on these factors, but also because ERP solutions can allow you to improve and streamline your operations.
Retailers also care about their reputation and Corporate Social Responsibility. The IFS ERP allows customers to capture necessary data to analyse and improve their supply chains from a sustainability viewpoint. Sustainability is typically a key component of any company’s Corporate & Social Responsibility policy. CSR is typically an obligation for all company stakeholders, including customers, employees and investors.
Mitec Consulting is an IFs Partner and through the implementation of IFS, is helping its customers to achieve their traceability and sustainability goals. Contact us today for ERP Consulting advice.