food erp white paper complete - Datix...Copyright Datix Inc. All rights reserved Introduction%...

1

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 2 0 1 5 – 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

CCop

Applying Epicor ERP To Food Industry Businesses

Copyright Datix Inc. All rights reserved

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 2013. 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.


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

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

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).

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


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 10-‐12 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


granular details of production to mitigate risk in even the

most minor transactions.

Even food packaging and wrapping businesses, with their

core ability to produce materials for distribution, must

equally include as much in-‐depth detail from their

manufacturing processes as food producers.

To make this information easily accessible cloud technology

can illustrate the data in real time and can be accessed from

any mobile device. Epicor users identify this tool as an

essential way for supply chains to increase visibility to the

FDA and upstream partners. Documentation of the

measurements can be transmitted within minutes to any

public requesting authorization. The credibility built with

those publics can create an advantage for those supply chains

over others in the industry. In addition, FDA incentives allow

products to move much sooner to store shelves, resulting in

surges of revenue with fewer errors.

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

system, then communicates the change to the rest of the

network’s modules via a straightforward question and answer

evaluation. The utility enables users to formalize all

configurations prior to circulation and approval, and includes

detailed audit trail logs noting ID and approval dates.

Configuration responses are stored with other product

information for historical auditing and accuracy.

Batch manufactures become more profitable by approving

the production of private label goods in facilities. In 2013, a

research study conducted by ReportBuyer reviled 80 percent

of products sold in large retail stores were private label

products.

One feature of Epicor—on the fly configuration—allows

businesses to differentiate product lines by configuring

recipes from a job order screen. From here users can assign

new order numbers and initiate new label printing. The

function can be customized to display a range of options to

trigger fulfillment orders surprisingly fast. It is a value-‐added

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

calculates costs of all production events. This allows food


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.

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 number of forecasting periods without taking into

account seasonality, market trends, carrying costs or cost of

production. Companies are most successful when advanced

scheduling systems yield consistent outcomes. Basic

forecasting techniques, combined with user understanding of

forecasting processes, are best practice in today’s demand

economy. The recommended solution is a comprehensive

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).

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).

Food companies can benefit from using recipe data—coupled

with—marquee food safety measures to label products more

accurately. Unfortunately, improper food labeling is a leading

cause of recalls. Epicor offers a plug in software called “Bar-‐

tender” to reduce incorrect label making. In addition, batch

manufacturers producing private label items may leverage


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).


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).

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, 25th 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.

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.


References

1. Aptean. Best Practices in Demand and

Inventory Planning for the Food Industry

(2012): 1-‐7. Aptean, 2012. Web. 16 Mar.

2015.

2. Cox, James F., John H. Blackstone, and

Michael S. Spencer. APICS Dictionary. 9th

ed. 1998. Print.

3. Economic, A. Forrester Total. "The Total

Economic Impact™ Of Epicor ERP Cost

Savings And Business Benefits Attributed To

Epicor ERP." June 2014 The Total Economic

ImpactTM Of Epicor ERP (n.d.): n. pag.

Epicor Business Software. 14 July 2014.

Web. 17 Mar. 2015.

4. Epicor Business Software. Epicor Showcases

ERP Version 10 in the Cloud at IMTS 2014.

Epicor. Epicor Business Software, 10 Sept.

2014. Web. 16 Mar. 2015.

5. "Food Supply Chain Traceability Risks &

Solutions." Datix Inc CRM ERP Software

Solutions Provider. Datix Inc., 05 Feb. 2015.

Web. 16 Mar. 2015.

6. Inc. "Job Shop." Inc. Magazine. N.p., n.d.

Web. 16 Mar. 2015.

7. Labs, Wayne. "Avoid Labeling-‐related

Recalls." Food Engineering Magazine. N.p.,

4 Feb. 2015. Web. 16 Mar. 2015.

8. Lucas, Michael. "Food Traceability

Technology Is One Approach to Bridging the

Gap between Safety and Compliance."

Supply & Demand Chain Executive. N.p., 16

Apr. 2014. Web. 27 Mar. 2015.

9. "MAPI Foundation Economic Forecast:

Lower Oil Prices Help Consumer Spending

MAPI: Manufacturers Alliance for

Productivity and Innovation." MAPI

Foundation Economic Forecast: Lower Oil

Prices Help Consumer

10. Payne, Jack. "Tune Up Traceability with

Enterprise Resource Planning." Food Quality

and Safety. Food Quality and Safety

Magazine, June-‐July 2012. Web. 16 Mar.

2015.

11. S. H.R. 2751, 111th Cong., 156 Food Safety

Modernization Act 89 (2011) (enacted).

Print.

12. Smith, Sarah. "Private Label Foods &

Beverages in the U.S., 8th Edition." PR

Newswire. ReportBuyer, 24 Feb. 2015.

Web. 16 Mar. 2015.

13. Spending MAPI: Manufacturers Alliance for

Productivity and Innovation. MAPI, n.d.

Web. 16 Mar. 2015.

14. USDA. FSIS. Bear Creek Smokehouse Recalls

Beef Products Due to Misbranding and an

Undeclared Allergen. USDA, 14 Mar. 2015.

Web. 16 Mar. 2015.

15. USDA. "Summary of Recall Cases." Recall

Summaries 2010. Food Safety Inspection

Service, 2015. Web. 16 Mar. 2015.

16. "Warehouse Management." Data

Processing 25.2 (1983): 39. Epicor Business

Software, 2006. Web. 16 Mar. 2015.

food erp white paper complete - Datix...Copyright Datix Inc. All rights reserved Introduction%...

Documents

Transcript of food erp white paper complete - Datix...Copyright Datix Inc. All rights reserved Introduction%...