The food industry has changed dramatically since the millennial turn. Consumers are more demanding, driving up expectations across a range of factors, including availability, price, quality, freshness, and service. Retailers are more demanding as well, expecting replenishment systems that allow them to meet volatile demand while keeping costs low. The regulatory environment has pushed tracking and traceability to the fore. Pressure on pricing is constant as well, fueled by increasing competition, and the business is ever more promotion-driven. Add to this shrinking product lifecycles and the proliferation of private labels.
In this daunting environment, small and mid-sized food manufacturers face a host of challenges, including:
- Developing new products. In markets with an unquenchable thirst for the new, there are ever-more products and SKUs. This had led to a growing number of suppliers. Often products that are here today are gone tomorrow.
- Customer retention. Quality is now a universal expectation, along with competitive pricing. Service demands are higher than ever before, with excellent service really being a component of quality. To meet retailers’ demands, controlling costs while meeting schedules is critical.
- Improved process efficiency. To compete, food manufacturers have had to drive up productivity and efficiency. Supply chain integration is key to achieve this goal, along with implementation of Lean manufacturing methods. The need to improve and manage yield is constant.
- Schedule compliance. With shortened time-to-delivery, shelf life management issues, and increasingly schedule variability, schedule compliance is a significant challenge.
- Regulatory compliance. Compliance demands are an increasing concern as government regulations (e.g., safety, environmental) become increasingly strict and complex.
- Market volatility. Having the ability to respond to uncertain market demand is vital, particularly as materials and energy costs rise.
From a planning and scheduling perspective, these challenges pose a litany of operational requirements to food manufacturers. Manufacturers must:
- Execute dynamic scheduling for normal and special demand variation.
- Support product (and especially new product) SOPs, recipes, operator instruction, and compliance.
- Ensure schedule changes are made to accommodate contract variation.
- Be capable of seasonal planning within forecasts.
- Have necessary visibility to ensure efficient operation while assuring compliance.
- Have forecasts and schedules that enable change for special and promotional products.
While this is a formidable list, successful food manufacturers are meeting these demands with a number of effective strategies:
- Simplify forecasting, planning, and transactions.
- Implement dynamic daily scheduling and planning systems for faster and more effective responsiveness to change.
- Enable paperless production and control with built-in compliance to minimize risk.
- Build in real-time visibility across the enterprise for alerts and analysis.
- Establish closed-loop control between the back office and production floor.
Enabling technologies have provided the necessary functionality to support these strategies, including dynamic planning and scheduling tools, what-if analytics, real-time visibility, agility for seasonality, capacity, and maintenance management, and automation of process control. Among the benefits being realized by adopting these strategies and the tools to implement them: better decision making, stronger internal and external connections, more reliable delivery on shorter production and supply schedules, greater business efficiency, and significant cost savings.
Posted by Tom Muth Senior Manager, Product Marketing, Epicor