Companies in the Food and Beverage Vertical manufacture in a regulated FDA environment and produce batches similar to other process industries such as the Chemical Industry Vertical. While each manufacturer in this group has their unique processes dictated by the product being manufactured, they usually have similar requirements for Formulas/Recipes, Scheduling, Inventory, Quality Control, Distribution and Finance.
A Formula/Recipe is fundamentally different than a Bill of Materials in that Food and Beverage manufacturers express their components, called ingredients, in terms of ounces, pounds, gallons, and volumetric units of measures. They store these ingredients along with machinery descriptors, such as run rates, within a Recipe. There is no need for a routing as in discrete industries since items are produced on a process line and relevant information is contained in the Recipe. Given the availability and characteristics of some of the ingredients, products may have separate Recipes for summer and winter production. Recipes can also be adjusted on the plant floor for scaling, where the batch size is increased or deceased depending on meeting the desired amount of finished goods; small changes to the recipe can be made for variations in taste or color of the ingredients used.
Associated with the Recipe will be one or more Packaging Bills of Material which will describe the components of the containers and wrappers. Since the same product may be packaged in differing containers based on size, language, promotion, and other differentiators, the Packaging Bills of Material is the mechanism used to help to plan and track the components used in the production process. To distinguish between finished products using the same Recipes but having differing Packaging Bills of Material, product groups or families are established to facilitate material purchases and production scheduling.
With the exception of contract packers, many food plants are “make to stock” instead of “make to order” and time phased forward scheduling is used to meet customer demand. The Master Production Schedule is driven by a forecast for finished goods and the production output is placed on the shelves of retail stores or in warehouses for short term storage. The schedule includes times for wash downs, product change overs, and maintenance. Sequencing of products on the equipment is adhered to in order to keep to a minimum wash downs and line change overs caused by differing packaging sizes, and contamination from one product to another. As is with most batch processing plants “Scrap to Run” concepts are employed, where the batch contents are packaged regardless of the quantity ordered. If not already incorporated within the ERP applications software, a Maintenance Management System is most likely deployed to limit downtime by effective use of Preventative Maintenance techniques and to control sanitation activities.
Inventory of finished and raw material has several unique issues within the Food and Beverage Vertical. Shelf life, for raw material or finished goods, is an ever -present consideration for warehousing and is associated with temperature considerations for cold storage facilities. Raw material and finished products are placed into quarantine status until quality control tests are complete before releasing to production or shipment to customers. In case of product recalls, the FDA requires every manufacturer demonstrate their ability to trace all consumables from the ultimate consumer back to the original supplier.
On the plant floor varying raw material concentrations, or potencies, must follow the Recipe and may have to be diluted before use. To relieve raw inventory, Food and Beverage manufacturers can use meter readings for liquids as well as back flushing/theoretical usage for all raw and packaging materials. Catch weight, where the material may be stored in containers of differing sizes, is unique to batch manufacturers and must be accounted for when issuing material to the plant floor. Finally, understanding the creation and storage of co-products and by-products for some producers can be a significant and costly issue. The co-product is produced every time the main product is produced, and can be sold. On the other hand, by-product is considered scrap and usually must be hauled away at the manufacturer’s cost.
A Quality Module is essential to all plants in this Vertical. Many plants use a Laboratory Information Systems (LIMS) in conjunction with the ERP system to govern the testing of both raw and finished goods. The successful completion of the laboratory testing changes the status of the batch holds or quarantine material so that they made be used in production or shipped to customers.
The management of public/remote warehouses and route management are prevalent in the Food and Beverage Vertical. Manufacturers use public/remote warehouses to store product closer to their customers in order to limit travel time and to reduce the time from order to delivery. This distribution method is often used by manufacturers who sell to large volume retailers which recive in skid load quantities.
To meet local distribution requirements, a Route Delivery system is paired with ERP. Here, smaller than skid load units are assembled and shipped locally to retailers usually expecting shelf placement and rotation of product. These systems often come with facilities for invoicing and handling product returns.
While not a manufacturing discipline, Finance plays an important part in enabling the ERP system to function in the Food and Beverage industry and often takes on non-traditional finance activities. Broker/dealer relationships are often essential to distributing the products and usually requires special pricing and distribution considerations. Special pricing in the form of deduction management is considered for “favored” customers where product placement and incentives are used to promote sales. Additionally, promotional accounting is used in the Food and Beverage Vertical, where sales periods are established for special discounting, play a significant part in assuring the company remains competitive in the market place.
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