We rely on the Food and Beverage Manufacturing industry to provide us with options and to bring innovative, high-quality, and safe products to our tables. But the consistent delivery of these products represents a series of complex equations for food manufacturers.

So, how does the food manufacturer plan for future success in a competitive market?

Despite steady growth, the industry remains vulnerable to rising input costs, government regulation, and cost-related supply chain tension. Future food and beverage manufacturers must focus on production efficiency, supply chain management, and adapting to changing government regulations.

Innovation occurs in high-demand areas such as supply chain, cold storage, and traditional unit operations in legacy manufacturers and product categories. Disruptive technologies span the entire value chain and will have long-term, positive consequences. And the answer to all of that lies in a robust Cloud Enterprise Resource Planning (ERP) solution.

Here are some of the top factors that food manufacturers must address every day to maintain a competitive edge:

Focus on production efficiency

Food and beverage manufacturers know their high volume/low margin characteristics, which do not correspond well with rapidly rising input costs. In the future, these manufacturers must boost processing productivity by focusing on input management, inventory control, and waste reduction, all issues that can be managed through your ERP.

Controlling these cost drivers will assist businesses in meeting consumer expectations for competitive prices while also freeing up funds for new products to meet their varying needs. A robust ERP system allows companies to control costs and increase profit margins by implementing information systems that optimize product mix calculations, inventory level and cost tracking, and automated quality controls.

An all-inclusive supply chain management strategy

Food and beverage manufacturers who succeed in Canada and the United States in the future will be those who effectively manage relationships with both consumers and suppliers. Sharing information and integrating systems with suppliers will be critical, as collaboration should propel the industry forward.

Cloud ERP software provides controlled information access to supply chain partners and can automate routine tasks by providing up-to-date figures, purchasing requests, and budget control tools. These systems go beyond task automation by collecting analytical data with each transaction, increasing the potential for supply chain efficiencies.

You have no control over the global economy, but you do have control over the value of your relationships. While investing in new technologies can help with the innovation drive, it also starts by collaborating with suppliers in a mutually beneficial partnership. Working closely together and managing the entire supply chain will give manufacturers some wiggle room if rising costs continue to be an issue.

Increased SKU counts and specialty ingredients have increased exposure in the current environment. It is common for a food processor to handle 200 ingredients for 60 SKUs, even though a significant portion of their revenue comes from a few essential products.

When an ingredient is unavailable, the manufacturer faces additional challenges because a substitute ingredient may necessitate changes in everything from supply storage to processing requirements and even cleaning and traceability policies.

The willingness to invest in this area has resulted in solutions that use ERP systems and artificial intelligence (AI) powered algorithms to rapidly adjust to new supply constraints, real-time location tracking, and alternative input sourcing.

Staying abreast of Government regulations

For successful food manufacturers, government regulations are a constant and critical concern. Although regulations are necessary for customer safety, they can slow the introduction of new products and harm the manufacturing of existing ones.

Recent regulations indicate a food safety shift in emphasis from the regulatory realm to the marketplace. That means it will be up to food and beverage manufacturers to ensure compliance and readiness in an emergency.

Future food and beverage manufacturers must adapt quickly to new regulations as they become available. There is no substitute for monitoring regulatory developments, which tend to predict trends. Such regulations affect all companies in the industry, creating a small but significant window of opportunity for competitors to adapt faster.

Because the burden of ensuring quality and safety falls on manufacturers, highly advanced ERP systems can integrate new regulations with existing business processes, ensuring compliance in food processing while also managing performance and tracking inputs.

In the future, innovations in this industry will drive the progress of societies striving for health and sustainability; they'll also play a significant role in determining regional economic success, particularly for top manufacturing countries such as Canada and the United States.

Companies must be more proactive than ever in organizing and managing operations, utilizing all available tools to reduce external factors' impact on performance. It's a great time to be in the industry, as new technological solutions help solve business problems and improve our society.

For decades, many food manufacturers have needed help to collect good data. But not any longer. The food industry is poised for transformation as sensor technology advances and technology platforms become more accessible and affordable for small and medium-sized manufacturers. Food manufacturers can now better understand their ingredients, products, and operations.

Food Digitalization

Even the smallest food manufacturers must invest in digital technologies such as Cloud ERP to meet new industry standards for increased transparency and safety. The changes address compliance concerns and retailers' requirements that their vendors be able to participate in digital supply networks.

The more money you put into measuring your raw materials and finished goods, the easier it will be to improve your performance. For example, you may improve a product's shelf life by better understanding its water content through accurate, real-time measurement.

Using data-driven science to supplement human decision-making is beneficial to business. The ability to collect data from your operation will also help standardize work and reduce reliance on tribal knowledge held by key individuals. 

Big data will also help to inform food science, such as cold-chain management and related R&D.

Automation, Robotics, and Industry 4.0

Autonomous systems will significantly impact the food industry. As sensor performance improves, some food manufacturers are implementing AI. Data acquisition systems can accurately characterize complex biological ingredients and products, allowing manufacturers to automate processes and derive the same value from predictive data analysis that other segments have for years.

Significant capital investments and new workforce skills in analytics and programming, which are in high demand across all industries, are required for Industry 4.0. Many smaller domestic manufacturers have found it challenging to implement automation, particularly for high-mix, low-volume work. However, the advantages of automation are numerous, including:

• Increased output efficiency
• The possibility of running operations around the clock
• Reduced labor requirements
• Increased machine uptime and lifecycles
• Quality and repeatability have improved

Consumers who understand their food are demanding healthier options and more transparent processes. They also want more customization and convenience in shopping, purchasing, and delivery. They are looking for brands that are committed to reducing their environmental impact.

Resource Allocation (Sustainability) 

Regulations governing emissions, resource use, and waste will likely become more stringent in the food industry. The good news is that advanced technologies are making it possible to manage resources more efficiently.

Many food companies can significantly improve this area by learning how to quantify and measure waste streams. For example, there is a significant difference between the goal of "use more recycled resin in our HDPE tubs" and "increasing the recycled resin in our tubs from 10% to 20% will reduce our product's net carbon footprint by 15% while only losing 3% in rigidity."

And the key is in knowing how to measure the values – with your ERP technology.

Ready to reconsider your ERP?

Replacing a legacy ERP system with cloud ERP will result in significant organizational changes. Suppose you want to learn more about updating your ERP to a modern cloud solution or about the cost of ERP for small businesses. In that case, the Liberty Grove Software team of ERP consultants can guide you to the right ERP solution for your organization.

We'll provide the services you need to guide you through evaluation, project planning, implementation, testing, training, and ongoing support.

Contact Liberty Grove for a complimentary consultation on how Cloud ERP can future-proof your food manufacturing organization.

Related reading:

Is Your Food and Beverage ERP Recession Proof? - Liberty Grove Software

Best 10 Reasons to Move Your On-Premises ERP to the Cloud - Liberty Grove Software

About the author

Liberty Grove Software is an established Microsoft Partner that focuses on providing customers with sales, service, and support for Microsoft Dynamics 365 Business Central/NAV solutions and training and upgrades.

Over more than 25 years, Liberty Grove has assisted hundreds of customers with businesses ranging from small to mid-sized to Microsoft Partners in implementing, training, customization, and upgrading Microsoft Dynamics ERP solutions.

The organization is one of only a few companies worldwide that Microsoft recognizes as qualified to provide Business Central/NAV Upgrade Service Centers.