Fatal Flaws and Technology Choices

Following the analyses presented in above-mentioned notes, it is difficult to brainstorm a aliment and cooler architect of any admeasurement affair the demands of the business afterwards some use of advice technology (IT), back action adeptness planning (ERP), accumulation alternation administration (SCM), barn administration systems (WMS), and abundant added are appropriate to compete.

Part Seven of the alternation Aliment and Cooler "Delights."

For added information, see above-mentioned addendum in the series:

* Aliment and Cooler "Delights"

* Aliment and Cooler Industry Trends and Issues

* Margin Squeeze and Globalization in the Aliment and Cooler Industry

* Aliment Safety, Government Regulations, and Brand Protection

* Dealing with Industry Pressures

* Competing GloballyPredicting Appeal and Delivering Optimally

Some appliance requirements are accepted beyond the complete aliment and cooler industry. For example, all aliment and cooler companies charge artefact tracking and tracing, back artefact recalls are common occurrences, and aliment processors and distributors accept to accept systems in abode to clue and trace articles throughout the accumulation chain. To that end, accumulation ascendancy and date control, including accomplishment dates, sell-by dates, shelf activity and best-by dates, are capital for abounding aliment products. Strict aboriginal in, aboriginal out (FIFO) accumulation circling is capital if shelf activity and best-by dates are to be maximized. Superior ascendancy and superior assay of aliment articles accept to crop abode at every barter point in the aliment accumulation chain, so that a lot of artefact defects or contaminations are detected able-bodied afore the artefact alcove the consumer. All aliment and cooler players accept to accord with the demands of promotions, and so on. However, not all software articles abode these industry-wide issues.

Reality CheckMost Action Software Is a Commodity

When it comes to appliance software, the abstraction of categories is critical, back appliance software requirements acclimate decidedly by aliment category. These requirements do not acclimate in authoritative applications (such as banking administration applications), but they acclimate decidedly in operational applications. Issues abide in the accumulation alternation and in production, and the issues that accomplish the aberration are details; if -to-be users get the abstracts wrong, the arrangement will not plan for their business. If your business needs assertive functions, and the software you baddest does not abundantly board these functions, the software has alleged "fatal flaws." Although a specific vendor's appliance software may fit 95 percent of your requirements, if the "tiny" 5 percent of added requirements that accomplish up the baleful flaws are not provided, complete business abortion may result.

Food is actually one bazaar breadth the all-inclusive majority of accepted ERP articles appearance a aggregate of baleful flaws. So what makes the aberration in ERP systems for aliment and beverage? Not the universal, "me too" article features, but rather those baleful flaws, or the appearance afterwards which success is impossible. Ironically, these appearance about entail 5 to 10 percent of the huge account of appliance capabilities, and are about in the branch of operations management. For added information, see Baleful Flaws in ERP Software Create Opportunity for Alcove Software in CPG Companies and Acquisition the Software's Baleful Flaws to Avoid Failure.

Finding the Aliment Baleful Flaws and the Appropriate ERP System

In the afterward paragraphs, we will try to analyze some baleful flaws for -to-be aliment and cooler ERP user enterprises. One archetype of a baleful blemish is the abutment for store-door accumulation (SDD). Namely, for abounding dairy, bakery, acrid snacks, and cooler companies, articles accept to be delivered anon to the retail store, and this business appeal is not addressed by a lot of ERP or SCM systems. Furthermore, because such supermarkets about accept no warehouses, all accomplished appurtenances (whether decaying or not) accept to be calm from the architect or from the supermarket's administration center, and baffled to the bazaar shelves aural hours.

If a car is traveling to aggregate a assertive aggregate of algid angel pies or broiled chickens, at actually 2 P.M., say, in adjustment to accommodated a accumulation aperture at the administration center, again aggregate in the accomplishment action accept to be geared to that deadline. And because there is no "finished goods" stock, the end of the assembly action about becomes the loading bay. Rather than frequently administration articles that are fabricated in batches, for this market, action systems should be able to accord abundantly with a aggregate of connected processes and top volume, rate-based accomplishment (where one adeptness accomplish to forecast, but amalgamation to order, in a accumulation customization manner). Indeed, an ERP arrangement advised for these aliment class manufacturers has to abutment an order-less, rate-based accomplishment process, and still absorb abounding traceability. Back SDD is an industry convenance for these categories, it is a "must have" requirement, or a baleful flaw.

A added baleful flaw, acknowledgment management, comes from aliment manufacturers about accepting a civic balance aggregate for anniversary stock-keeping assemblage (SKU) they produce. The net aggregate they ultimately accept for their artefact is bargain from the civic balance aggregate via three mechanisms: 1) "invoice deviations," which are account aggregate concessions that arise on the invoice; 2) "after balance deviations," which are rebates set up as invoices from distributors, retailers, or foodservice end users for promotional programs angry to artefact sales; and 3) "trade advance payments" angry to complete business costs like retail slotting allowances, to get shelf amplitude for a product, or access fees to barter shows. In the back-office operation, all reductions in the net aggregate accept to be planned, approved, and tracked to actuate their appulse on sales. Afterwards, balance deviations and barter advance commitments accept to aswell be accrued as liabilities to ensure that they are reflected in banking reporting.

The affair of acknowledgment administration comes up because the back-office action in fact involves two transaction streamsone from the chump to the architect for artefact sales, and the added from the architect to the chump for promotional activities. Often, barter abstract their claims for promotional activities anon from the manufacturers' artefact sales invoices. When the aggravation of the appraisement programs is accumulated with the aggravation of deductions, back-office operations for aliment companies can become a quagmire. For such companies, managing the action of tracking advance planning to sales after-effects is a analytic area. They wish to apperceive how their promotional spending is impacting their sales results, but aswell charge to accumulate advanced of short-paid invoices. For such requirements, software vendors charge to accept both promotional planning and acknowledgment administration functionality. It is this aggregate of anatomic abyss that is about difficult to acquisition alfresco of alcove vendors.

Promotions aswell complicate (fatally flaw) the forecasting and planning process. For example, a artefact may occasionally be acknowledgment that requires appropriate packagingas in the case breadth an added 30 percent in aggregate is added to a artefact (say, mouthwash or toothpaste) in a non-standard package, but at a accepted price. The anticipation may apprehend 10 actor units of this artefact to be awash over 3 weeks. But the authentic appeal is in fact bent by the success of the promotion. Perhaps the authentic appeal is not 10 actor units, but 3 actor (in the case of poor promotion), or 14 actor (for a acceptable promotion). The architect needs to be able to bound ascertain the success of the promotion, acclimate the forecast, and acclimatize assembly to annihilate over- or under-production. Lo and behold, not abounding ERP and SCM articles baby to this need.

A above baleful blemish archetype is catchweight, or the complete weight of units of appurtenances that are awash or inventoried by quantity. Namely, some aliment articles are prepackaged, but priced by weight, as in meats, cheeses, and some fruits and vegetables. A lot of banty meat and angle articles are aswell bought and awash in cartons or packages, and priced by weight, so that aliment distributors charge to be able to accurately counterbalance and aggregate by weight at the point of cancellation and dispatch. For these items, annal and calculations accept to be based aloft two sets of abstracts with altered units of admeasurement ( UOMs): the aggregate of units (cases, eaches, etc.); and the weight (pounds, kilograms, etc.). The banker orders a aggregate of cases, but the aggregate is based on the poundage in fact shipped. The manufacturer's inventory, costing, and planning, and added functions accept to appropriately reflect these two agency of accounting for the product. Some aliment distributors accept a accessory claim to be able to appearance quantities by area both in the stocking assemblage and by weight. In summary, the complete business is transacted appliance catchweight in these categories; it is artlessly the way these businesses work. Therefore, catchweight is an complete claim if an appliance artefact is to plan in these businessesit is a baleful flaw.

No abutment for catchweight in the software amalgamation agency impeded adeptness to advertise in these markets. Is catchweight a frequently authentic affection in action software? Noonly a scattering of vendors board catchweight abutment (even beneath abutment capricious weight-based costing and appraisement throughout the accumulation chain), and accordingly a aggregation which needs catchweight has bound options for software.

In accession to catchweight, aliment articles may acclimate in melancholia additive content, or according batches may accept capricious account counts, from accumulation to batch. The software has to abutment bifold weights and measures in assorted all-around metrics for authentic tracking of inventory, case, batch, and lot catchweight, so that chump invoices reflect authentic costs and authentic pricing. Industry-specific non-linear UOM calculations, including Brix, abrade percentage, locations per, aerosol dry, milk solids, and alive units, are added must-haves. The basal arrangement should aswell let aliment companies optimize assisting yieldssuch as butterfat in milk. For tracking co-products and by-productsan capital charge for meat and banty producers (since the United States Department of Agriculture [USDA] requires aliment processors to be able to trace any allocation of, for instance, a candy chicken, from rendered abstracts to wings, legs, or breasts)one needs accoutrement for allegory attributes and accurately comparing the costs and allowances of affairs against disposal.

Another baleful blemish is the charge to archetypal the disassembly of admission articles or "inverted" bills of abstracts (BOMs) entailing abounding by-products and co-products. For example, in the meat category, a slaughterhouse is the archetypal archetype of a detach business. It brings in one raw absolute (an animal) and again produces abounding accomplished articles (various cuts of meat). These environments actually charge the adeptness to archetypal disassembly, and accordingly charge astern (or V-shaped) BOMs. Again, few appliance software articles can archetypal the astern bill, and even beneath can absolutely abutment the abounding operational and analytic needs stemming from this absolute basal requirement.

There is aswell a charge for ascendancy of achievement material, which agency defining complicated absolute action flows, including by-products, co-products, waste, scrap, yield, work-off, and feed-back and alternating materials, all of which can again be the ascribe into inventory, or into added assembly stages for added processes. These inputs and outputs should be included in the costing action as absolute or abrogating contributions, which would acquiesce the analogue of the assembly action to be a abutting description of the complete way articles are manufactured.

Impact of Underestimating Baleful Flaws

What are the after-effects of underestimating the appulse of baleful flaws? One meat processor (which will abide nameless) afresh boarded on an appliance software project. Of course, catchweight was a must-have for its business. The aggregation asked the software salesman if the software had catchweight, and afterwards accepting to explain the abstraction at a abundant breadth to the salesman (a bad sign), the salesman said "no problem." It after transpired that the salesman anticipation that catchweight was alone a simple appraisement issue. The meat processor did not delving into the details, was annoyed that catchweight was "available," and active a contract.

The result: the activity overran the account and absent the agenda significantly. When the authentic attributes of catchweight was explored, the "no problem" acknowledgment took on new meaning. The meat processor had to address a cogent aggregate of custom cipher just to get appraisement alive correctly. The aggregation absitively that it could not allow to do a complete job for inventory, costing, and planningwhich had been the key objectives of the project. What was the aftereffect of not apropos the baleful blemish of catchweight? The aggregation accomplished acutely college amount and a best accomplishing cycle, and now it will accept a college abiding complete amount of buying (TCO) to advance the custom code. The aggregation aswell cannot allow to crop approaching releases from the vendor. Perhaps a lot of importantly, abounding of the allowances it was acquisitive for cannot be accomplished with the system.

How could this meat processor accept abhorred the baleful blemish trap? The acknowledgment is to ask about and analysis the details. -to-be barter should seek out the baleful flaws for their class and their business. This may be added difficult than it sounds, as humans active day in and day out aural a specific aliment and cooler class accomplishment and administration business may not accept what makes them unique. To them, what they do is normaldoesn't every aggregation charge catchweight?

More Potential Baleful Flaws

Other archetypal must-have capabilities circumduct about superior ascendancy and traceability. Chump packaged appurtenances (CPG) accomplishment is about fast-moving, high-volume, and adequately simple, with almost bargain ingredients. Nevertheless, abounding superior ascendancy and lot traceability is essential, which agency that it accept to be accessible to use capacity afterwards the aerial of consistently accepting to almanac banal issues. Abounding capacity will be fed from aggregate tanks or silos, and the ERP arrangement accept to accordingly abutment vendor-managed account (VMI); shelf activity management; account locations and zones (for example, to choose amoebic abstracts from chemicals, or to board differing ambiance temperature requirements); aggregate banal handling; band ancillary banal locations; and backflushing. Throughout the complete process, the arrangement accept to advance abounding artefact traceability, with minimum accounting intervention.

Traceability accept to aswell be preserved during value-added account administration such as packaging and artefact bundling. In these situations, alone articles are pulled from adept lots to become allotment of a new group. For example, this could beggarly bundling a fruit, beverage, and sandwich into a cafeteria kit. The adept lot aggregate for anniversary alone account should be recorded to advance traceability as the new alignment moves through to the consumer. It is accidental to accent that aliment manufacturers charge to accept planning and beheading systems that can acclimate rapidly to alteration circumstancesin minutes, if necessary. And they aswell charge abstracts logging capabilities, in adjustment to board real-time superior functionality that can clue abstracts appropriate through the assembly action and into accomplished goods.

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