With the rise of increasingly stringent FDA and USDA regulatory requirements, companies in the food and beverage industry are being forced to change their internal business processes and leverage new technology to help them meet evolving industry compliance requirements for product safety and lot traceability. A number of enterprise software providers, in turn, have developed sophisticated tools to aid food manufacturers and distributors in meeting such requirements. Businesses who take advantage of such software functionality are better prepared to ensure the highest levels of product safety and are able to gain real-time access to ingredient and finished good lot information.
To achieve more tightly controlled product safety and improved visibility to ingredient and product lot history, companies in the food and beverage industry should consider five critical ERP software requirements when engaging in an ERP selection project, including:
1. Forward and Backward Lot Traceability. Lot tracking and traceability is an essential business requirement for manufacturers and distributors alike. In accordance with the Bioterrorism Act of 2002, all companies who manufacture, distribute, import, pack, process, receive, or hold products that may pose a threat to human or animal safety, such as foods or legal drugs, must be able to track their products and readily submit reports to the FDA at the FDA's request. A fully-integrated manufacturing or food distribution software solution that features both forward and backward lot traceability can track the lot numbers of raw ingredients received into inventory, when these ingredients were received, when these raw ingredients were consumed in manufacturing, the lot numbers of the raw ingredients that went into producing each finished good and / or intermediate product, the lot numbers of all finished goods and / or intermediate products and their manufacture date, and when a customer was shipped a particular finished good lot. Businesses who are unable to track and readily access such ingredient and finished good lot information can be faced with innumerable compliance and financial issues should a product recall need to be initiated.
2. Automated Quality Control Processing. For businesses that must meet regulatory agency requirements, quality control procedures must be put in place at each step along the supply chain. Quality control personnel must be able to document ingredient and finished good quality testing results and be able to retrieve this information in an efficient manner. Business who lack an ERP system with built-in quality control functionality often rely on manually recorded ingredient and product quality data from spreadsheets or paper, making timely data retrieval an impossibility.
An ERP software solution with integrated quality control features, however, can help streamline QC operations and provide a single electronic data source for ingredient and product quality information. When analyzing various ERP companies and their respective solutions, those in the food and beverage industry should look for an ERP solution that provides built-in and / or user definable quality control workflows and processes. These workflows, which consist of automatic alerts, testing, analysis, and electronic signatures, can help prevent many product safety problems from occurring in the first place. Using an ERP system's built-in quality control functionality, certain raw ingredients or materials can be flagged to be tested by quality control personnel each time one of these items is received into inventory from a given supplier. Upon the ingredient's receipt into inventory, quality control personnel can be alerted via email or the ERP system's internal messaging system that the ingredient has been received into inventory and is awaiting quality inspection automatically. Quality personnel can then test and inspect the product, record test data values directly in the system, and then electronically sign off on the ingredient and have it released into available inventory for consumption. If the ingredient does not pass inspection, quality personnel can have pre-defined reason codes for quality inspection failure and have the product subsequently returned to the supplier for credit or reshipment. Likewise, finished goods can be flagged to be put on hold and tested by quality personnel to ensure the product meets specific product safety and quality characteristics before releasing the product into available inventory or before shipment to a customer. Furthermore, quality data for ingredients and finished goods can be easily retrieved from the ERP system, and QC reports can be generated when needed.
3. Integrated Wireless Warehouse Management for RF and Barcode Scanning.
The deployment of RF and barcode scanning devices in an organization's warehouse has proven to be a successful method for streamlining warehouse operations and improving overall warehouse productivity. For companies with lot tracking and traceability requirements, wireless warehouse management technology can also provide a means to improve lot data accuracy and improve overall product traceability throughout the supply chain and throughout a given product's life cycle. In a distribution or manufacturing software system with built-in wireless warehouse management technology, lot codes can be generated automatically and barcodes applied for receipt of ingredients into inventory, finished goods produced and placed into inventory, and finished goods shipped to customers. An employee in the shipping and receiving or manufacturing department would simply scan the barcode and enter the quantity received, produced, or shipped - the system would automatically identify the lot number(s) for the items and store the data, reducing the likelihood of inaccurate ingredient or finished good lot information. The system would also track any lot movements from one location of a warehouse to another, when the ingredients or finished goods were moved from one location to another, and which user performed the inventory transaction. Furthermore, barcodes can be generated and scanned for work orders, pick tickets, and packing slips. Upon scanning the barcodes, the scanning devices would communicate directly with the ERP system as to when a given raw ingredient or finished good lot is being picked, when finished goods have been produced, and when finished goods are being packed and shipped to customers, giving organizations the ability to trace lot numbers for ingredients and finished goods at each step of the production and shipping processes.
In addition, by selecting an ERP software system that supports RFID technology, organizations can continue to strengthen their overall level of product traceability. In a report submitted by the Institute of Food Technologists (IFT) to the FDA, Traceability (Product Tracing) in Food Systems, the IFT states, "The identifiers used with RFID expand upon today's product codes by adding a unique serial number to each 'instance' of a particular type of product. That serialized information can be entered into a database to determine the source, expiration date, and other useful information about a particular item and to provide end-to-end traceability about specific items over time."
4. Product Shelf Life Management. An ERP software system's ability to track ingredient and finished good shelf lives and expiration dates is an important functional requirement for companies in the food and beverage industry engaging in an ERP selection project. Sophisticated ERP systems should allow for both first in, first out (FIFO) and first expiry, first out (FEFO) inventory management methodologies on a product-by-product basis. The system must be able to account for ingredient and finished good shelf lives and be able to allocate inventory for production and customer orders based on a given ingredient's or finished good's expiration date to ensure ingredients and finished goods do not expire while in inventory and to minimize the total inventory write-off for the organization due to expired product.
The ERP system should allow the organization to establish guaranteed minimum shelf life requirements for individual customers on a product-by-product basis. When a customer who has a minimum shelf life requirement for a given item places an order for that particular item, the system should override the FEFO methodology and automatically allocate only those items in inventory that are capable of meeting the customer's minimum shelf life requirements to the sales order.
5. Recall Management. Food and beverage companies face the potential of a product recall on a daily basis. In addition, businesses have recently been asked by the FDA to conduct mock recalls to determine their organization's ability to respond to a product recall in a timely, effective manner that ensures consumer safety. Given these increasingly stringent regulatory agency requirements, selecting an ERP system that allows the organization to build its own recall plan directly into the ERP system, establish notifications and alerts to be sent to specific individuals during each step or phase of the recall, and simultaneously track all costs incurred as a result of the recall can significantly improve an organization's readiness to respond to an unforeseen FDA-requested mock recall or an actual product recall should one need to be initiated.
In an article titled, What Can You Do to Be Ready for a Recall? (http://ohioline.osu.edu/aex-fact/0253.html), Doctors Gonul Kaletunc and Ferhan Ozadali outline the necessary steps an organization must take to be prepared for a product recall and what must be done during the recall process for the recall to be successful while minimizing the overall disruption and financial impact on the business. ERP systems that feature recall management and recall processing can allow the organization to build each one of these recommended steps directly into the ERP system, from drafting a recall press release and notifying the local FDA agency of the recall, to disposing recalled product and determining when the recall can be terminated. Furthermore, the system can track the status of the recall and send automated messages to specified personnel notifying them when they are to perform given tasks during the recall process. The system can also track all of the recall's associated costs from press release writing and syndication to accounting for returned product. Additionally, by selecting an ERP solution that provides the ability to build the organization's recall plan directly into the system, the business can use the recall plan to conduct mock recalls, track success, and add specific tasks, roles, and responsibilities to continue to improve its product recall procedures.
By selecting an ERP vendor and solution that can meet these requirements, companies in the food and beverage industry will be armed with the necessary software tools to improve their overall level of product safety and traceability and gain a significant competitive business advantage.
