How to Select an ERP for Food and Beverage Manufacturing, Part 2

Part 2: The Importance of Accurate Inventory Management

How to Select an ERP for Food and Beverage Manufacturing, Part 2

This is part two of a three-part series highlighting Baked by Melissa’s journey to choosing ERP software for its food manufacturing business.

In Part 1 of Baked by Melissa’s journey to choosing food manufacturing ERP software, we discussed the company’s struggles with tracking inventory as it added new ingredients and flavors to its menu. Inventory management is a common issue that many growing food and beverage manufacturers fight with and can affect all areas of a business. Without accuracy and visibility into inventory, manufacturers often fall victim to either over-purchasing of raw materials, which leads to spoilage and waste, or under-purchasing, which can halt production and have a huge impact on a company’s bottom line.

We sat down with Jason Levas, Chief Operating Officer at Baked by Melissa, to discuss the importance of inventory management and how his team went about choosing a solution to overcome their inventory challenges.


The Challenge – No Visibility into Inventory

Baked by Melissa experienced a surge in growth from its eCommerce side of the business as the company began focusing more attention on marketing. This surge put a strain on the bakery’s manual inventory processes and antiquated business solution. Levas and the team started struggling with accurately managing inventory, especially around the busy holiday season.

Without the right data to make informed purchasing decisions, Baked by Melissa’s purchasing department wasn’t ordering enough ingredients because they feared unused material would go over its expiration dates. As a result, many of the holiday promotions that Baked by Melissa offered customers quickly oversold. To correct this, Levas and his team spent a ton of time and effort reaching out to customers about alternate items and pricing fixes.


The Solution – Industry-Specific Software for Expiration Date and Shelf Life Management

Unlike other industries that work with non-perishable materials, the food and beverage industry is unique in the importance it must place on inventory management. Working with ingredients that are perishable means there’s lots of variability within that ingredient; as the product gets closer to its expiry date, the quality of it will change.

From a distribution standpoint, manufacturers must also consider shipping and delivering products with a long enough shelf life, so retailers or restaurants have enough time to sell the product before it expires.

Baked by Melissa used its Enterprise Resource Planning (ERP) solution to uncover inconsistencies in its purchasing practices – it was under-purchasing some items and over-purchasing others. With an ERP solution in place, Levas was able to incorporate expiration date management functionality to increase purchasing accuracy and ensure the production team was using ingredients and selling finished goods based on expiry dates. This visibility into inventory helped Baked by Melissa avoid stockouts and customer service issues when the next holiday season arrived.

Inaccuracies in managing inventory can have a negative effect on all aspects of a food and beverage business. Managing inventory effectively means monitoring expiry dates and purchasing the correct quantities of products. If perishable ingredients haven’t been stored properly or used at the right time, spoilage an occur, which results in huge amounts of food waste or the risk of a recall.

A solution like food manufacturing ERP software gives manufacturers the visibility they need to ensure they’re producing the highest quality products. As the properties of perishable ingredients change as they age, production of that product should mimic those changes to account for the way that ingredient will perform on the line. Being able to account for moisture loss or texture variances in production helps ensure that quality remains consistent and uniform. With an ERP, manufacturers can better plan production to ensure ingredients are used in their prime. If changes to production need to be made on the fly because of a rush or custom order, an ERP can help accommodate variations in production to compensate for ingredient variability.

Many businesses uncover hidden operational costs after implementing an ERP for food and beverage manufacturing. That’s because a lack of visibility into demand creates room for inventory mistakes and cost implications. When companies rely on manual processes for inventory management, it’s hard to determine the cost of keeping up with inventory counts. Before implementing an ERP, many food companies rely on weekly physical counts to monitor inventory, which halts production and requires extra man hours. An ERP solution automatically tracks, manages and records the use of ingredients from the time it enters a facility until the finished good is delivered to the customer. This means that inventory is continuously updated and always accurate.

To hear more from Levas and Baked by Melissa’s journey to choosing an ERP for food manufacturing, check out our webinar recording. For more information on how FoodBusiness ERP can help your business better manage its inventory, reach out to us. We’d love to chat.

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