Don't make a meal out of food production

SYSPRO’s tools are allowing UK food manufacturers to better track ingredients and products, controlling recipes and costs...

The UK food and drink manufacturing sector is the country’s single largest manufacturing sector, with an annual turnover of £70 billion. This represents 15 percent of the UK’s total manufacturing turnover. Efficiency within this sector is a must, with traceability, on-time delivery, human resources management and recipe management ranking as high agenda items.

Food manufacturers are looking for business information solutions that deliver real-time data that is centralised within a single enterprise-wide system.

Many food industry customers are reaping the benefits of SYSPRO’s traceability solution in this environment, endorsing the need for effective business systems to underpin their operations.

To give you a clearer idea of the scope, the UK’s food and drink manufacturing industry ranks fourth largest in the world and employs 470,000 people. This is 13 percent of the UK’s total manufacturing workforce, with an estimated 1.2 million people employed in related industries such as food retail and hospitality.

Each year, the UK exports £10 billion of food and drink products, more than two-thirds of which goes to the European Union. This makes the UK the fifth-largest food and drink exporter worldwide. Furthermore, the industry is a key partner to British farming, as it purchases two-thirds of all the UK's agricultural produce. This activity is carried out by 6,530 food and drink companies.

Traceability is a must
One of the most important issues faced by the food industry is traceability. The government and consumers require that food companies – producers and manufacturers alike – must be able to trace products throughout the supply chain back to their source. The serious outbreak of E.coli food poisoning in South Wales due to contaminated meat products showed how important traceability is for public health. This involves keeping accurate records and making them available to Food Standards Agency inspectors or other officials if required.

A range of systems for traceability are available, from paper-based to fully automated solutions.

Many of the larger food companies recognise that the increased efficiency, effectiveness and security of automated systems are superior to paper-based systems and have adopted these with gusto. Investigations show that there is much for food manufacturers to gain from such systems.

For example, SYSPRO’s Lot Traceability features deliver comprehensive track-and-trace capabilities. In addition to enabling users to trace items back to source, while maintaining assurance certification and tracking expiration dates, the software allows one-to-one tracking between component serials/lots and parent item serials/lots. This enhanced performance means manufacturers can track products and ingredients to finite levels if required. The system also maintains a history of traceable items and keeps detailed notes on inspections.

Bradbury Cheese, based in Buxton, Derbyshire, is using SYSPRO’s traceability functions. John Williamson, IT consultant for Bradbury Cheese, says: “As a food-based company we have to track and trace our product lines from when they enter our distribution centre to the moment they are displayed in shops all over Britain.”

The 100-year-old company uses a fully integrated SYSPRO suite of modules covering manufacturing, distribution, general accounts and Lot Traceability.

“SYSPRO has enabled us to meet stringent customer service levels, and we now have so much more control over our stock. In fact, we gained a return on investment through proper stock management alone. Plus, we have more visibility on what we are selling to customers in terms of product lines. There is so much more information in SYSPRO compared with the old system,” says Williamson.

Managing recipes
For some companies, traceability is part of the bigger picture of managing the entire manufacturing process using the over-arching principle of recipe management. This links products, components, processes, resource requirements and manufacturing constraints of the production facility. Recipe management is crucial in managing each of these areas to ensure that what goes into the manufacturing process produces the desired product at the end.

For example, Victoria Foods’ rapid growth proved to be a double-edged sword when the company launched a new range of products. It soon discovered that the demands and expectations of customers – created by its new product success – brought with it major operational challenges that were difficult to cope with in the early stages. The underlying problem lay with a significant increase in production complexity – more ingredients, additional processes, and items having to be produced in much smaller batches.

At this point, the company had not automated its recipe management process. The manufacturing operation was reliant on a labour-intensive combination of manual systems and multiple spreadsheets, which were typically fed data that was rarely up-to-date. The result was no detailed view of Work In Progress (WIP) or of what was being held in the on-site or third party off-site stores.

Attempting to meet the requirements of a 98.5 percent on-time delivery service for its growing product range soon created a neverending cycle of schedule intervention, wastage, over-stocking and obsolescence for the company – not the ideal recipe for any business.

John Blackledge, commercial director of Victoria Foods, says: "It was clear that we needed major improvements to many aspects of managing the business, especially production and inventory control, and that the existing systems were just no longer up to the job."

Victoria Foods found its solution in SYSPRO. Having one set of integrated, up-todate data, plus the right systems to control all stock-holdings, and track movements through the factory, soon brought significant improvements in terms of stock accuracy and production visibility.

Stephanie Macdermott, Victoria Foods’ planning manager, says: "The key first step was to make sure the core SYSPRO system achieved a clear and accurate understanding of what needs to be, what can be, what is being and what has been produced. This represented a major advance for the business, but, just as importantly, it gave us a platform from which to move forward and introduce crucial new practices and systems.”

For a start, pick-and-kit production has now been successfully introduced. Picking-lists of ingredients are produced by production schedulers, printed off in the stores, and the kits for each production batch are then built, ready for transport to production when needed.

Previously, someone would have to go to the stores and try to take out the materials needed for the next production batch, says Macdermott.

However, even if everything was available, some items could easily be stored awkwardly and not be immediately accessible. As a result, production would regularly be held because the right materials were not in place in time.

Moreover, the lack of preparation meant that bulk- or pallet-loads of some ingredients would often have to be moved out of store to production, and anything not used would have to be returned.

New-found accuracy
With its new-found data accuracy, Victoria Foods extended its ERP system to integrate Advanced Production Scheduling, thereby improving the links between forecasting, sales and production. This provides a real breakthrough in terms of overall business efficiency.

Through direct integration with the core ERP, the APS application is regularly fed new job information, along with WIP data from the shop floor, and from this the system automatically and very rapidly creates and updates production schedules.

As well as removing what was previously a slow and labour-intensive task, the system also optimises production, so minimising set-up and cleaning times, and maximising utilisation.

“Meeting customer service requirements and managing growth were the key drivers of the ERP implementation. Our super-streamlined operation is already meeting these challenges far more effectively. But at the same time, data accuracy and visibility through manufacturing have had an equally dramatic effect in terms of delivering bottom line gains,” says Macdermott.

“In the first full year, we have seen improving yields and a rise in overall equipment effectiveness.

Even more dramatically, we have witnessed a massive reduction in ‘waste’ and ‘overproduction’ as shown by the fact that our overall stock levels are down by 16 percent, obsolescence
has been cut by 13 percent and WIP has been slashed by 63 percent, which is a massive reduction.”

Managing production costs
Companies within the UK food sector supply chain face massive challenges. Processors are under increasing pressure to produce more options, meet volatile changes in demand and constantly improve quality, while still keeping prices to a minimum. In such an environment, effectively managing the workforce and keeping a tight rein on production costs is essential, especially the labour element that still tends to predominate in many food businesses.

Lincolnshire-based QV Foods is one producer that is now in a far better position to achieve this necessary control, having significantly enhanced its HR and cost control capability through the implementation of SYSPRO’s HR solution.

QV Foods is a leading supplier of potatoes for major retailers, major food manufacturers and food service companies. With a turnover of around £42 million per annum and a workforce of over 300, the company has to manage volatile demand levels. With margins very tight, its business efficiency is highly dependent on both workforce flexibility and cost control.

Tina Knowles, group management accountant, says: “The production requirements on the different business units can change significantly on a daily basis, and so managers have to constantly match demand with resources. This can mean moving people, even part way through a shift, between production lines within a unit.

“In this environment, not only do managers need to be able to establish who is working where and when, but any movements have to be tracked to ensure labour costs, which are a key indicator, are allocated accurately, and that managers understand what costs they are incurring.”

As Mike Porter, IT manager, reports: “We previously used an independent T&A system that was loosely integrated to a payroll package.

Job-costing was undertaken manually using a spreadsheet, with data transferred manually from payroll.”

SYSPRO HR gives QV Foods a single source of HR data and a seamless process for updating labour and cost. Not only have time-consuming administrative activities been eliminated, as data for all new workers only has to be entered once, but the system also accurately captures all the work movements of both the workers who clockin and of temporary staff. The system enables the company to rapidly and accurately allocate payroll overhead to each line within each business, irrespective of workforce movement, on a daily basis.

As a result, operational management at QV Foods has been significantly enhanced. “The job-costing data we now have enables each unit to closely monitor cost against budget, especially the labour cost per ton, which is a main key performance indicator (KPI), and quickly act on any production issues which cause any variances.

Essentially, the data ensures any production problems, which can quickly eliminate margins, do not stay hidden for any length of time,” says Knowles.

The final analysis
Clearly the food industry has to contend with a lot of pressures. IT in itself cannot solve all the issues. Indeed, successful food companies are those that fully understand their markets and are willing to ensure that their management and manufacturing processes are as in tune with customer requirements. These processes must be as streamlined as possible, so that they are able to run profitable businesses.

Such companies have identified that to attain their business goals they need solutions that fully support their needs. SYSPRO believes it has demonstrated its understanding of this market by supplying the forward-thinking companies described with tailored solutions that enable them to reach their goals.



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