Mitigate Supply Chain Management Risks Using ERP

FDA mandate creates new challenges

A new mandate from the FDA aims to standardize food safety and traceability methods. On July 25th, those involved with food supply chain management must be capable of conducting a full scale product recall from its entire supply chain in electronic format in less than 4 hours. With that date rapidly approaching, food safety experts have suggested that implementing newer versions of enterprise software combined with updated business processes could mitigate these risks. ERP systems are a strong front runner to serve as a tip of the spear for organizations scrambling to meet these stiff regulations; due to their ability to capture all the data involved in supply chain management from beginning to end.


Risks of current Supply Chain Management processes

Highly constrained discrete manufacturers in the mid-market constantly deal with the unpredictable nature of food costs, volitale pricing due to unstable consumer demand, and intense direct product costs constantly eating at their bottom line. A simple, more affordable option for mid-market food supply chain management entities is an ERP system that can lean out manual and cumbersome business processes such as labor-intensive food manufacturing.

Using spreadsheets and cumbersome manual processes is an exhausting and an incredibly risky prospect…

The standard business processes that are heavily relied on today’s by supply chain management professionals are in need of real reform. Not only do many currently implement processes that pose a safety risk, many of these common practices have a devastating effect on profitability as well. Processes like managing important supply tracking, batch, inventory, and product information in a spread sheet, or manually tracing and tracking lot and batch numbers.

Using spreadsheets and cumbersome manual processes is an exhausting and an incredibly risky prospect in light of new regulation. Manual processes for compliance deteriorate labor productivity and make the company more venerable for a recall.  Industry best practices suggest that automating these current manual processes could deliver relief from these arduous practices.  An easy way to do a part of this is by integrating a module inside of an ERP to track and delegate job information.


Accounting for economic adulteration

Aside from traceability initiatives, the FDA requires food producers to account for economic adulteration. This is very serious, and you better believe the FDA is taking it serious. Food safety experts suggest that one way to help do this is by implementing a batch security system. A comprehensive ERP system should detect causality throughout production; resulting in immediate preventive protocol clients to dispatch reports to proper stakeholders if an issue should arise.

Tracking the side effects of an adulterated product is nearly impossible until an issue arises and a recall is made. Not only does the recall result in devastating fines and sunk costs, but it economically devalues your company. Failure to adhere to this area of the audit can be a critical blow against profit, credibility, and sustainability.

If any food service inside your supply chain cannot detail a viable plan to mitigate these risks the FDA will have the opportunity to either cease that plant’s operations—effecting the rest of the supply chain—or perform an audit of your facility.


Ancillary benefits to midmarket manufacturers

Despite the sobering reality of these regulations, there is a benefit to adhering to these practices outside of FDA compliance. There are some pretty fantastic tangible benefits of implementing these new ERP modules inside of a food industry business. Things like, greater inventory efficiency, the ability to identify and manage unacceptable stock quickly and easily, and the capability to negotiate vendor contracts using hard data pulled from your ERP.

An additional soft benefit of these systems can include sales and marketing opportunities. Some supply chain management professionals have started driving marketing campaigns to exploit lot and batch traceability that is automated by the ERP implementation. Here, sales and marketing teams can explore how products were grown or raised (i.e. grass-feed, organically, pesticide use), then integrate these messages on packaging and in advertisement. Enterprise software is expediting fresher inventory faster with less risk to a rapidly growing consumer base, and this is a welcome message to consumers.


In a nut shell

The FDA is serious. They will be enacting these sweeping mandates on July 25th, and as it stands to today a large number of supply chain management entities are at risk. Mitigating this risk is not difficult. Implementing or upgrading enterprise software may be able to ultimately dissolve any major issues for the business; however it is critical that correct business processes be implemented along with software. We have written about why it’s important to implement processes, not software, before.

If you’re a supply chain management professional, it’s important to full-understand what will be expected of you come July. Evaluate what processes you currently have that will leave you at risk, and consider what options are available to automate these processes in a fashion that improves traceability and allows you to streamline reporting.

For more information about this topic, see our previous articles below. If you’re interested in further exploring software and business processes that could help mitigate regulatory risk use the contact form below.

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2 thoughts on “Mitigate Supply Chain Management Risks Using ERP”

  1. Pingback: Food ERP Systems and the Kraft Heinz Merger | Datix Inc

  2. Pingback: Leverage ERP Inventory Management For Success

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