While it’s easy to say all businesses are the same, I must say, hand on heart, that the food manufacturing and distribution industry is unique. And it’s exciting to see how well it’s supported by Microsoft Dynamics 365.
Ok, what’s so different about food processing?
Process manufacturing (used to make food products) is quite different from discrete manufacturing. In the most basic terms, process manufacturing creates stuff, and discrete produces ‘things’.
Process uses multiple recipes and variable ingredients which are blended and transformed into something new. Think honey, sugar, nuts, dried fruit, oats and coconut oil mixed together then baked to make a completely different product – a muesli bar. Each ingredient in the bar has a use-by-date, and its point of origin and batch must be traceable and accounted for. As must the final ready-to-eat bar.
Discrete takes standard parts and components and assembles them into widgets (well ok, that widget could be a million-dollar forklift). It’s an amalgam of components often with serial numbers fabricated into one larger ready-to-use product. The nature of the smaller parts isn’t changed by the manufacturing process.
What makes process manufacturing so tricky?
So, we’ve established that food manufacturers make value-added products that will degenerate over time. But that’s far from the only challenge facing the industry.
They’re under pressure to meet the demands of:
- Exceptionally tight margins combined with shorter product life cycles
- Well-informed, activist and networked consumers
- Trends in health and wellness (flavour/product of the month)
- Trade promotions featuring rebates, chargebacks, and deductions
- Aspirations to go direct-to-consumer
- An unpredictable globalised supply
- Complex and tightly regulated environmental and other considerations
Growing (and maintaining) a competitive advantage
To achieve sustainable growth, food processing businesses must balance natural, financial and market forces. Easier said than done!
Customers need to be engaged to open up new markets and generate a loyal following. Employees need to stand out from the rest – like any business, service is a huge differentiator between success and failure. Operations need to be optimised to enable a rapid and agile response to market demand. And of course, insights analysed to recognise the potential of new products or ways of refreshing existing product lines.
Dynamics 365 Finance and Operations for ready-made results
Out of all the solutions I’ve seen and worked with over the years, D365 F&O impresses me the most. And it impresses the food processing customers who’ve chosen it.
Why? Well, the list is long, so I’m not going to dive too deep, but here goes:
- Protect! Stay squeaky clean by only procuring from approved vendors. And use digital signatures to safeguard your recipes from unauthorised changes. Block untested materials from entering your processes and lock suspect issue.
- Manage! Raw materials, finished products, reverse bills that generate multiple finished products, recipes by date and quantity thresholds, non-linear inputs, products under regulation, active ingredients and formulation percentages, unexpected outcomes.
- Plan! For natural losses which impact yield, and automate ordering alternative ingredients
- Track! End-to-end batch properties, vendor batches, COO information.
- Deliver! Bottled fluids with hourglass BOMs.
Sequence! Organise your production runs from light to dark. - Calculate! Know the total cost of production with co-products.
- Test! Run quality tests across instruments and groups.
- Generate and update! Automate quality orders and refresh quality results on inventory batches, produce MSDS sheets.
- Adjust! Respond quickly to commodity price changes.
So, what’s the Dynamics 365 Finance and Operations recipe for success?
Try this:
- 1-part production costs (accurately measured and delivered)
- 1-part simplification (reduce unnecessary overheads associated with using multiple legacy systems)
- 1-part agility (streamline introducing new products)
- 1-part healthy bottom line (increased overall revenue)
- 1-part trade spending (well managed so no-one loses out, especially not the business!)
- 1-part improved margins
Mix well. Enjoy.
John Showell
Fusion5 Sales Executive – Microsoft Dynamics
