Enterprising technology

Prepared Foods, April, 1997 by Bob Swientek

In rudimentary terms, enterprise resource planning (ERP) is a method of sharing, managing and utilizing information (see article pg. 67). Although straight-forward sounding, ERP is complex to execute because it involves everything from raw material purchasing and production scheduling through category management and efficient customer response.

For virtually all food and beverage companies, the information systems for plant floor data, inventory management, logistics, sales management, product forecasting, etc. have been added piecemeal. Hence, many of them can't communicate with one another. And, getting these disparate systems to share data is an expensive and laborious task.

Although a huge undertaking (even more so for global players), ERP is at the forefront of many food companies' agendas because it offers tremendous cost savings through reduced inventories, more efficient promotions, lower unit costs, and adept supply chains.

According to a 1996 "Streamlining The Consumer Supply Chain" study from technology consultants CSC, Waltham, Mass., 44% of food and beverage respondents are increasing their information systems budget. Top areas for investment include activity-based costing, statistical analysis, promotion planning and measurement, product flow/logistics analysis, container labeling, productivity analysis and cross-docking.

The top five information technology strategies for food and beverage manufacturers are: Integrating systems, re-engineering business processes, connecting to vendors/retailers, developing direct access to consumers via interactive technologies, and capitalizing on technology advancements.

About two-thirds of the survey group reported that application development for information systems involved packaged software with minimal customization. Four in 10 are seeking enterprise solutions.

Land O'Lakes, the Arden Hills, Minn.-based food and dairy co-operative, is among those seeking answers. Last year, the $3.5 billion farmers co-op selected a supply chain software package from American Software, Atlanta, to drive profits and minimize stock-outs across its product lines, which have shelf lives of 2-9 months.

In addition to handling complex forecasting, the system can effectively link with the distribution resource planning system to drive initial production scheduling.

Land O'Lakes is also one of the first users of Oracle's new ERP package, which includes financials, Oracle7 relational database software, process/production management and a demand chain system through a partnership with Industri-Matematik International (IMI), Tarrytown, N.Y. The integrated software solution delivers a seamless approach to managing operations across the entire business, according to Oracle, Redwood City, Calif.

"To enhance our competitive position in the market, costs and flexible service levels are critical factors as we strive to meet constantly changing customer requirements," reports Mark Wilberts, vice president, of information systems for Land O'Lakes. The IMI system addresses both of these factors and enables the co-op to better manage its pricing and promotions activities, notes Wilberts.