Managing Supplier Risk in the Food and Beverage Industry

To be a food or beverage manufacturer is to face enormous amounts of risk. These are highly regulated industries in which the slightest mistake could actually cost customers their lives, and penalties for failing to comply with the law are jail time. On the less serious end of the spectrum, changes in customer demand are also a risk food and beverage manufacturers must navigate.

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How Can You Navigate Food Industry Retail Trends?

The world is changing around us, yet are we keeping pace? That question is especially relevant in the food industry.

Over the years, we’ve seen a shift in the retail landscape with a move towards retailer consolidation. More and more consumers are buying food products online, too. How do these food industry retail trends affect manufacturers, and how can they manage these shifts successfully? Read on to learn more, as well as what kinds of technological solutions they can use to handle these changes.

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What Are the Solutions to Supply Chain Management Challenges in the Food Industry?

There has never been a more complex time to be a player in the food industry. The industry is highly regulated. Competition is fierce. Ever-changing customer demands can make or break a firm. How do you manage the challenges of supply chain management in the food industry and remain successful?

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Food and Beverage Consulting Services and Software Solutions

Strict compliance standards, low profit margins, intense competition, high customer-service expectations – when you’re a food and beverage company, these conditions define your business. How effectively you meet these challenges determines whether or not your company can continuously improve and sustain long-term success.

As the economy steadily improves, the food and beverage industry is experiencing significant change that is redefining how companies manage risk, provide value, and connect with their customers. From young, tech-savvy millenials to aging baby boomers – the ways in which today's consumers research what they want, the key factors influencing their buying behavior, and their loyalty to a specific brand or product are all open for competition.

On top of that, food and beverage companies must be able to react quickly to issues such as food safety and recalls before they can damage reputations, and closely monitor compliance with a range of increasingly stringent regulations, whether from the FDA, the EU, the International Food Standard, or others.

Put together, these conditions can present obstacles—or opportunities. Removing operational waste, increasing customer value, and implementing the right enabling technologies can help food companies continuously drive higher value for customers and maintain a competitive advantage.

Why Merit Solutions?

Today's food companies need to focus on minimizing risk and preventing and responding to food safety incidents; failing to adhere to these regulations can hinder consumer and shareholder confidence, erode the bottom line, and cause irreparable damage to brand equity.

Our broad range of food and beverage consulting services and IT solutions help address the challenges related to traditional processes, cultural resistance to change, and less scalable technologies – enabling successful improvement projects while operating in a globally regulated environment.

Other benefits of working with Merit Solutions include:

  • Monitor Food Safety: Food companies around the world follow safety regulations based on HACCP standards or other requirements, such as FDA compliance, EU regulations, and IFS standards. Food safety requires superior recording of each activity and the ability to collect, record, organize, track and trace product details accurately and at a moment’s notice.
  • Meet Retailers' Demands: Responding quickly to retailers’ demands is key to a successful food organization. Whether the issue is RFID, specific packaging, special delivery requirements, or opening visibility to inventory levels and manufacturing operations – food and beverage companies must be able to quickly meet the demands placed by today’s retailers.
  • Respond to Consumer Trends: Workstream and information flow improvements play an integral role in helping food companies respond to – or better yet, anticipate – consumer trends. A big benefit is shortening product development times and speeding time to market.
  • Improve Supply Chain Operations: To respond quickly to changing demands, you, your suppliers, and your customers need easily accessed, relevant information – whether it’s product availability, prices, expiration dates, or promotions information. In addition, information gathered throughout the supply chain can help you identify opportunities to add more value to customers.
  • Plan for Growth: Organizations need workstreams and enabling systems that can deliver high value with current needs, while providing the opportunity to scale dramatically to account for organic growth, acquisitions, changes in business focus, and other foreseeable changes to the business.

Although the global food and beverage industry is a multi-trillion dollar industry, it sees limited growth and, as a result, incredibly fierce competition. Success for food and beverage companies depends on their ability to speed innovation and increase value while controlling costs and maintaining food safety


Industry Specific ERP Consulting Services


It doesn't matter if you are a process manufacturing organization or a global consumer products enterprise, you need people, workstream, and enabling technologies that support the unique industry-specific requirements in which you operate – without costly and time-consuming customization and development.

But the transition to new workstreams and improved information flows can be a challenge.

Merit Solutions has built teams around each individual industry we serve, combining Subject Matter Experts and technology professionals who have worked in and with our industries for a number of years. These industry teams have proven success working together to help clients mitigate the risks associated with enterprise transformation projects in their market.

Our Industry Specific Consulting Services


The Food Safety Modernization Act: One Year Later

Since President Obama signed the Food Safety Modernization Act (FSMA) on January 4, 2011, the Food and Drug Administration (FDA) has made significant progress in developing proposed rules to implement the sweeping food safety reform law, publishing mandated reports, and taking important steps toward increasing overall food safety capacity in the United States. Below are brief summaries of what FDA has accomplished to date.

Highlights of FSMA during 2011:

  • Issued interim final rules on criteria for administrative detention and used this authority three times; issued interim final rules on prior notice of imported food.
  • Issued guidance to the seafood industry on food safety hazards and to the dietary supplement industry regarding new dietary ingredients.
  • Conducted extensive domestic and foreign outreach to all stakeholders to receive input in developing the proposed preventive control rules.
  • Established the Produce Safety Alliance and the Food Safety Preventive Controls Alliance.
  • Met the FSMA mandate for foreign food safety inspections, and is well on its way to meeting the 5-year inspection frequency mandate for high-risk domestic food facilities.
  • Continued to build State-Federal and global partnerships.

Moving forward, the ability to track and trace ingredients is likely going to be a major focus for food manufacturers as the FSMA is rolled out. The days of brand recognition alone will be long gone; worldwide, all the major producers of food products will now need to focus on brand reputation as well as brand recognition. Government authorities will be requiring companies to track and trace all products to the original point of origin. Today, companies only track goods at convenient points in the supply chain, such as when one ingredient leaves the warehouse and when it arrives in the manufacturing plant. Expect the future to mandate much tighter controls.

From a systems perspective, none of the Tier 1 or Tier 2 ERP vendors have announced a system that supports the mandates of the FSMA. True winners in ERP solutions will be vendors that can provide material and routing information that identifies critical control points in the manufacturing process. Likewise, the system will also need to be made aware of potential new hazardous and other airborne bacteria identified as risks. To date, the only systems tool to support the food safety initiative that is approved by the GSFI is a document management system that is not integrated to the ERP or quality management systems. While many of the Tier 1 and Tier 2 ERP vendors are hosting Food Safety webcasts, none of them are proposing a resolution for the complexity that the FDA is now mandating.

Stay tuned in the coming weeks as Merit Solutions will offer a new perspective on how Microsoft Dynamics AX 2012 will support the Food Safety Modernization Act of 2012!


Food Recall Management for Microsoft Dynamics AX

Customer demands and regulatory requirements relating to food safety are accelerating every day. The bar is going up and everyone in the industry will soon be scrambling to find and implement systems that satisfy these new demands… that is, if they’re not already panicking!

One new requirement is the Food Safety Modernization Act signed by President Obama in January of 2011, which mandates that all food companies must have Food Safety Management systems in place, including document control, HACCP and recall. This is the biggest change to Food Safety legislation in over 60 years.

Another is The Global Food Safety Initiative (GFSI), which is a collaboration between some of the world’s leading food safety experts from retailer, manufacturer and food service companies, as well as service providers associated with the food supply chain. It is coordinated by The Consumer Goods Forum, the only independent global network for consumer goods retailers and manufacturers worldwide. It serves the CEOs and senior management teams of nearly 400 members, in over 150 countries. Most major retailers mandate suppliers follow one of the 8 protocols supported by GFSI, which includes SQF and variants of ISO22000. These standards are very similar to the FSMA recently set by the FDA.

The bottom line: you don’t want to be one of the food manufacturers caught without adequate Food Safety and Food Recall ERP systems!

That’s why we’re so excited about the MAXFood Recall Workbench.

The MAXFood Recall Workbench exists for one purpose “ to go beyond lot track and trace to enable extremely fast recall functionality. A common challenge for organizations is the quick response to client requests for test recalls. Many companies are making the ability to perform a quick recall a key performance metric for their suppliers. You are probably subject to this testing from your customers. Non-performance during test recalls puts your customer relationship at risk. You could lose your customers if you are unable to perform.

We reduce risk to you if your firm is subject to recall testing from your customers. Imagine being able to answer a test recall within minutes “ this should improve your vendor performance score and your customer relationship. The MAXFood Recall Workbench goes beyond the time consuming labor of either paper or system based lot track and trace functionality. It provides a Rapid Food Recall capability for:

  • Recalling product shipped to customers.
  • Stopping production for any affected in-process manufacturing orders.
  • Finding and quarantining any on-hand batches subject to a recall.
  • Quarantine and Vendor notification for problem raw material lots.

Normal lot track and trace works just fine, and is an improvement over paper-based lot tracking systems. But lot track and trace doesn’t save time when customers have to be notified or on hand inventory must be quarantined. It just gives you a list of orders or inventory “ then someone has to print the list, and enter transactions.

The MAXFood Recall Workbench saves companies time and money by automating and streamling the entire Food Recall process!


Need Food Safety Cloud ERP?

The Centers for Disease Control reports that as many as 76 million illnesses are caused by food contamination every year in the United States. In addition to the public cost, the impact of food safety lapses can be devastating within the food industry. While many food industry executives think of regulatory penalties as a risk, the major risks are potential shutdowns or, even worse, damage to brands and companies.

MAXFood Cloud ERP enables food manufacturing and distribution companies to meet constantly changing stringent quality and safety compliance regulations while making products faster, safer, and at more competitive costs. MAXFood Cloud ERP provides a complete, enterprise wide business software solution designed to reduce an organization’s total cost of ownership and improve profitability.

For companies that need Food Safety ERP, MAXFood Cloud combines built in quality processes and recall procedures with advanced lot tracking capabilities to efficiently manage raw materials and ensure food safety.

  • Forward and Backward Lot Traceability
  • Food Recall Workbench
  • Production Specifications Reporting
  • Support for compliance with HACCP, GFSI, and SQF protocols

Learn more about MAXFood Safety Cloud ERP.


Upcoming Webinar: Microsoft Dynamics AX 2012 for Food

Please join Merit Solutions on Wednesday, October 26th at 11am CST for our Food Industry Webinar: Microsoft Dynamics AX 2012 for Food!

Find out how Microsoft Dynamics AX 2012 helps medium to large manufacturers and distributors in the food industry to monitor food safety, streamline business processes, and enhance customer responsiveness. This next generation ERP provides a complete, enterprise wide business software solution designed to reduce an organization’s total cost of ownership and improve profitability. See how Microsoft Dynamics AX 2012 can impact your whole food organization – from finance and accounting to inventory, production, and distribution.

Register now!


Food Webinar Tomorrow – Register Now!

There’s still time to register and attend tomorrow’s Microsoft / Aberdeen Food Webinar: Food and Beverage: Preparing for Growth and Living with Change.

Join Michael Shoemaker, Director of Microsoft’s Distribution & Consumer Goods Industry Development and Kevin Prouty, Research Director for Enterprise Applications and Manufacturing Industries with Aberdeen Group, as they discuss Food and Beverage: Preparing for Growth and Living with Change. As the economy swings into recovery mode, Food and Beverage companies are getting ready for growth in both their organization and their technology infrastructure. But change and market volatility have become a way of life. From data derived from Aberdeen’s rigorous research methodology, we will show that managing change, along with managing growth, are the most important challenges that Food and Beverage companies face.

In this webinar, you will see benchmark data that highlights how successful organizations respond to their challenges through Best-in-Class strategies. The speakers will also examine what capabilities and enabling technologies these successful Food and Beverage companies bring to bear to drive their strategies. You will learn how these organizations prepare themselves for growth while striving to live in a world of constant change.

Finally, the speakers will discuss how top manufacturers are answering some of the most pressing technology questions in the industry today, including:

  • What technologies to focus on to support your business strategies?
  • How do successful companies prepare for constant change in the market?
  • What benefits should you be getting from your ERP system?
  • Does social media play a role in collaboration with the business?
  • What should you do organizationally to get the most out of your systems?

Register now:
Food and Beverage: Preparing for Growth and Living with Change