Could enterprise resource planning save your bacon?
24 Apr 2015 - {{hitsCtrl.values.hits}}
A few retail scandals capture the public’s attention faster than a high-profile product recall. Even more so when it comes to products we put in our mouths. Recent years alone have unearthed such headline-grabbing stories as the infamous horsemeat scandal and McDonald’s expired-meat crisis last summer, to name a few.
But drama and scandals aside, recalls continue to represent a major challenge across each and every sector in the process manufacturing market—from the food and beverage industry, to pharmaceutical, chemical and aerospace manufacturing. Recall numbers for the European food industry, for example, crept up by 16 percent across the fourth quarter alone last year.
Recalls are big, bad news and the costs can be high—or even ‘catastrophic’, according to 81 percent of manufacturers surveyed by Grocery Manufacturers Association. Recalled products typically need to be repaired, replaced or destroyed. Then there’s the cost of identifying, tracking and executing the recall, as well as the damage to brand reputation and regular operations.
Thankfully, there is a growing industry trend towards taking action and complying with regulations. Many manufacturers obtain insurance against possible recall losses but it’s paramount they put in place more effective systems for product traceability to limit the size and scope of recalls.
In truth, many of the high-profile scandals we read about could have been prevented with a proper solution in place for data capture and quality management. Recall readiness has today become a test of a manufacturer’s enterprise resource planning (ERP) system and their ability to implement an effective traceability chain.
While there are a lot of ERP solutions supposedly geared toward the process manufacturing space, many do not take into consideration the real complexities faced by the industry. It’s vital, therefore, to use an ERP system specifically tailored for this space, offering integrated traceability—from the raw material supply chain, through to the finished product. Being prepared for a recall is about having a traceability chain that allows a manufacturer to visualize and access data on everything from batch, serial number and expiry dates, to quality assurance of incoming materials and finished goods. This way, with sufficient data, it’s possible to isolate which products, components, subcomponents or batches are involved in a recall.
ERP systems should be a natural foundation for storing and accessing this breadth of data because their functionality spans the entire value chain, across its multiple processes for procurement, manufacturing, quality and supply chain management. In other words, the ideal ERP system governs the entire journey of your materials—where they came from and what has been done with them.
But building an effective traceability chain is also a matter of effective data capture. That’s why it’s important to utilize partners for more advanced data capture and analysis. Without the support of robust barcode or RFID scanning tools, capturing this volume of data at each level of transaction can be a costly and complex affair.
Equally complicated and costly is the task of accessing or consolidating data from fragmented applications or isolated spread sheets. That’s why, as one consolidated solution, the ERP system should offer integrated quality management, quality assurance and formula/recipe management—three of the key domains involved in assessing the root cause of a recall. And, as the industry moves towards more proactive tracking and quality measures, the ERP system should provide the data needed for compliance with key process manufacturing regulations including HAACP, FDA, USDA and REACH.
There are many compelling arguments for implementing an effective traceability chain—not least the ability to isolate problems before they snowball, protecting your operations and ultimately your brand integrity. Rapid, efficient traceability makes a supplier more desirable to OEMs and provides insight into even the smallest changes in product quality and yield, enabling manufacturers to monitor and fine-tune operations.
But implementing traceability needs to be done in an efficient way that feeds data into an integrated suite of applications that consolidates access to information. A broad and deep ERP suite is the optimal framework for holding, accessing and using traceability information. Coupled with efficient data collection, it’s the strongest foundation for operation improvement and making sure that today’s issue does not make tomorrow’s headlines.
(Jakob Björklund is IFS’s Global Director for Process Industries. Jakob holds a Master of Science in Industrial Engineering and Management from the University of Linköping. In his 17 years with IFS, he has been involved with consulting, sales and marketing and product strategy for process manufacturing and supply chain management)
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