The food and beverage sector is one of the most complex due to the risks that its activity entails, such as the demanding regulations that they have to comply with, the handling of products with a short life cycle, contamination and the withdrawal of products . All these factors mean that these companies are on the precipice every day, being able to fall into a reputational crisis at any time or face harsh administrative and criminal sanctions.
The food sector, along with the health sector, are especially vulnerable to the environment, which is why it is extremely important to have tools that help minimize risks. One of these solutions is the ERP sage x3. This business management software allows you to automate processes, control all the resources involved in production, intelligent cash management to guarantee a margin that allows you to deal with any unforeseen event and improve competitiveness through the online channel and campaigns marketing and advertising.
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The risks of food and beverage companies
Contamination is one of the risks that put the reputation of food and beverage companies in crisis. Millennials are especially demanding when it comes to the products they buy. They demand social responsibility and ethical behavior. This requirement forces manufacturers to be transparent about what products they make and how they make it. In this regard, the importance of eliminating plastics is becoming more and more important and there are many NGOs that are denouncing these practices. For example, in March 2020 the NGO Tearfund sued four giants in the beverage sector (Coca-Cola, PepsiCo, Nestlé and Unilever) for the emission of more than half a million tons of plastic pollution, which is equivalent to covering 83 football fields every day.
Along with contamination, the appearance of a batch in poor condition is another of the risks in this sector. At the end of last year, the Spanish Agency for Food Safety and Nutrition (AESAN) warned about the presence of the bacterium Listeria monocytogenes in goat cheese produced by the company JERMI and sold in the Lidl supermarket chain. Another example was the scandal that broke out in 2013 when the European Union warned that horse meat was being sold, as if it were beef, in twenty countries. An alarm of this magnitude puts the entire sector at risk, given the mistrust that is generated among consumers.
The impact of COVID on the food sector
The pandemic is another of the challenges facing the sector. The report Presented in June 2020 by the Spanish Federation of Food and Drink Industries, it predicted the loss of between 4,000 and 11,000 direct jobs and the closure of 800 companies, mostly SMEs. The closure of the HORECA channel and the paralysis of tourism is what has led many of these companies to bankruptcy, since around 30% of their offer is destined for the hotel industry. From the Federation they foresee a recovery for 2022, but while it arrives it is essential that companies prepare to be more competitive, through the digital transformation of the business.
According to a report by Panorama Consulting Solutions on ERP systems and enterprise software, only 12 % of executives were "very satisfied" with their current ERP solution, and 59% of multinational companies found it a "burden." Many companies discover that the ERP solutions that they implemented with great economic effort do not add value to them because they are outdated and do not respond to the new needs of the market. The positive of all this is that we are at an ideal time to look for a technological partner that implements modern solutions, faster to implement, simple to use and, above all, updated and scalable, designed for companies seeking to grow.
What is traceability and why is it important?
To address the concept of traceability, we turn to a report prepared by the Spanish Agency for Food Safety and Nutrition, according to which traceability is "the possibility of finding and following the trail, through all stages of production, transformation and distribution, of a food, feed, food-producing animal or substance intended to be or likely to be incorporated into food or feed”.
According to the Codex Alimentarius: “Traceability is the ability to follow the movement of a food through specified stage(s) of production, processing and distribution”.
This term implies the need to identify any product within the company, from the acquisition of raw materials or input goods, through the different stages of production, transformation and/or distribution, until the moment in which delivery is made to the next link in the chain.
Traceability provides benefits for companies, consumers and the administration.
Benefits of traceability for companies
- A high level of protection of life and health of people is achieved. And therefore, the company guarantees the quality of the product and its certification.
- It provides information within the company to facilitate process control and management, for example stock control.
- When an eating problem arises, it facilitates the location, immobilization and, if necessary, the effective and selective removal of food.
- It contributes to decision-making regarding the destination of batches of affected products.
- It allows to demonstrate the origin of a problem, an aspect that takes on special importance when pointing out a person responsible. In this way, innocence or guilt can be demonstrated in the face of a crime against public health; violations related to the quality of products or the loyalty of a company with respect to commercial transactions.
- It helps to deal with customer complaints by being able to extract information from any point in the chain, from production to delivery to the customer. Once the problem is located, the appropriate measures will be taken with maximum efficiency, speed and coordination.
- Traceability promotes commercial food safety and thus helps build consumer confidence.
Traceability also has benefits for the consumer: information transparency throughout the agri-food chain, from the producer to the consumer, generates trust. Finally, for the Administration, the establishment of traceability systems allows greater confidence to be placed in food companies, facilitating official control activities throughout the entire chain.
Why is it important to have up-to-date software?
As we have anticipated, it is important to have software Updated ERP for the food and beverage industry because its implementation represents an important investment for the company. If the company does not grow, it cannot be the fault of an ERP whose infrastructure has become obsolete and is unable to integrate new functionalities necessary for the business.
Guarantee quality control
The ERP must be able to quickly predict possible deviations or conditions outside the tolerance range in the equipment or the level of products, to avoid quality problems. This is achieved through the systems integration of all business applications.
Maintain the composition and flavor of the products
In this sector it is important to always maintain the same composition and flavor of the products, as this is what consumers expect and what is required of manufacturers. This is achieved by standardizing processes.
Data visibility and automatic updating of records
As in other sectors, working with data obtained in real time is vital for decision making. ERP systems need to keep records in a central database that allows for quick and easy updating and automating data collection. With dynamic documentation, it is possible to automatically update the records in the event, for example, of a change in a supplier or an ingredient.
Integrate the manufacturing process with product design
In this sector, it is essential to have an ERP solution that allows the integration of manufacturing processes with product design. This means a reduction in the number of processes, which are usually very expensive, as they require customized equipment and controls to maintain constant quality levels.
As we have previously indicated, these companies are subject to strict regulatory controls, which requires them to be up to date with regard to current regulations. The sanctions imposed by public authorities are severe and include embargoes, withdrawal or destruction of products from the market, fines and even criminal charges.
To avoid regulatory compliance problems, companies can:
- Integrate compliance and traceability into your processes.
- Implement a central repository with the relevant laws and regulations in force, to which entrepreneurs, regulatory bodies and partners have access, to keep up to date with changes in regulation.
- Digitize document management processes to advance at the same pace as regulations and provide timely and unified information to decision makers.
- Implement business systems that lay the foundations for the control and automation of processes, in addition to guaranteeing their integration and interoperability, to avoid data silos.
- Keep software tools up to date, so they can manage regulatory reporting demands and ensure compliance.
How Sage X3 helps with traceability and risk reduction
To minimize the risk of product recalls and other problems in the supply chain, food and beverage companies take into account sage x3 the perfect solution. This software provides accurate and updated data in real time.
With Sage X3, business management improves in various aspects:
- Quickly apply and comply with new regulatory requirements and ensure that all teams continue to act in accordance with the regulations.
- Get reports with actionable data that can be used within the company – and also for suppliers, customers and regulators – from a single centralized data source that includes information from the entire distribution chain.
- Identify the root cause of product defects and the extent of contamination in the supply chain as early as possible.
- Communicate effectively with stakeholders and the rest of the supply chain during product recalls.
- Systematize other tasks to avoid product recalls and mitigate their consequences.
- Maintain and execute crisis management plans.
Source: Traceability in the Food and Beverage Industry Report by Sage
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