Business and Operations
What is ERP, and is it right for you?
By Bakers Journal
By Bakers Journal
Enterprise resource planning (ERP) software integrates multiple business functions into one program, from accounting to traceability.
Ostensibly, it can be used by food production companies or bakeries where traceability and product development for food allergies are a concern; ERP can be used to deliver safer food with less friction.
While ERP has been around for over twenty years, much of the food production businesses operate in what companies call “silos” or rely on systems that were already in place through different spreadsheets, or three different computer programs, think Excel for product management, Project for launching a new line, and maybe a favoured accounting program already in place.
The danger to having different spreadsheets for different applications lies in something getting lost in the shuffle. Sales can suffer; however clients can input their sales orders in directly and the same system can be used to gauge the quantities and quality of ingredients needed to fulfill an order, as well as calculate the amount of staff needed to complete the order.
However, there are some downsides to ERP integration. If the system crashes, it will take an entire company with it, however temporarily, the effect can be debilitating. The cost and time for installation and training can also reduce productivity in the short run. If your bakery is a small, family run operation, a widescale ERP might not be the best option for productivity.
Keeping in mind how online ordering has affected even small batch bakeries, time has now been compacted for most food production companies. Where a decade ago, grocery chains or restaurants could put an order in a week in advance, online ordering often forces manufacturers to produce and ship within the same day.
However, traceability is a big issue when dealing with food audits or recalls; an ERP can reduce waste by limiting the number of products recalled. ERP systems function by using data and collaboration within a company to improve efficiency. As ERP is evolving ,it also starts to deal with data sharing between customers and suppliers.
Some time might be saved by accountants as well as stock managers, when your ERP has a built-on supplier portal that allows suppliers to log in to see what your company’s inventory looks like, and replenish anything that appears low.
Unlike an ordinary inventory spreadsheet, some ERP systems offer a way to monitor how your products are selling in stores, restaurants and bakeries, allowing you to gauge and forecast your manufacturing schedule.
With blockchain gaining traction, your supply chain may stand to become more transparent, in terms of ingredients and shipping schedules.
However, it doesn’t deal with information dealt to potential competitors. With the advantage of ease of data sharing comes the responsibility of confidentiality and increased data security. Any company that allows ease of access should have a backup plan in case of breach.
In short, if you are a small batch bakery, an affordable ERP system might help you scale up, but the cost might be prohibitive if you’re a small enough operation with high turnaround.
A larger-scale operation could use an ERP if they consider training and staff turnover, as well as their accounting practices. In both cases, knowing what your needs are and gauging where the gaps in your productivity lie, you can make your decision as to whether or not an ERP is right for you and your business.