When J.M. Smucker Co. sold off its Eagle canned milk division in late 2015, it set in motion two automation-related projects.
The new owners rechristened the 150-year-old brand Eagle Family Food Group LLC and began the task of increasing efficiency and lowering costs. High on the new CEO’s to-do list was a new enterprise resource planning (ERP) system. Smucker continued supporting Eagle on its Oracle platform, but the cost was onerous. The CEO gave the IT staff seven months to implement a new system to support the new business.
Concurrently, the new operations team began making improvements at Eagle’s two dairy plants. With an investment of $200,000, they were able to boost throughput 50 percent. Blessed with redundant capacity, Eagle announced it would close its Seneca, Mo., plant by June 2018.
Even a conservative estimate of payback on the production improvements would conclude it was spectacular. ERP implementation, on the other hand, was much more expensive and time-consuming. But don’t look for a ROI calculation: In today’s environment, operating a business without a robust ERP is like driving blindfolded.
“ERP is integral to running a multi-plant food company,” acknowledges Brad Hamilton, vice president-planning & analysis at Seaboard Foods. (Coincidentally, Seaboard and Eagle both implemented ERP solutions from Infor.) “If you did a traditional ROI, you’d conclude, don’t do it.”
That’s not an option, of course, so the real question is, how does an organization structure ERP so that it interacts fluidly with other company software, such as warehouse management systems, quality systems, track and trace solutions and manufacturing execution systems (MES), the magilla of all production systems?
The good news is that mapping the flow and format of data into ERP is not the onerous integration challenge it was, although by no means is it a simple matter. That improves reporting of KPIs and other production metrics but doesn’t resolve the need for data outflow, particularly information demands from customers, regulators and the general public.
Product genealogy is a case in point. Order tracking is the newest corporate toy in business-to-consumer communications. Pizza Hut provides breathless updates on pie orders, complete with an image of the person who will bring it to your door. The information involved in even the simplest packaged food product is enormously more complex than a pizza parlor’s closed loop, and the kind of farm-to-fork data involved in tracking it, let alone delivering it to consumers, won’t come together for years, if ever.
Nonetheless, connecting manufacturing and supply chain operations to the enterprise is getting easier, points out Eric Lemaire, food & beverage segment manager for Schneider Electric United States (www.schneider-electric.com), Andover, Mass. Mapping processing and material genealogy to ERP represents the first halting steps toward smart labels on products.
“More and more, bidirectional integration between ERP and MES is front and center of what we do,” says M. Rich Sides, COO of Ultra Consultants (www.ultraconsultants.com), a Chicago-based firm that screens ERP systems and helps companies select the solution that’s the best fit and requires the least customization. “There still is this gap between what ERP and MES needs and what the complementary system provides.”
ERP solutions installed 15 years or more ago are at or near obsolescence. Integrating a new system with the rest of the enterprise is getting easier, as food companies going through the process a second time are finding. New and emerging organizations also are implementing ERP solutions, increasing the likelihood that IT specialists will recognize the pitfalls and deliver a successful project.
Deschutes Brewing Co. (www.deschutesbrewery.com) produces 350,000 barrels of beer a year, enough to rank it as the nation’s eighth largest craft brewery and 15th largest brewer overall. Growth has come in fits and starts since its founding in 1988 as a brew pub in Bend, Ore., but sales growth is picking up. Following the lead of other craft brewers who have built second breweries east of the Mississippi, Deschutes will start construction of an $85 million plant in Roanoke, Va., in 2019.
“Automation systems and processes haven’t scaled to where sales have gone,” concedes Tim Plummer, IT manager, forcing management to take a hard look at needed improvements before the new brewery comes on line. “ERP was No. 1 on the list of what we needed to do to prepare. Right now, we’re dependent on Excel spreadsheets and manual entry. Hopefully, the new ERP system will have that single version of the truth we need.”
Deschutes’ first ERP was oriented toward discrete manufacturing, installed as a stopgap in the late 1990s by an early-stage organization. By replacing that accounting-oriented system with cloud-based ERP from Just Food, the firm hopes to tie production, inventory and sales more closely.
“We’re evaluating our supply chain and production processes and questioning if those processes should be modified,” says Plummer. “One of the biggest pieces of this project is the integration of business information with the data collection and reporting side of production. There’s room to improve on data collection in packaging, with the goal of boosting OEE and efficiency in how lines run.”
Deschutes typifies the wave of companies that have found a niche and developed a thriving business, only to discover that growth has masked automation deficiencies.
“Entrepreneurs tend to under-invest in infrastructure until the burning platform dictates that they do something,” suggests Sides of Ultra Consultants, which is working with Deschutes on the ERP project.
Ultra characterizes Just Food as a Tier 3 software solution, well suited for quality control, planning and scheduling and warehouse management. Financials and other business functions may be included, but organizations with more than $100 million in sales typically need Tier 2 solutions. Tier 1 providers like SAP, Infor and Oracle provide the greatest flexibility and support sophisticated business processes, though the cost is usually too extravagant for small and mid-sized organizations.
Deschutes’ ERP selection began with a review of the company’s overall strategy, how much historical data should be retained to support it and what KPIs should be collected to support an organization with national distribution. Deficiencies in the existing system — is the brewery documenting raw materials inventory and consumption sufficiently for accounting to match raw materials with purchase orders? How well does the operations plan match sales forecasts? — were identified before a short list of ERP vendors was created.
Two-day demonstrations were conducted to assess three finalists’ support of process and recipe management, lot tracing and recall, demand forecasting and ease of integration with other business and operations systems.
Today’s ERP solutions are more configurable and adaptable then they used to be, Sides maintains, with less customization required to interact with other systems. “More and more, harmonizing ERP and MES is front and center in what we do,” he says. “Integration of yield tracking and recipe control is getting better, but there still are gaps.”
ERP projects might best be viewed as works in progress, if the experience of Seaboard Foods LLC is any indication. Like Deschutes, Seaboard’s implementation is ongoing. A phased conversion was deemed least disruptive to daily operations.
A division of Seaboard Corp., which also owns Butterball and other operations, Seaboard Foods is a vertically integrated pork processor with an unusual sales, marketing and cross-ownership relationship with Triumph Foods.
Business complexity had exceeded the abilities of the AS/400-based business system that served Merriam, Kan.-based Seaboard (www.seaboardfoods.com) since it commenced processing operations in the mid-1990s. Three bacon plants are on the Cat2 MES platform; plants owned by Triumph but operated by Seaboard use processing and traceability software from Carlisle Technology.
Business-to-business integration and customer demands for greater visibility played a major role in the decision to begin rolling out Infor’s M3 solution. The number of pieces and total weight per case used to be the extent of customer information requests; now they want nutritional information, expected shelf life and other details, backed by a robust tracking system.
“I don’t think you can get down to the data granularity of a further-processing plant with a pork processing facility,” believes Seaboard’s Hamilton, but at least integrating it with business systems is becoming less onerous.
Following a period of sluggish growth, Seaboard is witnessing accelerating demand for both fresh and further-processed pork. A 900,000-sq.-ft. plant in Sioux City, Iowa, with the capacity to process 6 million hogs a year is expected to come on line in September, doubling the company’s ability to meet demand.
To cope with growth, “we’re getting our foundational system in with M3, though there is no quick way to get to the end,” Hamilton reports. “It truly is a continuous improvement project.”
A new maintenance system, an advanced planning program, customer relationship management and other modules linked to the ERP are being phased in over time. A more automated reporting structure is emerging, but seamless interconnectivity remains a pipedream. “Spreadsheets are not a thing of the past,” he allows. “There’s plenty of external information that has to be dealt with.”
Minimal customization of ERP was the top priority when Anthony Habib helped Jelly Belly Candy Co. transition from an AS/400 system to off-the-shelf ERP. The principal of Hebron, Ky.-based Habib Global Consulting LLC (habibglobalconsulting.com) didn’t have to worry about customization in his current commission with Queen City Candy Inc., a Greendale, Ind., rebagger that added manufacturing to its operations in 2015: Everything about the ERP is customized in terms of data flow between plant and warehouse operations and the business enterprise.
Cherry Group Inc. in nearby Mason, Ohio, built the ERP system around how the manufacturing and inventory systems reported data. Building off an SQL server database system, Cherry structured reporting around the way Siemens PLCs were presenting data needed for product planning, inventory management, lot tracking and other performance indicators.
The MES link
Rockwell Automation’s Mike Barr has banished the term MES from his vocabulary, referring instead to “lower level systems” that aggregate data and report it to the ERP. The old joke is that MES stands for Microsoft Excel Spreadsheet, and most food companies continue to rely on those spreadsheets as ersatz databases for discrete reporting and analysis.
A more practical reason to eschew the term is difficult and costly MES implementations many companies have experienced. “For some food and beverage companies, that acronym leaves a bad taste,” says Barr, who is sales director-information software & process business at Rockwell (www.rockwellautomation.com).
Maintenance records managed by computerized maintenance management systems (CMMS) are an example of the “lower level systems” he references. They provide a depth of detail on individual pieces of equipment that enables analysis for superior performance, reduced downtime and better outcomes. “That level of granularity might never be in ERP,” he says, and while MES promises similar analytical detail for all aspects of operations, the scope often undermines the goal.
CMMS is MES Light, focusing on a specific need. Once maintenance automation is mastered, manufacturers can build other lower-level systems focusing on order execution, quality data and other aspects of operations.
Real-time reporting of maintenance activities would overwhelm many ERPs. It wasn’t even an option with the CMMS used by West Liberty Foods LLC (www.wlfoods.com), a West Liberty, Iowa-based processor of turkey and other protein foods. “It was an older program that wasn’t real-time,” remembers Andy Zuspann, maintenance supervisor at the company’s Mount Pleasant, Iowa, plant. At the end of a shift, technicians handed over paper logs of their activities to clerks who keyed in the data. To retrieve it for analysis, managers needed help from IT.
“They were sitting down at the end of the job, writing down what the problem was, what was done, the parts used,” Zuspann says of the technicians’ routine. The result was frustrated workers and unproductive activity by both technicians and managers. Zuspann estimates he spent five or more hours a day scheduling jobs.
Perhaps the old system’s greatest sin was its demoralizing influence. Because data collection didn’t trigger any apparent action, technicians concluded it had no value. Frustration fed turnover, a problem most acute at the Mount Pleasant plant, which became the beta site three years ago for installation of Leading2Lean’s CMMS.
The cloud-based software initially raised security concerns, but the reality is that on-site servers are more exposed to a breach than a remote server with multiple security layers, insists Eric Whitley, director-business development at Wellington, Nev.-based Leading2Lean (www.leading2lean.com).
Short-staffed IT departments deal with many issues other than keeping security patches up to date. “Lackadaisical protocols” such as a shared password leave those servers vulnerable. The cloud server, on the other hand, is off line and accessed by a browser via a mobile device. “Maintenance workers log on to the app and view exactly what is happening,” says Whitley.
Zuspann’s technicians no longer struggle to write sometimes-illegible reports. Instead, they record activities on mobile devices that upload activities to the cloud for immediate use. They also can view the results. “In the past, maintenance data was a secret,” says Chad Williams, corporate maintenance manager. “Now it’s a wide open book. Anyone can look at it.”
Data sharing with third parties also has occurred. Two years worth of maintenance records on 50 similar machines were exported to Excel and handed over to the OEM, the dominant vendor in that equipment category. After analyzing the data, the OEM identified three reactive maintenance issues common to the machines, then re-engineered the equipment to address them.
In Mount Pleasant, worker turnover is half its previous rate and technicians’ wrench time is closing in on 90 percent. Network-wide, the company estimates it saved $2 million in two years through reduced parts inventory. Williams’ filing cabinets no longer bulge with reports that often failed to trigger corrective actions. Corporate visibility to maintenance performance has transformed management perceptions of the department from a cost center to a value-added function.
“A lot of ERP systems don’t have APIs,” Williams notes, referring to application programming interfaces, the software that delivers plant data in the format that ERP systems need. As a result, companies have to build customized APIs to map the data flow, adding cost and delaying system integrations. With the new CMMS, “their APIs are wide open,” he adds. “Now we flow information back and forth.”
By making the code available to facilitate APIs, Leading2Lean effectively provided West Liberty with the kind of bite-sized lower level MES that Rockwell’s Barr referenced.
Whether it’s manufacturing robotics or tracking systems, automation advances pioneered in automotives, pharmaceuticals and other industries eventually drive down costs and make them practical for food & beverage companies. There’s always a tradeoff between what is possible and what is affordable and compatible with industry standards.
Advanced process control that smoothes out variations in throughput from one batch process to the next has been used successfully for a quarter century by New Zealand’s Fonterra Dairy; more recently, Kraft Heinz implemented the technology, also known as model predictive control, but for the most part, food & beverage companies have taken a pass on advanced control.
In time, organizations will be able to justify and sustain that technology. In the meantime, they have many other automation issues on their plates as they respond to an increasing complex and inter-related business and manufacturing environment.