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.”