Hungry for Food Industry Growth

In the food industry, not just any business management software will do. Manufacturing challenges of food manufacturers are most apparent in their unique regulatory and operational needs, requiring sophisticated, flexible, cost-effective software solutions.

What are some leading reasons why food producers should be hungry to update their software systems?

1. Food manufacturers need sophisticated lot/serial tracking. If you process food, especially for the U.S. manufacturing industry, traceability of ingredients and lot tracking of item sources is an absolute inflexible requirement. When the FDA comes calling, you need to know where everything came from, what ingredient went into what, and where it ultimately was shipped, instantly and accurately.
   
   
2. Food manufacturers need accurate weights to set pricing. If you buy and sell food products, you probably deal with items where you buy and sell by weight, but where there is no fixed weight per case. You need to capture the actual weight when products are received or shipped, and set prices accordingly; that's an easy-to-implement growth strategy for manufacturers. This is often referred to as “catch weight.”
   
   
3. Food manufacturers need to automate and standardize to meet buyer requirements. If you sell to national grocery chains, you need to be able to automate your ordering/invoicing processes to comply with a variety of Electronic Data Interchange (EDI) standardized formats and requirements. You'll need to receive orders electronically, process them quickly, and send your acknowledgement and your invoice in the required format to receive your payment quickly. Buyers require multiple formats, over multiple transport mechanisms.

Lot/Serial Tracking

Award-winning low-fat frozen entree brand Cedarlane Natural Foods has been in the business of making healthy ready-made vegetarian and vegan food since the 80s. Company founder Robert Atallah spoke to Food Navigator about what it was like to be an early innovator of plant-based food products in the U.S. Cedarlane has used xTuple to manage operations and accounting since 2004.

"When we added the xTuple inventory control module, we weren't just adding a system, but changing the company culture and creating new procedures," said Daniel Baroco, IT manager at Cedarlane. Some of those procedures are specific to food manufacturers. "Traceability is absolutely required in the food industry," Baroco says. "A lot of the ingredients we use can get converted in the finished product and becomes a different lot. You have to trace across those lots. xTuple does that for us very well."

Catch Weight

Since its inception in 1959, Richmond Wholesale has been an early adopter of technology. As one of the largest wholesale food distributors serving the worldwide market, they produce and stock both institutional food service and retail products — frozen, chilled and dry — in meats, seafood, dairy, vegetables as well as convenience foods and ready-to-eat meals.

From their primary facility in California, the company is a leader in wholesale food manufacturing and world-wide distribution specializing in customized orders for customers and strategic business partners, including the U.S. military.

The company orders meat by the case, but they pay by the pound because meat — among many other natural food products — is not a consistent "one size fits all" item. They sell the same way, so "catch weight" functionality was critical to their business. They needed to capture the actual weight per case at the receiving dock and the shipping dock, so the customer can voucher and invoice the proper amounts. 

Electronic Data Interchange (EDI)

Nordic Naturals, a leading processor of omega-3 oils, distributes to many large chains, including Whole Foods. To maintain their vendor relationship, they needed to tie their xTuple system to the Whole Foods electronic ordering system. They were able to automate the order process, from easy pick-pack-and-ship of items sold to electronic posting of invoices back to Whole Foods. They were able to meet the requirements to stay in the Whole Foods supplier network and retain a critical customer for their products.

Why all this talk about food industry growth?

Food is a big deal to we humans, and the food industry is one of the fastest-growing economic sectors in the world. The dietary supplement market is projected to be the fastest growing market segment in the global industry over the next five years, and it also the largest market segment of the nutraceutical industry in the U.S. The global organic food market is expected to grow from US$ 57.5 billion in 2010 to US$ 104.7 billion in 2015 at an estimated CAGR of 12.9%. *

 *  “Organic Food Market — Global Industry Size, Market Share, Trends, Analysis and Forecasts 2012–2018” SBWire (10/3/2012)

Food producers, particularly boutique and organic food producers as well as companies in the nutraceutical sector, will see serious benefits — including 100% traceability and cost-savings — from implementing new technologies to support their growth.