Product innovation is the foundation for any successful food and beverage (F&B) manufacturing company. To keep pace with changing consumer demands, manufacturers need to constantly connect with customers to avoid being out of touch with the time demands of the market. By doing so, they are not only able to accurately provide the niche that is served; they can also attract customers beyond just having the best price point at the closest location.
Other than introducing new products to the market, leading companies are improving their existing range of products they offer through technology-led innovation. Beyond line extensions, this means striving to continually drive cost out of a product without sacrificing quality. While a common initiative is a reformulation strategy using lower cost ingredients, a longer term solution is to refine the manufacturing process in order to lower transportation and storage costs.
To help deliver on these efficiency drivers, companies depend on various business software solutions such as enterprise resource planning (ERP), product lifecycle management (PLM) and supply chain management (SCM). However, very few companies ensure that the software itself is the most efficient in terms of addressing the specific needs faced by the Asia Pacific F&B manufacturing industry, or adequately address if the solutions are being deployed via the most modern channel available—the cloud.
The time to proactively implement the cloud in the F&B industry is now. Many F&B manufacturers based in Asia Pacific are just beginning to understand the benefits that can be derived from the software-as-a-service (SaaS) model rather than relying solely on on-premise implementations. This is equivalent to the R&D department not considering a new formula until they are no longer able to purchase a current ingredient. At that point, the market and the opportunity to gain efficiency will have already passed them by.
A cloud-based enterprise resource planning (ERP) solution is uniquely capable to handle the diverse needs and challenges of the global F&B industry. Cloud-based ERP systems can help free up capital, while giving the necessary flexibility to meet evolving operational needs.
Below are five reasons why moving to a cloud-based ERP solution makes sense.
1. Reduce costs
Numerous studies show that moving to the cloud can significantly reduce costs. A survey by Computer Economics shows that organisations that moved most or all of their systems to the cloud saw an average 15 percent reduction in IT spending. This reduction came not only from a reduction in data centre spending, but also in IT personnel costs.
In addition, cloud-based implementations typically require less development and testing resources, with cloud vendors usually providing much of the application support and maintenance. As a result, organisations that deploy cloud-based applications spend 40 percent less on consulting and 25 percent less on support personnel than organisations that deploy on-premise applications, according to a study by Nucleus Research.
Cloud-based solutions are also typically more cost effective than on-premise solutions. A study by Strategy& found that the total cost of ownership for a cloud-based solution can be 50 to 60 percent less than for traditional solutions over a 10-year period.
By freeing up capital expenses that would otherwise be devoted to implementing and maintaining an on-premise solution, companies have more money available to support growth initiatives.
2. Speed time to value
With the cloud, deployments are faster, there are fewer work slowdowns during implementation, and there is no need to invest capital in infrastructure upgrades. According to Strategy&, cloud-based implementations can be up and running in as little four to eight months as compared to 12 to 36 months for on-premise solutions.
Because cloud deployments require less internal support—in terms of both physical infrastructure and human resources—organisations typically experience little business disruption during implementation. And without the physical infrastructure that on-premise solutions require, companies do not need to invest capital in new IT equipment during implementation or during subsequent upgrades.
3. Grow faster
Because cloud deployments do not require the installation of any physical infrastructure, they help make it significantly less expensive and less time consuming to establish a business presence in new and remote locations. If a business venture is successful, companies can quickly and easily scale the solution to meet expanding needs. If the venture is a bust, the minimal investment in the cloud deployment for that location represents a much smaller loss than a business would incur with an on-premise solution.
A cloud-based ERP solution is also much easier to update than an on-premise solution. In most cases, the cloud ERP vendor will automatically apply any patches or updates. This means that the solution will always be current and able to meet the business needs, processes, regulations, and requirements, as they evolve over time.
4. Improve efficiency
Business growth is only profitable if it is balanced with increased inventory turns, streamlined processes, efficiency gains, and other operational cost savings. Cloud solutions are ideally suited for improving the efficiency of manufacturing operations because they can help automate many of the typical steps in automotive business processes, replacing manual activities and virtually eliminating the need for duplicate data entry.
In the F&B industry, manufacturing operations are spread across a complex value chain comprised of multiple suppliers and the original equipment manufacturers (OEMs). Cloud-based ERP deployments can be the means of supporting the high degree of coordination and collaboration between OEMs and F&B suppliers.
An enterprise-wide, cloud-based ERP system can also give early detection capabilities and real-time access to information about capacity, availability, qualifications, and interdependencies of employees, equipment, tools, and materials data. As a result, manufacturers have access to the information they need to adjust schedules and avoid potential disruptions.
5. Improve Visibility
A cloud-based ERP system also provides complete visibility across the entire organisation. For instance, with access to information about plant-floor resources, manufacturers can make the most effective usage of constrained resources, find areas where they can increase throughput and efficiency, and promote better material and asset management. Being able to see how all of the pieces fit together—in real time—ultimately helps manufacturers operate more efficiently and make better, faster decisions.
With a cloud-based ERP solution, companies also gain access to robust collaboration tools. With collaboration capabilities that extend across the enterprise and suppliers, they can identify potential problems more quickly and accurately, analyse them more deeply, discover what is truly driving them, and identify solutions before they can create bottlenecks.
Gear Up For Tomorrow
As F&B suppliers and manufacturers gear up to overcome capacity-constrained plants and facilities and seize new growth opportunities, they need capital to invest and the infrastructure to support the evolving business landscape and be able to quickly change direction as market forces require. A cloud-based ERP solution delivers everything an organisation needs to free up capital and swiftly respond to whatever surprises the market sends their way.
Moving to the cloud presents new opportunities as well as challenges. Companies which are new to this need to consider the best type of deployment model—between on-premise or on the cloud—that is the right fit for their business. Cloud deployments offer more flexible IT options for users, supporting a company’s technology and management needs without the need to invest in additional infrastructure or IT staff.
Selecting the right vendor or partner to help evaluate transitioning from a current application to the cloud will help F&B manufacturers answer the following questions:
- Does the solution provide industry-specific functionality needed? A system that delivers flexible, industry-specific functionality includes tools to solve challenges such as short shelf life, attributes, yield, and catch-weight. A solution that enables some personalisation for specific businesses is important, but not if it results in the need for customised source code.
- Is it a unified solution? A single solution in the cloud will create enterprise-wide visibility and help to streamline operations for greater efficiency. To maximise the benefits of cloud implementation, companies should select an option that provides all the functionality that is critical to their specific businesses (e.g., forecasting, demand planning, tracking and traceability, recipe management, etc.) within a unified suite.
- Is it secure? Security is often the number one concern associated with the cloud. As such, manufacturers should confirm that the solution follows industry best practices and protocol to protect data from compromise.
- Is it scalable and flexible? The ability of the cloud solution to grow as the business grows needs to be evaluated. Especially relevant for companies looking to go global, the solution needs to be capable of supporting additional functionality and multiple currencies.
Given the highly competitive and fast-paced environment of the F&B industry, manufacturers must continue to invest in updated technology and processes. Migrating critical business applications to the cloud not only increases a company’s overall efficiency, but can improve return on investment by focusing on utilising solutions with industry-specific functionality.
Today, the question is no longer why invest in the cloud, but how to invest in order to stay ahead of competitors and capitalise on the next generation of technology innovations designed for success in the F&B manufacturing industry.