Reducing food waste is an important issue for food and beverage companies that can best be resolved by improving communication and collaboration across the supply chain.
Enterprise resource planning (ERP) software that connects users and provides transparency is one of the best ways to curb the food waste issue and improve efficiency. Knowing how the right ERP solution reduces food waste is the first step.
The food waste issue
A recent study about the Belgian food processing industry found that the most common factors contributing to food waste were:
- Product changes (13 percent)
- Human error (10.9 percent)
- Product defects (8.7 percent)
- Buyer contracts (6.4 percent)
Clearly, all four of those causes are related to poor production and operational processes. As lead researcher Dr. Manoj Dora of Brunei Business School noted, “At most of the companies we went to, there was no standardisation of work or visual management in place. It’s a management issue.”
Dora noted that there are pre-production issues that contribute to food waste, notably incorrect orders, substandard storage and poor inventory management. Within the production environment, interruptions in production and inefficiencies in planning, ordering, processing, packaging and transportation compound the issues.
The scale of food waste is extraordinary. A Boston Consulting Group study estimates that globally 1.6 billion tons of food valued at $1.2 trillion are lost are wasted annually.
How food ERP software reduces waste
Your ERP solution offers multiple functions that help lower the amount of food waste. Here are a few of the main benefits:
- Real-time data. With access to information from the shop floor, mobile devices, suppliers and products in the moment of need, employees can make better-informed decisions and collaborate better, especially for inventory and order forecasting.
- Mistake reduction. With accurate data from your ERP solution inventory management application and accurate recipe management, there are fewer mistakes that result in scrapping batches or not having the right ingredients available when needed.
- Improved efficiency. ERPs connect finance, inventory, production scheduling, sales and transportation across the company. Working from a single source of information and processes that are informed by multiple areas, your company will have better operational outcomes, less downtime and better ordering and reordering, and more accurate production.
- Food monitoring. Embedded sensors connected to products, lots and batches collect and relay vital information such as temperature and humidity levels that can be used to assess viability or change conditions, save more perishable ingredients and reduce food waste.
- Traceability. In the event of a recall, an ERP helps you quickly track and trace ingredients and finished products quickly, ensuring better food safety and less waste.
NexTec group helps food and beverage manufacturers identify and implement the right ERP solution to reduce food waste. Download our guide to reducing food waste to learn more about how NexTec improves your investment in ERP technology.