The birth of the digital operations platform (DOP)
The modern enterprise resource planning (ERP) system’s origin
dates back more than 100 years, when it began as economic
order quantity (EOQ)—a decision tool for optimizing inventory
costs. Over time, additional functionality was added, like
finance and CRM, and the individual components were
integrated into a single overarching—albeit, difficult to
use—system.
A simplified definition of ERP is a system or solution that food
and beverage producers use to manage day-to-day business
activities, such as procurement of ingredients, process
management, operations, and sales. ERP systems can also
introduce automation that replaces manual tasks. The goal of
an ERP system is to improve food and beverage productivity
and agility.
As these business systems evolved, they met the needs of their
times, but their functionality was directly limited by the
available technology. Today’s modern ERP systems might be
better called digital operations platforms (DOP) to reflect their
agile, artificial intelligence-based, and experience-driven
nature, as well as the critical role they play in cloud-based
digital businesses.
Some key functionalities that modern ERP (a.k.a. DOP) systems
bring to organizations include:
-
Support for complete industry and business processes - Business strategy and requirements are considered in context of
a larger set of capabilities and technology needed to address
complete food and beverage manufacturing processes.
- API-based integration for complex workflows - Native
support for services-based APIs enables flexible interapplication
collaboration to support complex workflows and
in-context analytics.
- Complex application environments - Flexibility to handle
complex, hybrid technical environments while applications and
data move from legacy and on-premises software to cloud.
- Collaboration with suppliers and customer ecosystems - Ready to work beyond the enterprise and support the full
industry technology ecosystem by connecting with customer,
supplier, and partner applications.
- Future-proofed for extension and scalability - Extensibility,
scalability, and performance are part of the ERP’s core design
principles to maximize business agility—including support for
user interaction modalities beyond the traditional UX.
- Tailored to industry and business specific needs - The ability
to easily integrate the ERP system with complementary
applications that address specific food and beverage
manufacturing operational needs.
- Connected data for analytics, machine learning, and AI - Connect data across application silos for enterprise-wide
analytics, on-demand recommendations, and pathway to AI.
- Security and risk management - Tools for standards-based
security, risk and fail-over management, attack prevention, and
processes for continuous security advancement.
Benefits of a modern ERP system
Implementing or upgrading to a modern ERP can cause
significant disruption to the business, causing the organization
to lose focus, or even “break” business processes that the
company looked upon as core to their success. As scary as this
may seem, the productivity gains and business improvements
that your business will miss out on far outweigh the costs
and risks.
Modernization has a strategic impact on your business. Without
access to a modern ERP system, it can be difficult or even
impossible to support product innovation and benefit from the
improvements in key performance indicators (KPIs) that come
with a successful ERP implementation.
Some of the major benefits of a modern ERP system include:
Ease of use
You can’t achieve return on investment (ROI) if
your team members can’t use your ERP system. Updated
systems are more intuitive and user friendly, encouraging
employees to seek out data and integrate it into the
decision-making process.
More informed business decisions
Enterprise analytics
enable food and beverage manufacturers to connect data
across business silos and drill down on overall results and
KPIs to functional contributors. With modern ERP systems,
businesses can grow the “analytics mindset” within the
organization to increase data-driven decision-making and
increase operational effectiveness. By aligning enterprise
KPIs with department objectives, teams and individuals have
a clearer picture of how their priorities impact overall
business performance.
ROI is always the key metric for business decision makers, and
modern ERP systems help teams communicate more clearly
with executive stakeholders through business analytics,
scenario planning, and financial impact analysis.
By understanding the drivers of current financial outcomes and
then using tools to model future outcomes, teams not only
benefit from greater confidence in their decisions, but also get
increased support from executives that know they’re investing
company resources intelligently.
Ability to attract and retain talent
A major challenge for food and beverage manufacturers and distributors today is losing employees with
years of institutional knowledge and expertise to retirement,
while a new generation of workers are statistically less inclined
to embark on manufacturing and distribution careers. Without
these resources, your company can’t exist. The new generation
of digital natives demand technology that is user-friendly and
supports how they like to work. This means software that
mirrors the look and feel of applications they use in their
day-to-day lives and supports immediate access to data and
collaboration. For those in the food and beverage industry,
modern ERP systems have been a key differentiator when
targeting this generation of workers.
Breaking down business silos to increase collaboration
By
extending ERP capabilities beyond operations with a modern
platform food and beverage producers can increase
collaboration across functional areas for improved workflows
and increased productivity. As teams leverage improved
communications and cross functional data, they can reduce
cycle times and increase accuracy. Native social tools within
ERP systems allow teams to share rich information across
regions and time zones using devices that support work
wherever and whenever needed.
ERP systems should support “outside-in” requirements for
exchanging information with ingredient suppliers as well
as customers.
Networked support for processes such as supply chain
management, product lifecycle management, and order
management help to reduce cycle times, increase accuracy, and
improve overall business flexibility. Analytics for in-context
decisions can factor in third-party data, such as stock levels,
lead times, and demand forecasts for improved planning,
scheduling, and cost and risk management.
Improvement of key performance metrics
Organizations on
the latest ERP versions see more significant benefits in metrics
such as complete and on-time delivery, inventory turns, internal
schedule compliance, and reductions in operational costs.
These performance improvements have a direct impact on the
bottom line, which may even pay for the ERP system.
Utilize emerging technology
Analytics, mobility, cloud,
partner networks, and the internet of things (IoT) are table
stakes in the modern manufacturing and distribution
environments. For example, using IoT and analytics together
(such as applying analytics to inexpensive sensors on
machinery) can help to support predictive maintenance and
enable bigger profits in new service models. Outdated ERP
systems can’t support this innovation.
Data-driven mindset across the business
Saying that ERP systems help food and beverage manufacturers
manage day-to-day business activities to optimally deliver
products from farm to table and grape to glass is not only an
oversimplification, but it doesn’t address the breadth and reach
of modern ERP systems. Not only do modern ERP systems touch
and connect virtually every operational corner of a business,
they also help foster a data-driven mindset across the
business—empowering key stakeholders to leverage this
information for critical decision-making that can grow the
business and increase the bottom line.