13 September 2017
The Produce Marketing Association recently conducted in-depth industry research, indicating that the current extreme drought has decreased food production and significantly increased costs. The report confirms that agricultural production and security of domestic food supplies are at risk. “The agricultural sector’s contribution to the national GDP is an estimated 11 percent (horticulture accounts for 26 percent of the sector), and the industry’s influence on the upstream and downstream sectors of the economy cannot be overlooked.”
In these times, operational efficiencies must be honed to ensure maximum production, minimum wastage and the streamlining of processes across the industry. To achieve this, flexible software solutions are required, specifically designed to manage complex operations and regulatory compliance requirements. In order to respond to increasing market demands and pressures, speed and agility are essential. From enterprise asset management, to enterprise resource planning, product lifecycle management, and everything in between, the right software solution streamlines processes, optimising operations and increasing the power to make informed, strategic decisions.
The fruit and vegetable industry has come a long way from subsistence farming; and with this growth comes technological developments geared to improve output and increase the bottom line. “With the right software, efficiency and growth are cultivated,” advises Jane Thomson, Managing Director at Softworx, an Infor partner. “With deep industry functionality, flexible solutions aid in: forecasting and demand planning (down to hours and minutes); production planning and scheduling; tracking and traceability; integrated quality management; recipe and least cost formulation; and labeling support for nutritional information, ingredients, and allergens.”
The Infor CloudSuite Food & Beverage solution, for example, offers responsive, industry-rich functionality, delivered in the cloud. “As production grows, greater business agility is required,” adds Thomson. “This is essential to save costs and develop built-in support, hassle-free ownership, and security that follows industry leading, best practice protocols.”
The drought has made a tight-margin market even tighter, and it has revealed the weaknesses in legacy ERP solutions, which feed inefficient processes. Software should support the business in overcoming the top concerns in food production. “Innovative food and beverage cloud solutions offer complete end-to-end functionality, built specifically for the needs of the individual sectors within the industry,” confirms Thomson.
To deliver real benefit, software must be industry specific, supported by a secure infrastructure and offer cloud value (translating into faster turn-around time to seeing value with minimal upfront investments). In the fruit and vegetable sector specifically, software must be easily expandable, to include other best-of-breed applications, supporting unique needs in supply chain management, research and development, and quality assurance.
“To become more agile and to drive global growth, the software solution must provide real-time data that is accessible anytime, anywhere. It must be easy to expand to new locations, add users as production grows, and maintain visibility across multiple farms, sites and warehouses,” states Thomson. “Infor customers have gained agility, cost control, and greater efficiency with these food and beverage solutions”.
This software is tailored to maintain the effective running of the business, allowing the farmers and managers to focus on the production of quality crops. Every aspect of production is covered, from product lifecycle management (tools streamline the development of new products, speeding time-to-market, improving quality, and reducing development costs) to manufacturing operations (schedule production orders, convert formulas into production recipes, and effectively manage variances and yield), productivity features (deep analytics, an intuitive user interface, mobile data capture, industry specific KPIs, and drill-downs for faster, better decisions) – as well as financial management, supply chain management and supply chain execution.
Grower Contract Management (GCM) plays an integral part in fruit and vegetable production. GCM is a Quality Management System role and, in produce, quality is the key to success. As such, Infor has co-developed a new GCM-module, with its customer Felleskjopet (a co-op owned by farmers and growers, based in Norway) – a module which is delivering proven results.
The Grower Contract Management in M3 13.3 is tailored to manufacturers and co-ops buying harvested materials like crops and livestock from growers and farmers. “These growers or farmers must establish and manage advanced grower contracts, which oversee complex operational processes. From what to grow where, to what base origin to use (seeds and smolts), when to deliver at what quality, the definition of the pricing quantity, potential deviations in grades and characteristics (and the influence on add-ons and subtractions to the price), and other factors like storage costs, settlement delays, market price adjustments, etc. – the complexities abound,” says Thomson.
The contract between the grower and the manufacturer itself is intricate. As a result, a truly unique food and beverage module is required. It must be driven by the characteristics of crops from the way prices are established for these raw-materials. Thomson adds that; “Agreements with farmers must show what to deliver and how to calculate the price, while deciphering the process and parameters for quality inspection during growing. Farmers and growers must be paid based on variable grades and characteristics of products delivered, and considerations must be made for attributes, moisture and pollution.”
Costs are often affected by additional add-ons or reductions, based on services such as storage. The GCM-module attends to every element of the process, from start to finish – right up until the final payment process, which factors in market prices known at the end of the season, potential interest rate paid for overdue payments, and multiple payments for corrections of the above factors.
The GCM business process comprises seven steps, ensuring efficiencies throughout. It begins with the development of a grower contract, as a new harvest or season begins. This encompasses what to grow, where to grow it, which quality is required and how much to grow, and includes a multifaceted pricing schema. “The sell base origin is then confirmed, with the grower purchasing seed to use for the growing season,” advises Thomson. Tests are then conducted to confirm growth-rate and grade to predict final harvest results. At the end of the growing season, the goods are received from the grower and quantity and quality are confirmed. “Once the cycle is complete, settlements and payments are made, and final adjustments to costing confirmed.”
By supporting the entire contracting process – from selling base-origin through to final price adjustments and settlements – both growers and manufacturers are protected, and seamless efficiencies promoted. “This flexible data-model enables future changes to pricing rules, allows for the management of unique grower data (coop-membership, farm and farm-lots), and supports additional classifications and pricing parameters,” concludes Thomson.
“This innovative approach is proving to offer excellent support in the process of buying harvested raw materials from farmers and growers. In this economy, and with the drought suppressing production, challenges must be addressed – and innovative software makes addressing these challenges achievable, automated, and successful.”