Author Archives: Brett Mundell

About Brett Mundell

Brett has more than 20 years of business software sales and company management experience. Brett has been involved in more than 300 ERP projects. His passion is customer satisfaction, making sure every client is more than just satisfied. Brett wants our customers to be driven to refer their friends and peers because we offer the best services and technology available and because we exceeded their expectations.

Automate Bank Reconciliation With Sage Enterprise Management

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Checking that your business’ transactions match what appears on your bank statement is important part of maintaining financial health. But while it’s essential housekeeping, it’s also tedious and traditionally labour-intensive.

When a company has multiple entities that may be spread across multiple countries, each with separate bank accounts that must be balanced, the job becomes even more complex.

Bank reconciliation challenges in complex financial environments

For businesses with multiple ABNs and associated bank accounts, or with operations and accounts set-up across a number of locations, accounting can become complicated.

Many small to medium-sized enterprises now operate different streams of business, each with their own ABN, income, expenses, tax obligations and financial reporting requirements.

When an extra layer of complexity is introduced as your company grows or diversifies its operations, it can make it problematic to ensure all payments, costs and fees are being allocated to the correct ABN.

Why worry about improving your bank reconciliation process?

A regular bank reconciliation helps ensure your company has accurate accounting records and is maintaining adequate cash balances. If you have less cash than expected it can impact day-to-day working capital needs, or you run the risk of incurring overdraft fees or “bounced” payments.

Bank reconciliation also helps to identify discrepancies—which could be the result of fraud or errors that need to be rectified quickly so that financial statements are up-to-date.

Traditional bank reconciliation processes are manual, slow and fiddly, requiring finance employees to enter all payments, review and check-off every transaction line by line.

Streamline, save time and reduce errors

Your finance team could find a better use of their time than scrutinising every line of each bank statement for each ABN you hold. What if the process was almost entirely automated?

Bank reconciliation in complex, multi-company or multi-site businesses can be automated with the right software solution. Many of our customers have experienced time and efficiency savings by implementing Sage Enterprise Management (Previously Sage X3) to streamline key accounting processes.

By working with Leverage Technologies, Sage’s ERP software can be configured to meet your company’s precise needs. For instance, we can assist you to:

Set-up all existing entities, with the ability to add/remove additional ABNs and accounts.
Access automated feeds from each bank account you hold.
Determine the structure of the bank statement data file in liaison with your bank.
Based on the volume of your transactions, define anticipated timing of reconciliations.
Create user-defined criteria and fields to support automatic matching of entries.
Create references for each company and criteria to automate inter-company transactions.

Configured properly, the automated process is fast and user-friendly, cutting many hours of manual handling from your employees’ workload and freeing them to focus on more strategic financial management tasks.

How to conduct an automated bank reconciliation in Sage Enterprise Management

This is how easy it is to conduct the automated reconciliation process in Sage Enterprise Management.

#1 – Import your latest bank statement files for each account

#2 – Filter your imported bank statements by ‘new statements’ and start automated matching

#3 – Using the action button on the line of the statement, select ‘Display’ to preview which transactions were matched. The code field represents the status of transactions by code (A, B, C) indicating: matched exactly (A); open items were found and a potential partial match (B); or no open items found (C)

#4 – Select to display the ‘Process bank transactions’ screen to see detailed information about matching and work with the statement.

#5 – If you select the completely matched item (A) in the left list, you will notice which transaction it matched to in the open items section

If we select the second transaction with status of ‘B’. In this case it was a partial payment, we can manually match this to an open item in the list and click save.

#6 – Once you save a change the status of the transaction will be updated, in this case AM which indicates it has been manually matched

#7 – For C status transactions with no open items, you click on manual entry to create an open item, input payment details and then OK, changing the status to AD which means the transaction has been manually created and matched

#8 – Once you’re done with matching all lines, you validate your bank statement which will generate your payments

Sage Enterprise Management’s accounting capabilities may not eliminate all manual matching, but it comes close. In addition, Sage Enterprise Management provides tools that make manual reconciliation easier such as the ability to sort and search by amount, type, description, date, and reference numbers.

Can you be confident in automated reconciliation?

Automating reconciliations between statements and ledgers—especially for multi-company, multi-site and multi-currency businesses—is made more effortless with Sage Enterprise Management’s rich finance features.

But ensuring the process is as accurate as possible does depend on expert configuration and testing. Leverage Technologies is adept at reflecting a company’s unique financial landscape within the Sage ERP solution, as well as undertaking testing to ensure the system is doing what is expected, so you can have high levels of confidence in the automated process.

For more information on Sage Enterprise Management and how it can help your business grow smart, call us on 1300 045 046 or email [email protected].

How Much Does Sage X3 Cost?

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An interesting question: “How much does Sage X3 cost (or any other ERP solution of this calibre)?”.

In this article, we will give an overview of the various factors that typically determine the cost of your Enterprise Resource Planning software rollout. We will also focus on Sage X3 to give you an idea of what pricing you can expect for a project of your size.

Sage X3 pricing: What does it depend on?

Implementations of Sage X3 vary greatly depending on a number of factors. We have previously written extensively about the factors contributing to ERP budgeting, here is an overview with a focus on Sage X3.

Functional requirements

A company requiring a basic finance only implementation of Sage X3 will have very different budgetary requirements to a business needing to implement the full ERP solution (functional footprint) available in Sage X3, including:

Finance;
Logistics;
Distribution;
Purchase planning;
Manufacturing.

Geographical footprint

Implementing ERP in one geographical location is simple and requires a relatively small investment. One of the major benefits of Sage X3 is the fact that you can operate multiple entities (local and overseas) from a single database folder. This provides great functionality for inter-company and consolidation reporting. However, let’s not forget that when it comes to budget and cost to implement ERP each additional company that is implemented will require an additional budget. These budgetary requirements will be stretched even further if we add into the equation multi-national requirements. As we add additional counties, we also add complexity – legal and fiscal requirements, local training and support and comprehensive foreign currency reporting requirements.

Available internal resources

The experience and availability of your internal staff are key to defining the cost of your Sage X3 implementation. The availability and previous ERP implementation experience of your internal team will also have a marked effect on implementation pricing. Most Sage X3 customers are larger SME or mid-market companies. These companies fall into two distinct categories

Small to medium-sized companies who do not have the resources available to implement an ERP solution without outsourcing most of the resource requirements. These resource requirements can be outsourced to a Sage implementation partner. As more responsibility rests with the implementation partner, the price of implementation goes up.
Larger companies usually have more “internal muscle” to implement ERP and therefore are less reliant on the implementation partner for implementation resources. This clearly reduces the investment to implement.

Total number of Sage X3 users

The number of users that will be logged into your Sage X3 solution at any point in time only has a marginal influence on implementation pricing unless – those users are based in different geographical locations. The system requires the same amount of configuration for 10 users or 100 users. Influencing factors include:

Geography. Implementing across multiple geographical locations and countries increases the cost to implement;
Training requirements can have an influence on implementation pricing, depending on whether or not you use a “train the trainer” approach.

Project management

When implementing SageX3 companies must allocate between 10% and 20% of their budget to Project Management. Different Sage partners will include different elements in project management. Essentially, Project Management should cover project planning, project meetings, project coordination, resource scheduling and scope management. There should be Project Management resource allocation from the Sage reseller and the customer. The stronger the Project Management resource provided by the customer, the lower the Project Management resource requirements (and budget).

Implementation methodology

There are multiple different implementation methodologies available for Sage X3. An agile methodology which allows for a “fits like a glove”, do and charge implementation will normally cost more than a “waterfall” based (fixed scope / fixed price) implementation methodology. Let’s quickly explain the differences.

A waterfall methodology assumes an upfront, comprehensive scope of work. This scope of work is put together by your Sage reseller and your internal implementation team/resources. This scope of work is used to put together an implementation plan and budget. This “waterfall” methodology requires more upfront planning and structure and usually offers less flexibility during implementation. The advantage is usually a lower investment to implement.
An agile methodology relies on a “design and builds as you go” solution. You often get a more complete functional fit, but you pay more in dollar value and time for the solution.

The “big three” factors

Data, reporting and customization. These three factors have a massive influence on the Sage X3 implementation budget and timeframes. Manage each of these factors carefully to reduce risk.

Cloud vs On-premise

Does not have a huge effect on implementation pricing but there are pros and cons. Highly customized implementations of any ERP solution tend to require additional management in the cloud.

Sage X3 Cost Estimate

Assuming that we have looked at and summarized all of the factors that influence the pricing for the implementation of Sage X3 – how do we get to the Sage X3 cost estimate?

You would need to scope your high-level requirements. Let me give you a few guidelines and estimates.

We will assume that you are looking for an end-to-end solution, whereby the Sage business partner is providing the relevant skills and is not using a template implementation. Here is the tentative cost of implementing your solution.

Finance-only implementation. Assuming 10-20 Finance users, GL, banking, journals, fixed assets, financial reporting, accounts payable and accounts receivable. 40-50 days @ $60,000 – $80,000 implementation investment.
Logistics and distribution. 20-50 users – all financial modules plus purchase order planning, inventory / warehouse management and logistics 80-100 days @ $120,000 – $150,000 implementation investment.
Manufacturing. Finance, distribution and complete manufacturing – work orders, BOMs, routing, planning and scheduling – 100-150 days @ $150,000 – $225,000 implementation investment.

These “days” assume consultancy days ie. the number of days that your Sage implementation partner will require to do the consultancy, training and system configuration. These days to implementation does not include specific functional requirements like EDI, E-commerce, or specific BI projects.

On-premise or cloud estimates for software and support have not been included in these Sage X3 cost figures as we have focused on the implementation estimates only.

Conclusion

In summary, multiple factors influence ERP implementation pricing.

For a Sage X3 cost estimate, you are looking at things like internal resource availability, requirements, cloud vs on-premise, data requirements and geolocation, to name a few.

At Leverage Technologies, we have been implementing Sage X3 for some of the biggest sites in Australia. For more information or to get an estimate, feel free to give us a call on 1300 045 046 or email [email protected].

Interpreting ERP Investment Proposals: Are You Comparing Apples With Apples?

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ERP investment proposals can vary greatly even for the same project.

If your business is considering implementing an Enterprise Resource Planning (ERP) solution you might be wondering why there is such a substantial difference in price between the ERP investment proposals provided by different companies.

After all, your business’ requirements are unique and clearly defined. So, where exactly does the difference in price come from?

Here is our advice on understanding the differences between ERP investment proposals from various solution providers so to always compare apples for apples when it comes choosing the best fit for your business.

Receiving the perfect ERP investment proposals: It all starts with your requirements

First of all, it is highly likely that you will be considering multiple different ERP solutions and possibly different providers, including resellers and implementation partners of the same solution. Analysing different solutions gives you the ability to compare what’s available on the market:

Cloud vs On-premise;
Different user interfaces, look and feel;
Generic vs best of breed solutions;
Different functional solutions;
Alternative implementation and support options;

Let’s explore the key reasons why you might get very different proposals, at very different price points from alternative ERP solution providers.

#1. Are you comparing similar ERP Solutions?

ERP Solutions vary greatly in complexity and functional “footprint”. The more functional the ERP solution the longer and more expensive (consultancy) will be to implement the solution. Greater “standard” functionality is a double-edged sword – more functionality to use and more to implement.

More functionality requiring implementation will stretch out the time to deliver and will cost more in consultancy dollars to get the job done. Generally speaking, ERP solutions are available in tier one, tier two and tier three markets. Make sure that the solutions you are comparing are fit for purpose (there is a strong functional footprint that aligns closely with your requirements).

If you are not comparing similar solutions you are likely to see a substantial difference in investment required. This is particularly true of implementation pricing which varies vastly between tier one (Enterprise Solutions for large multi-national organizations), tier two (Mid-market ERP) and tier three solutions aimed at smaller businesses. We are often contacted by companies comparing five different ERP solutions, two from the mid-market (tier two) space and three from the small end of the market. This is not comparing “apples with apples”. In summary – when comparing investment summaries make sure that you are comparing ERP Solutions from the same “tier”.

#2. Implementation methodologies vary greatly

Is the ERP implementation partner offering a fixed price or a “do and charge” implementation? These two different approaches will yield quite different investment requirements. A waterfall approach assumes a fixed scope / fixed price implementation. An agile methodology is a “fits like a glove” build and consult on an “open budget” basis. Two very different approaches that will yield two very different budgets and ERP investment proposals.

#3 Assumptions are being made

When providing a proposal for the implementation of ERP solutions, your implementation partner has to make certain assumptions which will affect the ERP investment proposal.

Some examples of such assumptions include:

Availability of internal IT resources;
Current data formats and the “state” of current data from legacy systems;
Internal (company) project management resource;
Technical experience of team members;
Functional requirements (even after a scope of works there can be some areas that are not 100% clear).

How do the assumptions that your implementation partner makes affect your ERP investment proposal? Let’s use data conversion as an example. Data will need to be exported from legacy systems into your new ERP solution. In theory, this is straightforward:

Extract data from legacy solutions;
Put the data into Excel or Excel type templates for “checking”;
Use technical data upload routines within the ERP application to upload data and run data integrity checks;
Reconcile the data for accuracy.

Sounds easy and it can be. But, data transfers can also be complicated and affect the pricing of your ERP project. Factors which can have an effect on the consultancy time needed to upload data from legacy systems include:

Number of data sources;
Availability of internal technical expertise;
Status of legacy data (how “clean” is the data);
Are internal resources available for data checking and reconciliation?
How well has data been maintained?
How well do staff members understand the data?
Data volumes;
Data transfer requirements – for legal reasons (for example warranty or traceability requirements).

The answers to each of these questions will have a substantial impact on ERP implementation pricing. If one provider of ERP makes the wrong assumptions, they might provide a very different proposal to someone that has done their homework correctly and understands exactly what is required to convert your data.

A good ERP provider takes into account all of these factors to ensure an accurate investment proposal.

#4. Has the scope of works been correctly reviewed?

Providing an accurate implementation proposal for ERP requires an accurate assessment of scope. Two different providers might have different views on the scope of the project and can provide two very different proposals for implementation.

Conclusion

Many companies have a hard time interpreting the variance in pricing from different ERP proposals. Your ERP investment proposal can vary due to factors such as the solution being scoped, the assumptions of your implementation partners, the methodology being adopted and more.

Correctly implemented ERP solutions provide improved cash flow, increased customer satisfaction and happier team members. Evaluate potential providers and their proposals carefully to ensure that you make the right decision for your business and also make sure that your providers understand your requirements and lay the right assumptions for scoping your project.

At Leverage Technologies, we help Australian businesses find and implement the right ERP solution to grow smart. For more information or to speak to a consultant call 1300 045 046 or email [email protected].

Accurate inventory is not a myth: Enabling accurate inventory forecasting through ERP

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In today’s post, we are going to explore how Enterprise Resource Planning (ERP) empowers wholesale distribution and manufacturing businesses with advanced inventory forecasting functionalities to resolve internal conflicts between warehouse, sales and finance.

The debate between your Sales, Finance and Inventory/Logistics Managers may sound something like this:

Logistics Manager; “If sales forecast more accurately and sell to a plan we will be able to hold the right inventory levels…”

Sales Manager; “If purchasing and the warehouse team held the correct stock levels and kept us informed we would be able to sell more…”

Finance Manager; “We need more accurate stock holdings and we must reduce inventory levels to reduce the burden these stock levels place on cash flow…”

These are the three “most seen” competing points of view from most small to medium-sized businesses in the wholesale/distribution and manufacturing sector. The good news is, accurate inventory forecasting is not a myth!

So, how can an ERP solution help you manage these conflicting points of view and forecast inventory demand at any given point in time?

Accurate inventory forecasting is not a myth

ERP solutions give you the functionality to provide faster, better access to information for better decision making. This is particularly true with regards to inventory management for wholesale distribution and manufacturing.

Here is how an ERP solution can help resolve your internal conflict and give you accurate inventory forecasting functionalities.

Planning

The essence of an ERP solution goes well beyond invoicing, customers, financials and suppliers. Planning is at the heart of a good distribution and manufacturing ERP solution.

Planning tools for purchasing and production planning will help balance the supply and demand equation to consider thousands of transactions and recommend a plan. Think of the elements of any plan for a wholesale distribution or manufacturing business:

Lead times;
Economic order quantities;
Container and shipping management;
managing multiple suppliers;
forecasts and min/max stock levels.

It is impossible to manage all of these “moving parts” without the automation that an ERP solution provides.

A good planning solution will map out all relevant components to recommend purchase orders for raw materials and works orders for production planning. A good planning solution balances thousands of transactions to make the right recommendations.

Information

Decision making requires information; timely, relevant information. A good ERP solution provides relevant information such as lead times, current stock levels, historical sales, supplier on-time/in full reporting and expected delivery dates with detailed available to promise.

When your various business departments get access to all the information in real-time from your supply chain, your staff is empowered with the accurate data they need to make informed decisions.

Analytics

As mentioned, data empowers our staff with accurate information to make informed decisions. In today’s world, we have access to “big data” from multiple sources.

Let’s put this data to good use through analytics to help us with decision making. Decision making is about timely, accurate information. A well-implemented ERP analytics toolset will give you the information that you need when you need it to help you with the planning and forecasting.

Forecasting

Tough to get right in any business. Not to worry, ERP gives you access to automated forecasting tools and relevant data for forecasting historical sales, market trends and product updates.

Mobility

We live in a mobile world. All of the functionality that we require from our ERP solution should be available from a mobility device. Once again, the emphasis is on timely, accurate information.

Decision making can’t wait, and neither should you!

Access to information where and when you need it means that mobility remains important.

Conclusion

The debate between sales, warehouse management and finance can be solved by implementing an ERP solution to empower your business with advanced inventory forecasting functionalities.

Implement an ERP solution to provide your business with the information, analytics and planning tools to close the gap between planning, scheduling, sales, inventory management and finance.

At Leverage Technologies, we have been helping Australian businesses choose and implement the right ERP software to grow smart. For more information feel free to call us on 1300 045 046 or email [email protected].

5 ERP Replacement Signals Every Growing Business Should Look Out For

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ERP software has the ability to streamline your operations and increase productivity, no matter what the size of your organisation.

However, as your business grows, your ERP system may struggle to keep up with the increasing complexity. When this is the case, it is important to identify the ERP replacement signals as it may be time to upgrade your system or even start shopping for a completely new solution.

Here is our list of the top 5 ERP replacement signals that growing businesses should look out for

#1 You Have to Use Another Program

Enterprise Resource Planning software should provide you with the ability to keep everything within the same database. This includes everything from finances to human resources. One of the main benefits of ERP is that you have a single program as opposed to using multiple programs in order to get the job done.

If you find that you suddenly have to invest in another program because your ERP software is incapable of providing you with the desired level of functionality, it may be time to replace your existing software.

#2 The System is Slowing Down

In some instances, a system will slow down after you have entered so much data. Not all solutions are capable of dealing with big data. As a result, you will find that even the simplest tasks take longer to perform. When this happens, you may not be able to increase the speed, which means that you might not have chosen a scalable ERP solution. If this is the case, upgrading or changing solution might be the the best option to keep up with growth.

#3 It isn’t Cloud-Based

There are a number of cloud benefits. If your ERP software is housed on your server, you are limiting yourself tremendously. You won’t have access to any of the data or reports when you are on the go. If you require a financial report while you are on business travel, someone will need to run the report and email it to you. Not having data available in real-time can make it more difficult to make important decisions regarding operations.

Cloud-based solutions offer you more flexibility in the workplace.

#4 New Features are Not Present

There are a lot of companies that have grown dependent on their ERP systems. When you invest in ERP systems, you need to look at the various features that are present. It’s possible to manage your finances, HR, procurement, supply chain, and more within your system. However, if you are lacking the latest features and there is no availability to choose add-ons, you may be limiting yourself. This means that you may not be able to enjoy the level of profitability and productivity that other businesses have.

Taking the time to explore new ERP systems may be what’s needed to improve your operations and expand your technology.

#5 Integration is Poor

Consider the various processes that you use in order to keep your business up and running. Various departments should be able to integrate into your ERP system. This will involve integrating the system into your operations, allowing you to streamline everything.

It’s important to explore your ERP requirements to ensure that you choose a software solution that can improve workflow while also helping to a line of the different departments that you have. You can receive real-time information through reports, lower operational costs, as well as enhanced collaboration. However, if your integration is currently lacking, it may be time to upgrade your system to one that can provide a more consistent infrastructure as well as high user-adoption rates.

ERP is only as helpful as the system’s features allow it to be. You want to do everything you can in order to improve efficiency while reducing risk. If you pay attention to the replacement signals, you will know when it’s time to upgrade your system so that you can enjoy a greater level of functionality and begin lowering both management and operational costs.

Conclusion

As growth put additional pressure on your internal systems, your business needs to look out for the five key ERP replacement signals.

Things like islands of information, system speed and lack of functionality can translate in poor performance for your business. When the time comes, you might be presented with the options of upgrading your current system or replacing it with a new ERP software.

At Leverage Technologies, we have helped hundreds of businesses implement the right Enterprise Resource Planning to grow smart. For more information or to speak to a consultant call us on 1300 045 046 or email [email protected] today.

Is Sage X3 The Ideal Discrete Manufacturing ERP?

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Discrete manufacturing encompasses a wide variety of businesses, from the highly technical—such as medical devices, robotics, aeroplanes, computers, smartphones and cars—through to essential everyday items like toys, appliances, furniture, windows and fencing.

While the products vary, one factor remains constant: the need to ensure your processes are efficient and you’re producing high-quality, in-demand goods.

Discrete manufacturers are realising they need to harness technology to improve their whole-of-business operations and gain a competitive edge, which often means implementing a modern Enterprise Resource Planning (ERP) solution.

What do discrete manufacturers need from an ERP solution?

Discrete manufacturing businesses looking for ERP software must prioritise solutions that simplify and automate inventory management and production scheduling.

If you have to wait for a part that’s being shipped in from overseas, or experience a backlog at one step of your process, it can halt the entire assembly line. Too much stock on hand hampers your cash flow, and too little makes life hard for your sales team.

Production is often complex; with detailed BOMs (bill of materials), and different stages of assembly requiring attention to ensure quality in the end product. Not to mention engineering changes, configure-to-order requirements, or versioning to meet the demand for different features or price points.

To reduce costs and meet changing market needs, the best software solution is one that can be customised for your precise production tasks and also delivers clarity on your broader business performance.

Why is Sage X3 an ideal ERP for discrete manufacturing?

If you make products comprising multiple parts to exact specifications, Sage X3 is the ideal ERP.

Sage’s ERP is designed to give manufacturers complete and real-time data to make running a more precise and cost-effective operation possible. For discrete manufacturers, it offers a nuanced ability to:

Plan ahead for ordering raw materials and capacity.
Understand sales demand and manage inventory accordingly.
Schedule and track work and oversee shop floor activities.

The software includes forecasting, which feeds into tailored recommendations that help you optimise inventory levels. Create custom dashboards, monitor work orders, be notified when to buy materials, review data and take action as needed.

Sage adjusts its suggestions based on real-time changes in sales and order information, so you can make proactive decisions that save your business time and money.

Because Sage ERP automates many tasks within an integrated system, it gives you access to better data, fewer islands of information, and a more well-oiled operation.

Innovate with an ERP made to increase your sales

Traditionally making individual products has been harder to scale due to a reliance on components, sequential steps and quality requirements. However, Sage excels in helping discrete manufacturers analyse product line profitability and develop new products.

It’s simple to review and release the same product in different versions or create multiple kinds of the same product. You can quickly and cost-effectively plan for product diversification within the ERP, comparing the cost of variations in parts, change in a production location, or by the batch size.

Sage makes it possible to automate change management workflows to have new product versions approved, and then introduce new products or version information so that it’s available across your business—at the point of sale, BOM, and routing levels.

An effective ERP is now essential for discrete manufacturing

Your business clients and end consumers expect innovation, speed and personalised service. It’s ineffective to rely on outdated legacy systems or paper-based plans.

Systems that don’t give you end-to-end oversight of your manufacturing process are too slow and inexact, leaving your business more vulnerable to mistakes, recalls, and cost blowouts.

On the other hand, with Sage X3 as your ERP solution you can forecast, anticipate and respond to changes in operational and production needs, so you can meet and exceed your consumers’ needs.

For more information on Sage X3 as an ERP for your discrete manufacturing business call us on 1300 045 046 or email [email protected].

ERP for the Food and Beverage Industry: A Recipe for Success

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Looking for a Food ERP Software? In this article, we are going to explore some key aspects to consider when selecting an ERP Software for the food industry.

The Australian food and beverage industry is highly regulated…..HACCP, traceability, quality control – these are just some of the key aspects that organisations operating in this industry have to consider when selecting an ERP system. And the list goes on!

With strict regulation and compliance requirements, it’s important to understand what the challenges in the food and beverage industry are before proceeding any further.

Australian food and beverage industry overview and key challenges

The food industry in Australia is going from strength to strength – with a growing population and an abundance of great locally produced food products the Australian food industry is well equipped for further growth. The industry appears to be split into three core sectors across food processing and food distribution;

Smaller businesses offering food distribution to cafes and restaurants;
Mid-size food processing companies
Larger food processing multinationals.

When considering a new ERP software for the food industry there are multiple complexities – for small and large players. Challenges like traceability of raw materials and finished goods, random weight, weighing scale integration, run/delivery management and sequence-dependent changeover can offer some challenges for ERP providers.

The key for the smaller players in the food processing or food distribution market is to be able to find an ERP provider that offers the required level of functionality and expertise without the associated price tag. The intention of this article is not to recommend any specific ERP application – but more to give general advice on ERP product selection for organizations operating in the food industry.

How to choose the best ERP software solutions for the food and beverage industry

In this short video, we explain the 5 key functionalities that you should be looking for in a modern food ERP software solution for your business.

Things to consider when selecting an ERP software for the food industry

Key takeaways

Functional / requirements – as always when selecting an ERP solution it makes sense to list your functional requirements in each area of the business. This includes functional requirements for finance, sales, purchasing, inventory, manufacturing and all other business processes. In the food industry, your requirements for finance will usually be reasonably standard. As a result, a lot of focus is usually placed on the operational side of the business. Most specifically a lot of focus should be placed on the food industry-specific ERP requirements – expiry dates, random weight, traceability, HACCP etc.

Budget – there are some great ERP products suitable for the food industry available in Australia. These products are offered at very different price points. There is no point investigating a great ERP product for the food industry with lots of reference sites only to find that the implementation would require a budget of three times your intended spend on ERP. Unfortunately, we all need to be realistic and the budget has to play a role.

Generally speaking, ERP products can be divided into three broad categories – tier 1, tier 2 and tier 3.

Tier 1 normally indicates the more advanced, high-end ERP solutions used by multinationals and bigger companies with larger budgets.
Tier 2 is the mid-range sector where many Australian food sector SMEs are looking for ERP products. The ERP players in this sector offer a complete ERP application aimed at medium-sized businesses.
Tier 3 is typically the smaller end of the market – less complexity, lower implementation investment and quicker implementation timeframes.

The challenge with ERP for the food industry is that very often ERP solutions should not be selected purely based on the size of an organization but rather on the complexity of the business requirements. Put another way – what are the business needs? As we have already mentioned the food industry puts forward some relatively complex requirements. The challenge is that a small food processing business can have relatively complex ERP requirements. This will require a higher budget to implement. Even if the ERP software is given away for free experience tells us that more complex requirements by their nature take longer to implement and therefore require greater investment.

Methodology – whatever industry you are in when you implement an ERP solution you need to follow a methodology. The chosen methodology will offer structure and process to the implementation. The methodology should be selected based on the companies’ specific requirements, complexity, budget and size of business. There is no right or wrong answer for ERP implementation methodology. One size does not fit all when it comes to ERP implementation. Agile, waterfall and other ERP implementation methodologies should be selected carefully based on their merits and matched to your companies’ specific business requirements. Remember that ERP is about business – not software. The software is purely an enabler to doing better, smarter, more efficient business.

Timing – implementation timeframes for ERP can range from a couple of months to several years depending on complexity, resource requirements and other factors. Make sure that you set realistic go-live targets which allow for sufficient testing of requirements.

Let’s discuss some of the ERP for food industry requirements in more detail:

HACCP – a food management safety programme. Designed to control food safety through food safety and risk assessment plan. A well-implemented ERP solution can assist with HACCP requirements. Most specifically as these requirements relate to:

Traceability – a good ERP solution will allow batch/lot traceability. This will allow a food processing or distribution company to not only track and trace finished goods but also all components used in processing. This will allow full traceability if there are any product-related issues like contamination.
Monitoring – a principle of HACCP is the monitoring of critical control points. With traceability and manufacturing routing through ERP these critical control points can be monitored.
Procedures – monitoring of procedures and process flows is important in the food industry. An ERP solution can assist with document management and retrieval, automated quality assurance procedures (sample testing of raw materials and finished goods) and the automation of procedures. For example, an ERP solution can force a user to do a QA sample test prior to receiving raw materials into a warehouse.
Data – HACCP requires that food companies have access to data and good record keeping. An ERP solution with good reporting tools makes access to data easy. Even large volumes of data can be kept for several years and accessed at the push of a button.

Weighing scale integration – A common requirement for the food industry is weighing scale integration to the core ERP solution. This weighing scale integration can be relatively simple – providing scales for weighing cartons or boxes in the factory to check the actual weight vs expected weight of a carton of food or raw materials. More advanced ERP implementations might have integrated weighing scale functionality to automate the weighing process as a double-check that the right goods are being shipped.

Proof of delivery – when foods are delivered to a café, restaurant or hotel why not implement an automated and electronic proof of delivery solution on a handheld device – true mobility.

Run management – large and small food distribution and processing companies share a common goal – get your product to your customers on time and in full. Delivery run management involves the scheduling of trucks to make sure that we follow the most economic delivery schedule and that we pack the trucks according. As an example, the items for the first delivery are packed at the back of the truck.

Random weight – one of the more complex areas for ERP solutions in the food processing industry. Random weights indicate that you sell an item (for example rump steak) as a carton (sold by the carton) but you also have a variable weight in each carton. In this instance, the sell item of 1 carton might weigh approximately 10KG’s. The challenge for an ERP software solution is that the weights are very seldom exact. There can be weight loss on the meat and as such a 10KG carton could end up with a net, shipped weight which is variable. There are different ways to handle random or catchweight and your ERP provider will need to be across these solutions.

Reverse bill of materials – most ERP solutions want to treat manufacturing as the building of an item from various raw materials. As an example a bicycle is built from two wheels, a frame, a seat and more. These parts are assembled using the bill of materials. What makes food processing different is that you need a reverse bill of materials. In food processing, you start with one item (a whole cow) and then you cut the item into various finished goods – fillet steak, rump steak, etc. The complexity for ERP is the concept of one item of raw material becoming multiple finished goods.

EDI – if you are selling to the major food retailers in Australia your business will need to be EDI compliant.

We have talked about some of the complexities facing the food industry when implementing ERP – let’s not forget that when we implement a good ERP solution we get a whole lot more than a general ledger and invoicing. A well-implemented and functional ERP solution will open up all sorts of opportunities for improvement:

Instant access to analytics enabling the business to make informed decisions;
mobility for sales teams and delivery drivers (including proof of delivery);
run management to ensure the most efficient delivery to your customers;
on time in full reporting for your customers and suppliers;
better inventory control and
optimized purchase and production planning.

Food ERP Software Demo

Check how a true ERP software that is built for the food and beverage industry looks like in this short software demo of Sage Enterprise Management tailored to the food industry.

Conclusion

It is no secret that the food industry in Australia is going from strength to strength. Although highly regulated there is still room for Australian organisations to innovate on processes and operations to drive efficiencies at multiple levels.

This guide to selecting the right ERP software for the food industry aims to provide a better overview of the key challenges that this type of solution can help you overcome and how.

Do you operate in the food and beverage industry in Australia? Leave a comment below to let us know what challenges you are facing and what key benefits you would be looking for in an Enterprise Resource Planning system.