Food manufacturing software for small businesses

May 2, 2013 at 5:27 PMIan Benoliel

Food manufacturing software for small businesses does not have to be expensive or complicated with the All Orders Inventory and Order Management system.

1.    Create Bill of Materials for your Recipes

In process industries, such as food manufacturing, the BOM is known as the formula, recipe, or ingredients lists. It is simply a list of the ingredients and the quantities of each needed to manufacture the final product. It may be used for communication between manufacturing partners or confined to a single manufacturing plant. Using BOMs ensures recipes are adhered to during production. In addition to the ingredients and yields, the BOM has production instructions and routing steps, including one that can be called quality control. You wouldn’t believe how many small companies keep their formulas and production notes on paper in a file cabinet (or in the owner’s head). Paper or even basic Excel spreadsheet systems don’t allow companies to easily update and instantly communicate changes throughout the entire organization.

In business the only constant is change.    So you should regularly review you bill of materials to ensure you have the correct ingredients and proportions.

2.    Use Work Orders for Production and Quality Control

Paper work orders do not allow production data to be shared throughout a central database. Quality processes cannot be effectively documented and saved to create standard operating procedures critical to consistent food production. The ability to save and attach the batch and lot number being manufactured ensures quality processes. .

The electronic work order is used to create finished product. Each step in the work order is completed before the work order can be finalized. Too often lower-cost technology solutions lack the needed custom fields required per work order that allow the quality control checklist to be integrated with all other functions, and retained in the same database as order and inventory information.

Without the work order, the impact on quality will be significant, because the internal quality metrics cannot be documented. The work order is the internal document that manages production of a specific BOM for a specified quantity. The work order can track yields of raw materials and reworks.

3.    Track Lot or Batch #s

Lot numbers enable the manufacturer to trace a product back through the production process to the source of the raw materials used in the finished product. In our example of tomato sauce, the lot number on the cases allow the manufacturer to determine which tomatoes where used and from which supplier. So in the case where a certain batch of tomatoes may have been contaminated, the manufacturer can recall only the lot numbers affected instead of a total recall.

For food and beverage manufacturers, electronic traceability will become an industry requirement. On July 31, 2009, the House passed the Food Safety Enhancement Act, which has been touted as the most far reaching reform to food safety legislation in 50 years. The legislation outlines the requirements for all companies who produce, manufacture, process, pack, transport, or hold food to maintain full pedigree of product information and electronic traceability records. On Oct. 5, 2009, 55 food-service manufacturers, distributors, and operators launched the Foodservice GS1 Standards Initiative outlining the adoption of a common timeline for implementation of GS1 global standards for company identification, item identification, and product description.

4.    Put Labels on Finished Goods

This seems obvious but many manufacturers don't bother to put the appropriate label on finished goods. A label should at a minimum have the SKU, description, quantity and date. Other useful information would be the lot/batch number, work order # and best before date or expiration date. It would be extremely beneficial to you and your customers if your labels have bar codes. This would allow both you and your customers to use scanner to ship and receive product.

5.    QuickBooks Integration

With one of the first ever Quickbooks integrations being built by NumberCruncher in 2001, saying that the solution was designed for Quickbooks would be an understatement. With a powerful bi-directional synchronization, updates to entities, such as items and customers, that occur in one system will always roll into the other. No need to enter anything twice! Whenever Quickbooks needs to get notified of items going into inventory, such as receiving, or out of inventory, such as shipping, All Orders will make sure Quickbooks knows about it. Bookkeepers handling AR/AP in Quickbooks cannot even tell the difference between documents generated by actual users or All Orders! It is also as flexible as it is powerful. Choose what you want to sync and when you want it to happen. Trigger syncs manually, automate them to happen at specific intervals, or update data in real time. Users that only need All Orders for inventory and order management can even have Quickbooks uninstalled allowing a reduction in Quickbooks licenses (translation: more money in your pocket!) and fewer security concerns with your sensitive financial data being accessed by the wrong people.

 

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Forecasting Inventory Needs

February 1, 2013 at 12:31 PMIan Benoliel

If you are a manufacturer, wholesaler, or retailer and have repetitive orders of the same products, you have undoubtedly asked yourself at what stock level you need to replenish your inventory. The goal is to reduce inventory levels while being able to fill most of the orders that come through the door. Here’s how.

Lead Time

When you place a purchase order with a supplier, it will take some time for the inventory to reach your door. This is called lead time. A local supplier’s lead time may be one to four days, while an overseas supplier’s may be four weeks. Therefore, you should have at least enough inventory to last during the lead time.

Many things can happen during the lead time period. The supplier may delay in delivering your order, for example, or you may get an unexpected bounce in sales. So in addition to having enough stock during the typical lead time, you should also keep a bit extra, known as safety stock.  The reorder point, therefore, is calculated as follows:

Reorder point = lead time demand + safety stock

Lead time demand is what you expect to sell during the lead time period and is calculated as follows:

Lead time demand = lead time (usually in days) x forecasted daily unit sales.

If the lead time is 14 days and the forecast is three units per day, for example, the lead time demand is 42 units.

Reorder Point

To calculate the reorder point, you need to know forecasted daily unit sales. Some businesses know this exact number because they already have standing orders from their customers. Other businesses, such as retail, look at past sales to determine this number. When looking at past sales, consider seasonal fluctuations. For example, if you sell snow boots, you would not look at January sales when forecasting for July; you would base the forecast on the previous year’s July sales.

The final piece of the reorder point calculation is safety stock, which is that bit extra just in case. The calculations for safety stock can be simple or extremely complicated, depending on whom you ask. Many people opt for the simple solution:

Safety stock = lead time demand x 50%

This simply states that your safety stock is half of the lead time demand. So if the lead time demand is 42, safety stock is 21. So now you can calculate the reorder point, which is 63 (42 + 21).

Reorder Amount

There are a number of calculations for determining what the report point might be.   One is using the Economic Order Quantity (EOQ) which I describe below.    Another approach uses the Min/Max.      When the inventory stock level reaches a certain minimun quantity the minimum (min), the order quantity should bring the quantity to the maximum allowable.    The 'min' is the Reorder Point calculated above.  The Max could be a percentage of the reorder point.   Assume in the Min=63 and Max is 80 and there are 40 unit in stock, the order amount will be 40 as follows:

If Stock is less than 63,  Reorder amount = Max - In Stock

EOQ is designed to minimize inventory carrying costs. Inventory carrying includes interest, taxes, insurance, and temporary storage (not rent, which you must pay regardless of inventory level).

Reorder Amount ==( 2 x AU x OC ) / (ACC)

AU = annual usage in units
OC = order cost
ACC= annual carrying cost per unit

This formula looks more complicated than it is. The annual usage is an easy number. This is how much you sold or used in production in a year. The order cost represents the cost of processing a purchase order from quote to payment. For a small business, you can use $15; for larger businesses, use $30. For the annual carrying cost per unit, use the cost of the product multiplied by 10 percent.

Continuing from the previous example, let’s see the following values.

AU = 1000
OC = 15
ACC= $2 ($20 cost of product x 10%)

Reorder Amount =( 2 x 1000 x 15 ) / (2) = 123 units

So when the stock level reaches 63 units, you place a purchase order for 123 units.

The good news is that inventory software will do most of the calculations for you.  Morever, software like All Orders by NumberCruncher will calculate the reorder points and lead times and also generate purchase orders for multiple vendors with one click of the button.

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Taking a physical inventory count

November 22, 2012 at 11:47 AMIan Benoliel

Taking at least one physical inventory count throughout your fiscal year is critical part of your internal control procedures.  An inventory count can

  • Confirm the quantity of inventory for financial statement purposes.
  • Identify sources of shrinkage and theft.
  • Confirm 'back flush' rates for your bills of materials.

Generally at least one full count is conducted at the end of each fiscal year.  Many companies do 'cycle counts' whereby certain areas or products are counted on a rotating basis.   Doing cycle counts eliminates the need to do a complete inventory count at the end of the year.

The following is a general guideline for conducting a physical inventory count.

1.    What areas are you counting?

Many businesses have multiple warehouses and indeed multiple areas within the same warehouse.  Generally it is recommended that you count contiguous areas together so the count can proceed in an organized fashion.   Many companies have a 'map' of their warehouses. Using a map to identify which areas need to be counted is a great tool to visualize the count.  Consideration should also be given to segregate damaged products within their own area.     

Special consideration should be given to the following areas:

  • Pending shipments to customers that have been packed but not shipped are technically part of your inventory and should be counted.
  • Receipts from suppliers received from suppliers should be counted.
  • Stock that has been allocated be production should be counted.

A good idea is to tag or otherwise mark an area after it has been counted.   

2.   Establish a count date

If you are counting to verify quantities for financial statement purposes your count date should be as close to your year-end date as possible.    Counting is time consuming so doing a count on a busy day is not advisable.   Pick a day and time of relative calm. 

Your count date will also be the 'cut-off date'.   The cut-off date is used determine the quantities shown on the physical count worksheet. Meaning that all transactions on or before the cut-off date should be reflected in the count and transactions occurring after the cut are excluded.

3.    Who will be counting?

Usually company staff will be doing the counting although there are numerous firms that can be contracted to conduct your count.     Schedule your staff appropriately and allocate them sufficient time to complete their work.  Staff should be assigned to certain areas of the warehouse.    Counters should be paired up; one person will do the count and the other record the results.    The count would go faster and there would be less likely to fudge the number.   A supervisor should also be assigned.   The supervisor should spot check counts conducted by every staff member.    If the spot checks show persistent discrepancies certain areas may need to be re-counted.

4.    Physical inventory count worksheet

The physical count sheet is provided to counter.   Such count sheet should include the item or sku, description, area or bin, lot / serial # if applicable and a blank spot for quantity counted.     Management should know the 'quantity per books' which will be compared to actual count.  It is not recommended that the 'quantity per books' be shown to counters to discourage them just writing in the number.   The count sheet should also include extra lines so the counter can write in parts in their areas that are not on the count sheet.    After each count transpose the quantity counted onto the count sheet.  

5.   Investigate discrepancies

After all the count sheets have been tallied it's time to compare 'quantity per books' with the actual count.    Invariably there will be differences between book and actual.      Here are some things to investigate:

  • Shipments that are packed but not yet shipped. These should be included in the count.
  • Receipts from suppliers BEFORE the cut-off date that have not been put away. These should be included in the count.
  • Receipts from suppliers AFTER the cut-of date.  These should not be included in the count.
  • Inventory on the shop floor that may have not yet been consumed in production.  These should be counted.

Some more serious reasons for discrepancies include:

  • Theft
  • Shipments going out without invoices.
  • Receipts from suppliers which understates accounts payable.

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Sales Orders why are they important?

October 24, 2012 at 6:34 PMIan Benoliel

Sales orders are fundamental to any inventory and order management system. When a customer sends you a purchase order or clicks buy on your web site your company becomes obligated to fullfill the order. Therefore a sales order should be entered into your system as soon as possible.  

I have seen some companies that instead of entering a customer PO as a sales order, they enter it as an invoice even though they have not yet shipped the product.    This is not advisable for a number of reasons:

1. A sale is not yet made: Generally accepted accounting principles require that you ship the product before you record a sale.   Since you have created an invoice you have incorrectly recognized revenue in your accounting records.

2. You may not have the inventory to ship:  You may have generated the invoice but you make actually be in backorder.  This is especially possible if your system allows you to go into negative inventory (like QuickBooks does).  Now you have an invoice and the only way for you do determine what is in back order and what needs to be ordered from your suppliers is to painstakingly go through each product that shows negative inventory.  Ouch!

So the correct procedure would be to enter a sales order and a minimum the following data should be captured:

  • -Customer's legal name
  • -Billing to address
  • -Shipping Address
  • -Order date
  • -Expected shipping date
  • -Customer PO #
  • -Terms of payment
  • -Each product that was ordered (SKU and Description)
  • -Quantity ordered of each product
  • -Price per for each product
  • -Shipping method

Once a sales order is in the system you can use to answer a variety of questions like:

  • -When do I need to ship products?
  • -Which products do I need to order from my suppliers and how much do I need to order?
  • -Which sales orders do I ship first?

If you are not using an inventory and order management system things are probably slipping through the cracks. Here are some points to consider:

  • -Paper gets lost or destroyed.
  • -Excel needs to be manually updated.
  • -Without a system it's hard to share data within your organization.
  • -You have limited visibility as to open orders, backorders, available inventory and such.

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O Canada - QuickBooks Inventory Software for Canadian Companies

October 15, 2012 at 12:11 PMIan Benoliel

Canadian companies, who are more export oriented than their U.S. brethren, have specific needs when it comes down to inventory and order management. NumberCruncher addresses those needs in its flagship product All Orders. How you may ask does a U.S. based company have so much knowledge of Canada. Well that is because its founder and president, Ian Benoliel, is from Canada. Born in Montreal, Ian grew up working in his father's manufacturing business. Ian's familiy moved to Toronto there he started his career as a Charted Accountant. Although he now lives in South Florida, his mother, brothers and sister live in Canada.

So when selecting an inventory software that is integrated with QuickBooks Canada, make sure you select one that have those features required by Canadian companies like those contained in All Orders by NumberCruncher.

Support for GST, HST and PST

U.S. and Canadian sales tax a coniderably different. U.S. taxes are generally exigible on the sales of goods whereas Canadian sales tax is exigible on both goods and services. The tax authority in the U.S. is on the state, county and city level and in Canada the tax authority on the federal and provincial levels. Finally, and most importantly, the U.S. system is not a value added tax therefore for taxes are whereas in Canada, companies received an input tax credit for taxes paid to suppliers and other vendors.

Foreign Currencies

Its rare that U.S. companies have anything but U.S. dollar bank accounts. In fact you would be hard pressed to find a bank that can offer a Canadian currency bank account. (By the way you may want to try Harris Bank which is a subsidiary of the Bank of Montreal). Conversely I would be hard pressed to find a Canadian manufacturer, wholesaler or distributor that does not have both Candian and U.S. dollar bank accounts. Canadian companies need foreign currency because they export to the U.S., Canada largest trading partner and when importing from Asia.

Multiple locations

Many Canadian, particularly manufacturers, have many customers in the U.S. as such they may have third party logistics holding inventory so lead times can be minimized.

Other features

All Orders by NumberCruncher contains an array of features designed for manufacturers, wholesalers and distributors using QuickBooks like bills of materials, work orders, vendor management, reorder point forecasting, sales orders and shipping automation, lot and serial number tracking and barcode printing and scanning.

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QuickBooks Manufacturing Software - How All Orders can improve your manufacturing process

August 22, 2012 at 5:56 PMIan Benoliel

1.    Do not allow negative inventory

Many small businesses allow their inventory to go negative. SMBs are frequently short on staff so they bypass the receiving or build process and ship or use stock. After the fact they try to correct quantities but by then it’s hard to trace back to the correct on hand quantities so their inventory become a mess. QuickBooks allows you to go into negative inventory. You will get a warning but that's it. All Orders on the other hand has a preference to disable negative inventory. This small preference will force staff to complete the receiving or build process beforehand. Some may argue that this would delay the shipping process and take more time. However one could also argue that it takes MUCH more time to have to circle back to correct negative quantity instead of doing it right the first time.

2.   The bill of materials should be a management tool

QuickBooks is a great accounting program and that what the build assembly allows you to do, account for components and cost rollup. However your assemblies together with your bill of materials should also be a management tool.

The bill of materials should be able to store critical information about the production process. All Orders allows you to use routing steps, build instructions, component level instructions and associated documents like drawings.

The bill of materials can also be a valuable costing tool and therefore there should be a cost roll-up when the cost of your components change or even when the cost of the a components of a sub-assembly changes; QuickBooks assembly does neither.

3.    Allocate stock for a build

Normally when you start a build (i.e. work order) you would like to be able to be able to allocation available stock then do a purchase order for the rest.     In QuickBooks if you do not have sufficient stock the entire build assembly goes to 'Pending' mode which makes it extremely difficult to determine required stock and plan production.  

All Orders allows you to 'Allocate' stock to a work order thus preventing another user from mistakenly believing that the stock is available. In addition All Orders uses status to inform the user on the readiness of a particular work orders. A work order can easily be de-allocated if the stock is required elsewhere. The ability to allocate stock avoids the pending build issue so common in QuickBooks.

4.    Auto create work orders and build them in batches

Creating a build assembly can only be done one at a time and it could be extremely time consuming. All Orders has a couple of tools that make the job easier. Firstly you can use the "Reorder Analysis" to create work order based on different criteria like deficiency, required and reorder point. Secondly the work orders can be processed in batch from the work order list on which you can allocate, change status and finish work orders. In All Orders you can process 100 work orders at the same time!

5.   Use the work order for scheduling and quality control

The work order lists and reports have various programmed information that help you track their progress.  In addition, All Orders work orders contain up to 30 custom fields each which can augment the status tracking and/or provide data storage for your quality control procedures.

6.    Use labels with barcodes

This seems obvious but many manufacturers don't bother to put the appropriate label on finished goods. A label should at a minimum have the SKU, description, quantity and date. Other useful information would be the lot/batch number, work order # and best before date or expiration date. It would be extremely beneficial to you and your customers if your labels have bar codes. This would allow both you and your customers to use scanner to ship and receive product.

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Four things you should know about barcodes

July 4, 2012 at 9:38 AMIan Benoliel

Using barcodes increases efficiency and decreases mistakes

 

Using barcodes to receive, ship and count inventory will improve throughput in your warehouse operations and reduce the number of orders that are shipped or received incorrectly.  

Many companies want to use barcodes but don't know where to start. This article should get you started down the path of using barcodes in your business.

1.    What is a barcode?

A barcode is a series of symbols that can be read by an optical reader or scanner.   The sanner converts the barcode into human readable data.    The most common use of barcodes is for product packaging but is also used for shipping labels, manufacturing and time cards to name a few. 

2.    What is a UPC?

Many people believe that UPC and barcode is the same.   UPC stands for 'Unified Product Code' and it is a standard developed by retailers to make the check out process more effecient.  The first part of the standard is a 12 digit number that identifies both the manufacture and the product.  The second part of the standard is the type of barcode used.   Most large retailers require there be a UPC barcode on products they purchase.   UPCs are issued by GS1.

3.    What type of scanners should we use?

There are numerous barcodes scanners in the market.   "I like to narrow it down to two types", say Ian Benoliel, President of NumberCruncher.  "There are scanners that are input devices for computers similar to a keyboard then there are stand alone scanners which are themselves mobile computers".    The first type can be wired or wireless but generally need to be close to the computer like those sold by Wasp Barcode.    The second type are mobile computers.  For them you not only need the scanner but also a program like All Orders Mobile that tells the mobile computer what to do.     An example of this type of device is the UNITECH PA600.

4.    My vendor or customer part number is different than mine, what can I do?

That's where inventory control software like All Orders comes in.  With software you can cross reference your product code with that of your vendors' so that when you scan their part number what appears is your part number.    A cross reference can also be established between a UPC, customer part number and manufacturer part number.

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Lot Number Tracking

June 13, 2012 at 6:06 PMIan Benoliel

 

What is a lot number?

A lot number is an identification number assigned to a particular quantity, batch or lot of a product from a single manufacturer. Lot numbers can typically be found on the outside of packaging.

A product will typically have an identifier often referred to as an SKU (stock keeping unit). For example a case of tomato sauce may have an SKU of SCS-123. In addition to the SKU, the case will have a lot number which may be different on each case. For example cases purchased in December may have a different lot number than those purchase in January but the SKU will be the same. A lot number may also be a date code representing the expiration of the product.

Why should my business track lot numbers

Lot numbers enable the manufacturer to trace a product back through the production process to the source of the raw materials used in the finished product. In our example of tomato sauce, the lot number on the cases allow the manufacturer to determine which tomatoes where used and from which supplier. So in the case where a certain batch of tomatoes may have been contaminated, the manufacturer can recall only the lot numbers affected instead of a total recall.

For food and beverage manufacturers, electronic traceability will become an industry requirement. On July 31, 2009, the House passed the Food Safety Enhancement Act, which has been touted as the most far reaching reform to food safety legislation in 50 years. The legislation outlines the requirements for all companies who produce, manufacture, process, pack, transport, or hold food to maintain full pedigree of product information and electronic traceability records. On Oct. 5, 2009, 55 food-service manufacturers, distributors, and operators launched the Foodservice GS1 Standards Initiative outlining the adoption of a common timeline for implementation of GS1 global standards for company identification, item identification, and product description.

Electronic record keeping is a central element of the BioTerrorism Act and all food companies regardless of size must comply with regulatory chain of custody conditions. Among other things, in the event of a recall, it mandates that a company be able to provide a complete chain-of-custody of a tainted product within four hours or face fines and penalties. This rules out the use of paper records.

How can All Orders by NumberCruncher help track lot numbers?

Technology exists to ease the regulatory burden. These solutions include electronic records handling to help streamline the handling of bills of material and work orders, as well as technology such as barcodes and labels for lot traceability and expiration dates. But this technology has typically been out of reach for the small manufacturer. However All Orders by NumberCruncher provides sophisticated yet cost effective means to track lot numbers through the supply chain to the consumer and its integrated with QuickBooks.

Bill of material

A bill of material (BOM) is a list of the raw materials, sub-assemblies, intermediate assemblies, subcomponents, components, parts, and the quantities of each needed to manufacture the final product. It may be used for communication between manufacturing partners or confined to a single manufacturing plant.

A BOM can define products as they are designed (an engineering bill of materials), as they are ordered (a sales bill of materials), as they are built (a manufacturing bill of materials), or as they are maintained (a service bill of materials). The different types of BOMs depend on the business need and use for which they are intended.

An electronic BOM provides greater control over production costs. The ease in creating and editing an electronic BOM helps in maintaining product consistency and understanding product yield—the actual vs. expected product output.

In process industries, such as food manufacturing, the BOM is also known as the formula, recipe, or ingredients lists. Using BOMs ensures recipes are adhered to during production. In addition to the ingredients and yields, the BOM has production instructions and routing steps, including one that can be called quality control. You wouldn’t believe how many small companies keep their formulas and production notes on paper in a file cabinet (or in the owner’s head). Paper, or even basic Excel spreadsheet systems don’t allow companies to easily update and instantly communicate changes throughout the entire organization.

Small food manufacturers need vital inventory and order management features to effectively track inventory quantities, production, and customer orders. All Orders by NumberCruncher for has the necessary tools that QuickBooks Inventory for manufacturing and manufacturers does not have. From bill of materials for recipes to tracking expiration dates, these Small food manufacturers have the same compliance and operational requirements as larger companies. They need much, but not all, of the functional technology solutions [that are available to larger companies]. Too often this type of BOM functionality is found in costly software and hardware solutions.

Work Orders

Paper work orders do not allow production data to be shared throughout a central database. Quality processes cannot be effectively documented and saved to create standard operating procedures critical to consistent food production. The ability to save and attach the batch and lot number being manufactured ensures quality processes.

The electronic work order is used to create finished product. Each step in the work order is completed before the work order can be finalized. Too often lower-cost technology solutions lack the needed custom fields required per work order that allow the quality control checklist to be integrated with all other functions, and retained in the same database as order and inventory information.

Without the work order, the impact on quality will be significant, because the internal quality metrics cannot be documented. The work order is the internal document that manages production of a specific BOM for a specified quantity. The work order can track yields of raw materials and reworks.

Bar Codes

Just as they use clipboards to keep track of inventory levels, many small food manufacturers use a grease board, dry erase board, or a spiral notebook to track orders from suppliers, inventory, location transfers, customer orders, shipping information, work order picking, and inventory counts and adjustments. All of these can be done via mobile bar code scanning, but until now, many small food manufacturers have found this critical technology inaccessible because they were priced out of these solutions.

Using bar codes for ingredients ensures that the correct ingredients are picked and overall production efficiency increases. The level of efficiency and reduction of errors decreases by an average of 10 percent.

Lot numbers and Expiry

Expired or soon-to-be-expired raw material can be identified and made unavailable for use with many systems. The ability to track the lot and expiry for both finished goods and raw materials is essential, and lots must have customizable fields that can be used to characterize a specific lot (for consistency, acid level, and other metrics). Having this information on the lot level can vastly improve quality. For example, knowing the consistency specific lot may require production to add more or less water to the batch.

 

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Food Manufacturing - 5 steps to increase efficiency and improve quality

May 10, 2012 at 4:19 PMIan Benoliel

1.    Create SKUs for all the package sizes you sell

"Many small manufacturers get caught by this one." says Ian Benoliel, President of NumberCruncher. Instead of creating different units of measure as a way to define the package size you should create an entirely different SKU. Although you will have more SKUs, you will be able to track sales of a specific package size and more accurately reflect the cost of the packing. This the same thing the big boys do. In the super market you can purchase a can or case of Coke. You will notice that the singles and cases have different SKUs. This is because The Coca Cola Company uses a 'Packaging Bill of Materials' for the case. They combine 12 singles, case materials and labor to create an entirely new SKU.

2.    Use Lot or Batch numbers

A product will typically have an identifier often referred to as an SKU (stock keeping unit). For example a case of tomato sauce may have an SKU of SCS-123. In addition to the SKU, the case will have a lot number which may be different on each case. For example cases purchased in December may have a different lot number than those purchase in January but the SKU will be the same. A lot number may also be a date code representing the expiration of the product.

Lot numbers enable the manufacturer to trace a product back through the production process to the source of the raw materials used in the finished product. In our example of tomato sauce, the lot number on the cases allow the manufacturer to determine which tomatoes where used and from which supplier. So in the case where a certain batch of tomatoes may have been contaminated, the manufacturer can recall only the lot numbers affected instead of a total recall.

3.    Develop and Maintain a Bill of Material for all your Recipes

In process industries, such as food manufacturing, the BOM is known as the formula, recipe, or ingredients lists. It is simply a list of the ingredients and the quantities of each needed to manufacture the final product. It may be used for communication between manufacturing partners or confined to a single manufacturing plant. Using BOMs ensures recipes are adhered to during production. In addition to the ingredients and yields, the BOM has production instructions and routing steps, including one that can be called quality control. You wouldn’t believe how many small companies keep their formulas and production notes on paper in a file cabinet (or in the owner’s head). Paper or even basic Excel spreadsheet systems don’t allow companies to easily update and instantly communicate changes throughout the entire organization.

In business the only constant is change.    So you should regularly review you bill of materials to ensure you have the correct ingredients and proportions.

4.    Use Work Orders for Production and Quality Control

Paper work orders do not allow production data to be shared throughout a central database. Quality processes cannot be effectively documented and saved to create standard operating procedures critical to consistent food production. The ability to save and attach the batch and lot number being manufactured ensures quality processes. .

The electronic work order is used to create finished product. Each step in the work order is completed before the work order can be finalized. Too often lower-cost technology solutions lack the needed custom fields required per work order that allow the quality control checklist to be integrated with all other functions, and retained in the same database as order and inventory information.

Without the work order, the impact on quality will be significant, because the internal quality metrics cannot be documented. The work order is the internal document that manages production of a specific BOM for a specified quantity. The work order can track yields of raw materials and reworks.

5.    Put Labels on Finished Goods

This seems obvious but many manufacturers don't bother to put the appropriate label on finished goods. A label should at a minimum have the SKU, description, quantity and date. Other useful information would be the lot/batch number, work order # and best before date or expiration date. It would be extremely beneficial to you and your customers if your labels have bar codes. This would allow both you and your customers to use scanner to ship and receive product.

 

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