For eight months (and counting) the COVID-19 pandemic has forced companies in virtually every vertical, especially food & beverage, to make significant operational changes.
Aaron Olin, a senior consultant with Ultra Consultants, and an expert in building ERP solutions for food & beverage manufacturers and distributors, recently sat down for a quick Q&A. Here is what he had to say about the state of the industry and how companies are meeting the unfamiliar challenges of these unusual and difficult times:
Eight months into the “new now,” how is the food & beverage industry faring, how have companies adapted to a different business environment?
Aaron Olin (AO): “Adapted” depends on what the products they make, and on their customer group. We’ve got clients in various sectors, and we have clients that sell products into multiple sectors. Our clients that sell directly into grocery channels, for example, saw a business increase. But clients and divisions of clients focused on food service saw their business decrease.
People are shopping in the grocery stores more, and cooking at home more. So, if you’re a company with products going into the grocery channel, you’re doing better than if you are in food service. For consumer products, those companies saw an increase, too, because people are cooking at home and ordering food from Amazon, meal-kit companies, and other online merchants. One interesting change is that the bulk sections at groceries have closed with COVID. So, anyone selling product into those bulk operations has to find alternate outlets.
One more change we see in food & beverage – and in other industries, too – is a major move toward paperless operations. We help companies with business process improvement, software selection, and ERP implementation. And one of the big benefits of these initiatives is to move manufacturing operations from paper-based systems to digital systems.
Also, with COVID, paper-based systems were thought to be a virus transmission risk just simply with the paper changing hands, and many companies were concerned and looking for a digital solution. It looks now that surface contamination is not a likely means of transmission, but it is possible, and that risk can be eliminated by changing an operation from paper-based to paperless.
Many industries are still struggling with COVID-related disruption. What are you seeing in food & beverage?
AO: Disruptions to supply chains were a big issue right at the beginning of the pandemic. There were a lot of transportation shortages – essential services took available airfreight and ground transportation capacity. And there still are some problems, but not like in April and May.
I think right now the biggest issue for food & beverage companies is the need for a more agile forecasting and budgeting system. When something big and disruptive happens, your projections for the year need to change, and you need to re-forecast. If that is a lengthy process – say a five-week or six-week manual process – trying to re-budget in the middle of the year is extraordinarily difficult.
That’s something we’ve seen affecting our clients – their ability to quickly and accurately re-forecast, re-budget and re-do projections, and make the appropriate business decisions and changes that flow from it. Modern tools would make it easier and faster to do.
How have food & beverage organizations managed around COVID?
AO: It really depends on the company. Some have deeper visibility and ease of access to information from within their organization, and they can react and make decisions faster. I would say that the more mature the data access and reporting visibility, the easier it is to pivot and adjust based on new realities. This is not something that many companies considered in the past.
I think that this is unprecedented – where a major event like this has caused so many organizations to have to re-cast budgets and plans, sometimes multiple times, depending on the realities of lockdowns and regulations and local requirements. The ability to do that quickly is dependent on how mature their business processes are. The key is visibility and fast access to operational data from various levels within their organization.
What is making the difference between struggling and smooth sailing? What role are modern ERP and other technologies playing?
AO: The more advanced your ERP, the easier time you’re going to have in with the restrictions forced by the pandemic. What I mean by that is that a modern ERP offers the ability to have remote teams, and have people able to access your ERP system, without relying on antiquated data connections or different methods of communicating with servers.
Companies with a modern network architecture, a cloud-based system, and good, secure access from remote locations are doing better than those, for example, whose ERP is on-premises.
In many cases, if you host your ERP on-site, and you’re not set up to provide access to remote parties, setting up access is very problematic and very time-consuming – and could cause cost, risk, and other issues as you provide direct access to your main system to people using personal computers.
A modern ERP lets you provide secure access anytime and anywhere, so you’re not going to have those concerns. This is an extremely important and critical capability now – it allows your employees to manage the business and remain productive.
Editor’s note: This post is adapted from “Food & Beverage Q&A: COVID Challenges, What We See Now and How ERP Enables Agility” on the Ultra Consultants blog.