40% of food manufacturers still need to introduce supply chain efficiencies

40% of food manufacturers still need to introduce supply chain efficiencies

06 February 2019

  • artisan food and wms

 

Gluten free, dairy free, vegan. Craft beers, artisanal cakes and organic meats. We have become a nation of foodies and the food and drink industry is now the UK’s largest manufacturing sector, at 17% of the total. It is also relatively recession proof and contributing well over £28.2bn to the country’s economy annually.

 

How efficient and automated is your warehouse?

Along with our interest in eating delicious food comes a growing interest in knowing where that food has come from. Where were all the raw ingredients sourced? Is it really as ‘good’ as promised? What feeds were used during the farming stages? That’s an important question for manufacturers using meat and fish ingredients to answer – and customers want to know. Can every lot of finished goods produced be traced right back down to the sources of raw ingredients? Are they really allergen free? The UK’s ‘farm to fork’ food chain is estimated to be worth £110 billion and technology including warehouse management systems (WMS) play a central part in providing this awareness.

 

Food and drink is an SME industry

Interestingly, the vast majority of the 6,800 food manufacturing businesses in the UK are actually SMEs with under 250 employees. Many of these are artisan businesses producing food and drink with skill and care using quality ingredients in categories including: bakery & patisserie, beverages, charcuterie, condiments, confectionery, dairy, fish & seafood, fruit & vegetables, herbs & spices, ingredients, fresh meat, oils & vinegars, prepared foods. preserves, smoked foods, snacks, free from foods, vegetarian & vegan, and healthy lifestyle. They are often family owned businesses and have evolved over many years to a point where now, they are growing very rapidly, perhaps with the injection of additional investment from a funding partner or merger with a larger organisation.

 

Productivity is an important metric for the food manufacturing sector and something that smaller, artisanal producers are increasingly focused on.  Three quarters (76%) of businesses surveyed by the Food and Drink Federation as part of their annual study stated that they actively measure productivity (using a range of different metrics). Nine in ten (93%) of whom stated that they had seen improved productivity over the last three years.

 

Over 40% of food manufacturers still need to introduce supply chain efficiencies

Interestingly only 57% were looking to introduce supply chain efficiencies, which suggests many artisan food and drinks companies are still relying on paper processes in their warehouses. This mirrors our own experiences, as Indigo frequently encounters situations where an artisan food and drinks manufacturer is migrating from its traditional paper based systems and introducing a WMS software as their first level of automation.

 

Common problems we encounter among fast growing artisan companies include:

  • Relying on time consuming and unwieldy spreadsheets to store operational data;
  • Rapid growth in the number of SKUs as more products are developed to satisfy growing demand;
  • Frequent, costly picking mistakes which are affecting customer satisfaction levels;
  • Inability to identify where stocks are located or efficiently manage replenishment processes which is affecting inventory controls.
 

Introducing a WMS to automate and improve efficiencies can have a huge positive impact on smaller, artisanal food and drinks manufacturers.  One of Indigo’s customers, Loch Lomond Group, runs a distillery producing world class whiskies. As whisky drinking became more popular globally, it saw its existing product range quadruple in size and the company began shipping over 850 different SKUs of product varieties around the world, as export markets grew. The company was still working with paper processes in the warehouse and had outgrown them due to the international popularity of its whiskies – it’s a nice problem to have.

 

Achieving OTIF every day

Loch Lomond invested in Indigo WMS to automate the management of incoming raw materials and finished goods, plus improve sales order processing. Now finished goods put away is much more efficient and they are achieving a higher proportion of ‘on time in full’ (OTIF) shipped pallets, which is critical for customer satisfaction.

 

Full ‘farm to fork’ traceability

Traceability is another important consideration for Loch Lomond, to maintain accurate product records and guard against counterfeited goods. Each bottle the company produces has a unique lot code identifier denoting the line, date and time of production. Indigo WMS is supporting this process by capturing lot code information at the goods inwards stage and tracing it right through to the end customer. Loch Lomond can verify product authenticity and demonstrate that the duty has been paid.

 

Enabling efficient stock management

Efficient stock rotation in the warehouse is a key factor for food manufacturers who need to ensure this happens both with raw materials and finished products. It is also important for packaging materials - they also have a limited shelf life to maintain the highest possible food quality. Lees of Scotland experienced this and introduced Indigo WMS to help them run a more efficient warehouse.  They had been making cakes and sweet treats since the 1930s and, in part thanks to growing demand for ‘gluten free’ foods, are now a £20m a year business.

 

Traditional values with modern processes

As a business with traditional values, Lees had previously managed some elements of its warehouse operation using a paper-based system. This involved manually documenting every item coming into the facility, its use within the manufacturing process and concluding with warehouse pallet references for the storage of finished goods and final destination locations, as products left the site for retail. The end result was processes that were prone to errors and out of date information which had to be entered onto the ERP system manually. 

 

Grow without having to grow headcount

Using Indigo, all stock management processes have been automated – from when raw materials arrive in the warehouse to be stored for production through to the putaway of finished goods and final despatch onto retailers.  Food containing allergens can be stored safety and operatives are alerted of the best locations to use.  All data is available in real time, so warehouse management have a single view of operations at any time and can make the best possible use of their resources.  As Lees have told us directly, previously

prevalent stock picking errors have been eliminated and this has helped the company to grow its business over past few years, without the need to increase headcount. It means they can pick more orders more accurately within a shorter space of time, which helps to better control peaks and troughs in demand and long term labour costs.

If you are a food or drinks manufacturer and are struggling to fulfil the day’s order pool, contact Indigo for independent advice on how a warehouse management system could help grow your business.