erp for food and beverage regulatory compliance

ENSURING A HIGH LEVEL OF FOOD SAFETY IS THE MOST FUNDAMENTAL REQUIREMENT FOR FOOD & BEVERAGE MANUFACTURERSIFS WHITE PAPER by Bill Leedale, Senior Advisor, North America, IFS

ERP FOR FOOD ANDBEVERAGE REGULATORY

COMPLIANCE

WHAT REGULATIONS AFFECT FOOD AND BEVERAGE QUALITY AND TRACEABILITY?

Managing reverse logistics and depot repair, or all operations related to the reuse of products and materials, is a growing challenge for B2C and B2B manufacturers, retailers and service organizations. Despite the difficulties, addressing reverse logistics issues should be a priority for any product-based service business engaged in aftermarket repair services.

Food and beverage manufacturers need to do many things well, from product and packaging innovation, to order fulfillment, to meeting the tastes and health interests of consumers. But the most fundamental requirement in the industry is ensuring a high level of food safety.

The U.S. Centers for Disease Control (CDC) estimates that each year, roughly one in six Americans—or 48 million people—get sick, 128,000 are hospitalized, and 3,000 die of foodborne illnesses. With human safety at stake, it’s little wonder the industry faces multiple regulations. Just within the U.S. market, key regulations include:

Good Manufacturing Practices (GMPs) are an extensive set of requirements and guidelines managed by the the U.S. Food & Drug Administration (FDA) that establish procedures and methods to ensure food safety. Found in Title 21 of the Code of Federal Regulations, Part 110 (i.e., 21 CFR 110), the GMP requirements are broad, spanning production and quality control, sanitary maintenance processes, employee training, and documentation of procedures. GMPs have also evolved over time, necessitating producers to keep abreast of changes, which is why the term Current GMPs (cGMPs) is sometimes used.

The Food Safety Modernization Act (FMSA) aims to ensure the U.S. food supply is safe by shifting the focus of federal regulators from responding to contamination to preventing it. Processors of all types of food will be required to evaluate hazards in their operations, implement and monitor effective measures to prevent contamination, and have a plan in place to take corrective actions.

Hazard Analysis Critical Control Point (HACCP) is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards. This spans raw material production, procurement and handling, manufacturing, and distribution. The FDA and the U.S. Dept. of Agriculture have set forth HACCP recommendations for multiple types of food & beverage producers, including the responsibility to keep HACCP plans. State or local regulators also may be involved with HACCP requirements.

One element these regulations hold in common is the concept that food safety is driven by the establishment of well- documented procedures, including who touched each material or critical process. This regulatory emphasis on procedures creates a natural tie with enterprise software—the management systems that food & beverage companies use to manage procurement, production, product information, quality assurance, maintenance, distribution and other functions—because these systems help carry out most enterprise procedures.

ERP as a foundation for regulatory compliance and traceability 02

SAFETY FIRST

FOOD AND BEVERAGE MANUFACTURERS NEED TO DO MANY THINGS WELL… BUT THE MOST FUNDAMENTAL REQUIREMENT IN THE INDUSTRY IS ENSURING A HIGH LEVEL OF LEVEL OF FOOD SAFETY.

TOO MANY SOLUTIONS?

DOES YOUR COMPANY WANT TO INTEGRATE MULTIPLE SOLUTIONS TO ACHIEVE A COMPREHENSIVE FOUNDATION FOR REGULATORY COMPLIANCE?


By no means do regulators advise manufacturers to purchase certain types of software. In fact, U.S. regulations are almost regarding application management systems, other than to set forth certain procedures for the capture of electronic signatures under the 21 CFR Part 11 rule. However, enterprise software is aimed at supporting critical business processes and workflows, so if you need to establish rigorous processes, enterprise software is the way to do it.

For example, enterprise resource planning (ERP) systems are widely used by food & beverage companies to process orders, procure materials, and manage production and distribution processes in an integrated fashion. Some food & beverage companies also use enterprise asset management (EAM) for maintenance processes, as well as best-of-breed systems for quality management, quality assurance, or specific quality functions such as statistical process control (SPC).

The question isn’t really whether enterprise software can help with regulatory compliance—it clearly can. The bigger questions are, does your company want to integrate multiple solutions to achieve a comprehensive foundation for regulatory compliance, and, once this foundation is in place, in what was does it help with regulatory compliance?

This paper will examine these latter questions in detail. We’ll look at the differences between integrated, pure-play ERP suites that embrace areas like quality management and EAM, versus a best-of-breed approach. We’ll also break down how a pure-play ERP solution supports food safety procedures, and how through these control capabilities, also helps meet customer requirements around traceability.

FOUR ERP ELEMENTS THATSUPPORT FOOD & BEVERAGEREGULATORY COMPLIANCE

The ERP system production management module has full batch/process recipe management and lot control.

Pure-play suite with Quality Management and Enterprise Asset Management.

Integrated business process modeling and document management to define best practice workflows and link processes with supporting documents.

Roles-based “Lobby” views of quality trends, NCRs, and other quality-related action items.

ERP SCOPE AND COMPLIANCE

ERP systems are broad in functional scope, but when it comes to support for regulatory compliance in food & beverage, core ERP isn’t broad enough. This is because most ERP systems lack integrated applications for quality management, quality assurance, and EAM, or treat them as bolt-on options. By contrast, a “pure-play” ERP suite tuned for the industry includes pre-integrated, component-based applications such as quality management, quality assurance, and EAM. The eliminates the need to use middleware and integration projects to link with necessary applications, or rework the interfaces if one application or the other gets upgraded.

The best way to envision the software scope needed for food & beverage regulatory compliance is to think about the “chain of custody” concept in producing and bringing a product to market. The manufacturer needs to develop the product and maintain all related product and labelling information, procure the raw materials, test materials for quality, manufacture the product, test it for quality, and distribute the product. While some of these processes can be handled by an ERP system that supports recipe management and batch/process manufacturing, there also is the need for solutions such as quality management and EAM to ensure quality procedures are followed, and that production equipment and facilities remain sanitary.

Additionally, since food safety regulations emphasize the need for auditable, proven procedures, compliance in the food & beverage industry is aided by integrated functionality for document management and business process modeling. These supporting cross-application functions are vital in supporting the workflows and documentation involved in the food & beverage industry. Finally, with integrated project management, enterprises have a tool for managing the cost of quality and the resources they put into food safety programs.

IFS offers the industry such a pure-play suite encompassing quality management, EAM, project management, document management, and business process modeling. It also includes roles-based user interface and dashboard features that make it easy to surface necessary information by employee role.

While many companies have implemented ERP systems, these solutions in some cases are fragmented. Many enterprises, for example, will use one ERP system for enterprise financials and perhaps order management, but use a different system for production management, and yet a different system for maintenance. This increases the integration overhead in forging a comprehensive solution, and makes it harder to bring together metrics that span the full range of challenges.


CHAIN OF CUSTODY

THE BEST WAY TO ENVISION THE SOFTWARE SCOPE NEEDED FOR FOOD & BEVERAGE REGULATORY COMPLIANCE IS TO THINK ABOUT THE “CHAIN OF CUSTODY” CONCEPT IN PRODUCING AND BRINGING A PRODUCT TO MARKET.

Just consider the ways in which a pureplay ERP suite supports food safety regulations:

When procuring raw materials, the procurement function in ERP combined with quality management, quality assurance and nonconformance reporting (NCR) allows the enterprise to ensure supplier materials are tested as safe, and all NCR workflows are resolved.

In production, an ERP system that handles recipes and batch/production manufacturing, as well as EAM, controls each step in production, while also ensuring that any maintenance steps are followed. In producing a poultry product, this might involve ensuring a certain temperature is reach when a product is cooked, or in producing breads or cereals, that equipment is proper cleaned and tested for allergen traces.

For distribution, an ERP system with batch and lot traceability allows the company to know exactly which lots went into each shipment. The system should also have the ability to track data from carriers on shipment temperatures, or link to data from Internet of Things (IoT) connected sensors as part of new collaborative approaches to “cold chain” visibility.


COMPLETE VISIBILITY

FOOD CONTAMINATION COSTS THE GLOBAL ECONOMY $55 BILLION PER YEAR, AND, IN THE PAST, IT WAS DIFFICULT AND TIME-CONSUMING TO FIND THE SOURCE. BY USING BIG DATA, ORGANIZATIONS IN THE PROCESS MANUFACTURING INDUSTRY CAN NOW SEE EXACTLY WHERE THE PROBLEM CAME FROM AND STOP IT FROM CONTINUING FURTHER DOWN THE SUPPLY CHAIN.

TRACEABILITY RUNS DEEP

ERP systems for the food & beverage industry need to have rich functionality for recipe management as well as batch/process shop floor control capabilities. Systems designed for discrete manufacturing industries structured around bills of materials and assembly tracking may not be able to handle food & beverage manufacturing without the addition of a best-of-breed solution for batch execution.

However, the suitability of an ERP system for food & beverage industry compliance runs deeper than batch execution. The structure of how a product will be produced, and the quality control steps for that product may begin earlier as part of the product lifecycle management (PLM) phase for a product. Here is where an ERP system with PLM features for defining recipes, control plans, and labelling information comes into play. The recipe, control plan, as well as labelling information, are then available to the ERP system’s functions for production management, procurement, and quality management.

In short, traceability needs to run deep within an ERP solution for food & beverage. The record of how products are produced and what went into them should be consistent and easily traceable from PLM and on through procurement, production, quality management, and distribution. This is why a pure play ERP suite with integrated PLM, quality management, EAM, and other functions is desirable to support food safety compliance.

Of course, compliance with food safety regulations calls for specific quality management functions. A few key capabilities include:

Control plans. Essential for HACCP methods, control plan functionality in IFS Quality Management allows the organization to execute and document control processes and create a record of each step performed.

Failure mode & effects analysis (FMEA). One of the key functions within IFS Quality Management, FMEA software allows you to analyze the potential effects of failure and determine which control mechanisms are worthwhile. FMEA analysis is a way to narrow down what the biggest food safety risks are, and put in place improvement mechanisms. FMEA can be applied to either products or processes. For instance, FMEA may identify that there is too much dwell time for refrigerated foods on a receiving dock, which is more of a process issue than a production/product quality issue.

NCR support. This function is essential for addressing quality issues that arise, not just in manufacturing, but across any process in the enterprise. With IFS, it is possible to create NCRs from any screen, including audits. This permits users to record NCR details against any object in the ERP system, such as purchase orders, receiving, or customer delivery.


TRUE TRANSPARENCY

TRACEABILITY NEEDS TO RUN DEEP WITHIN AN ERP SOLUTION FOR FOOD & BEVERAGE. THE RECORD OF HOW PRODUCTS ARE PRODUCED AND WHAT WENT INTO THEM SHOULD BE CONSISTENT AND EASILY TRACEABLE FROM PLM AND ON THROUGH PROCUREMENT, PRODUCTION, QUALITY MANAGEMENT, AND DISTRIBUTION.

Statistical Process Control (SPC) and other quality trends. SPC analyzes process reliability, distinguishing common causes of process variation from special causes. With IFS Quality Management, SPC graphs are part of the solution, as are other quality and manufacturing reports, as part of a function called Visualizer.

Quality management integrated with lot/batch manufacturing control. By having a seamless integration between quality and production management, as well as underlying document control, it becomes simple to peg NCRs, inspection results, or other quality documents to a specific lot. Thus lot history not only presents a record of which materials went into each lot—you also get all of the quality-related documents for each lot.

IFS Quality Management and Quality Assurance include other functions, all of them fully integrated with the rest of the ERP system. The quality functionality uses the same reporting tools as the rest of the IFS suite. Additionally, users focused on a quality management may use IFS Lobbies, a user interface mechanism, to configure roles-based views of key metrics, events, and action items they want to see.


LOOKING AFTER YOUR CUSTOMERS FIRST

THE MOST IMPORTANT REASON TO HAVE EXCELLENT RECALL MANAGEMENT AND TRACEABILITY FEATURES IS FOR CUSTOMER COMPLIANCE.

CUSTOMER COMPLIANCE IS KING

At the core of most food safety regulations is the ability to provide a solid chain of custody over what was involved with each product shipment. Companies need to be able to prove to regulators how products were produced, what raw materials went into specific lots, all the quality measures that occurred at each step, and who touched the product or process at each step. Having all this data in one system, and being able to quickly retrieve it with a few simple queries, provides full traceability, not just for regulators, but for customers.

Instances where formal recalls occur or where government regulators visit a plant might be far and few between, but customer audits and traceability requests are commonplace. In a sense, that means that most important reason to have excellent recall management and traceability features is for customer compliance reasons. Fortunately, the same traceability foundationn you need for regulatory compliance serves customer demands as well.

Customers will also expect speed and precision in how a company proves its activity within the chain of custody. When you have an integrated pure-play suite that spans ERP, quality management, EAM, project management, and document management, you can provide thorough answers in minutes or at most a couple of hours, rather than the days or several hours it might take with bolt-on solutions or spreadsheets.

Fast, precise traceability will limit the cost of recalls, because companies are able to pinpoint which lots were affected. With integrated quality management, the organization can quickly figure out why a quality issue arose, and mitigate that risk from happening again. Regulatory compliance generally is silent on the issue of speed, but it’s certainly something customers—the major retailers who provide food & beverage products to consumers—care about. In the food and beverage industry, traceability needs to be precise and rapid, and quality procedures need to well planned, documented, and auditable, not only because of regulatory pressure but because customers, and ultimately consumers, insist on it.

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QUALITY ASSURANCE

WITH INTEGRATED QUALITY MANAGEMENT, THE ORGANIZATION CAN QUICKLY FIGURE OUT WHY A QUALITY ISSUE AROSE, AND MITIGATE THAT RISK FROM HAPPENING AGAIN.


Bill Leedale’s 30 years of experience leading large-scale implementation and business process reengineering engagements for global companies make him a sought-after consultant across multiple industrial sectors. Leedale holds a B.A. in Business and Economics from Wittenberg University in Springfield, Ohio and an M.B.A. from Ohio State University in Columbus, Ohio. He is an author of the current APICS body of knowledge and an author of APICS’ current Lean Enterprise Workshop. His certifications include Certified Fellow in Production and Inventory Management (CFPIM), and Certification in Integrated Resource Management (CIRM).

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