The wholesale food distribution industry presents a variety of unique challenges, particularly regarding transportation, supply chain traceability and storage requirements. Frozen food distributors face concerns that are entirely different from those encountered by fresh produce or seafood distributors, and full-line food service distributors may face virtually all of those concerns.
For this reason, highly specialized solutions have evolved in this market niche. Software that works for a distributor of snack foods may not work for a distributor of fresh foods. We’ll look at the different types of solutions on the market to help you make an informed decision.
Here's what we'll cover:
Food distributors don’t just use one type of application in the back office—they use many. As such, the term “food distribution software” isn’t so much a name for a software category as it is for a diverse group of applications that assist with everything from ingredient costing (for food distributors that are also involved in manufacturing) to dynamic expiration date calculations based on data from sensors installed in refrigerated trucks.
Essentially, software applications for food distributors fall into the categories of supply chain management (SCM) software. Food distributors have the option of purchasing standalone applications for different supply chain needs, or investing in an ERP system, which includes various SCM applications along with other standard business applications like CRM and HR modules.
In particular, food distributors should consider investing in a distribution ERP system. ERP vendors have specialized their solutions around a variety of industry verticals, e.g., manufacturing and retail. Distribution ERP systems are pared-down solutions that eliminate modules distributors won’t need while adding flexibility in areas like order management and warehouse management.
Moreover, food distributors in industries dealing with fresh and highly perishable foods should examine ERP systems focusing on supply chain traceability, i.e., tracking inventory as it moves from one link in the supply chain to the next.
These systems ensure that your inventory can be tracked upstream, back to your own suppliers, and downstream to the retailers’ shelves where it ends up. The FDA mandates that you at least be able to track inventory one link up or down in the chain in the case of a recall, but end-to-end traceability can inspire consumer confidence and help with damage control in a devastating recall scenario.
We provide a more thorough explanation of the technological requirements for and benefits of supply chain traceability in our report on lot tracking with distribution ERP systems.
The supply chain applications with which food distributors should be particularly concerned are warehouse management, transportation management and order management.
Food distributors should look for these features when evaluating SCM applications or ERP suites:
|Lot number tracking||A food inventory management system includes lot tracking, which can integrate with barcode scanning or radio frequency identification (RFID) implementations to note when and where certain items were delivered, which will be particularly useful during a recall.|
|Expiration date tracking||Solutions appropriate for food distributors should include the ability to track expiration dates and also to associate expiration dates with lot codes.|
|FEFO/FIFO||“First-expired, first-out” (FEFO) and “First-in, first-out” (FIFO) are two inventory rotation methodologies commonly used in food distribution. FEFO means that products closest to expiration are rotated out of inventory first, and FIFO means that products received first are rotated out first. Both are useful in food service, with FEFO being more accurate on average. Make sure that your warehouse and/or inventory management system supports these methodologies for inventory rotation, since they’re also used for accounting. For instance, a WMS can use FEFO to direct order picking.|
|Refrigerated zones/bulk storage etc. for warehouse slotting||Food warehouses are set up differently from normal warehouses, so you’ll need flexibility when it comes to slotting (i.e., defining where inventory will be stored in your warehouse). In particular, look for features like bulk storage and refrigerated zones.|
|Catch weight management||Since weight and quantities vary tremendously, a food distribution program needs the ability to track the weights of meat and produce throughout the delivery and distributor cycle and tie those to the ordering and accounting systems.|
|Delivery management||Delivery management modules offer intelligent routing procedures that result in faster delivery times. Distributors also need to incorporate special transportation requirements, including refrigeration and handling care.|
|Ingredient traceability||Businesses involved in the manufacturing as well as the distribution of food will need capabilities to track the ingredients that make it into products as well as the finished products themselves. Such systems are still quite specialized, and are largely the province of niche vendors.|
As part of a broader enterprise resource planning (ERP) suite, top food distribution software can also oversee the general ledger and accounts receivable, providing real-time reports of order entry, purchasing and pricing levels. As we’ve seen, an ERP system will also be necessary to ensure end-to-end traceability with regard to lot numbers, expiration dates etc.
The FDA is currently at work on defining traceability standards across the food industry, so now is the time to get a jump start on competitors by investing in an ERP system up to the challenge, such as Blue Link.
Like most industries, food distribution has been directly affected by globalization and economies of scale, not to mention environmental concerns. So although international exporting and importing in today's advanced systems is easier than it ever has been, a trend toward “locally sourced” operations has encouraged more organizations to shift into these arenas. Food distributor software provides businesses with the advanced functionality needed to manage the specific complications of international distribution networks—as well as more effectively reorganize through decentralization and the growth of regional food hubs.
Regional operations can particularly benefit from the ability of automated systems to help with increasingly complex tasks. Since these systems are expensive and the market is highly competitive, new products are seeking to capture business from smaller sources, offering specific functionality at more affordable prices.
Specific questions to ask when evaluating food distribution ERP software include:
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