With tight profit margins, stringent auditing and tough new regulations, food and beverage manufacturers selling to supermarkets must ensure their operations are transparent and traceable as possible - but how?

Congratulations! You've achieved something that many companies fail to do – winning business from a leading supermarket. The contract offers huge potential for securing a vital revenue stream that will have far-reaching consequences for your business and its continuing success now and in the future.

But with the hard work of pitching and negotiating now complete, you'll already be aware that there are new issues that must be dealt with to ensure you successfully deliver on the commitments you have made in the contract. And for UK food and beverage manufacturers selling to supermarkets, commitments to quality have dramatically increased in recent years and represent potential obstacles that must be dealt with efficiently.

Casualties of (Price) Wars

As supermarkets duke it out on the high street and online for supremacy in a volatile and fragmented marketplace, suppliers are finding themselves squeezed from all sides with some predicted to fold under the increased pressure:

100

food and drink manufacturers could face ruin by the end of this year because of supermarket price wars.

These stressful market conditions mean that suppliers need to ensure they put themselves in the best possible position to deal with their supermarket customers – without compromising on pricing or being held to ransom over backdated costs.

While the Groceries Code Adjudicator has secured critical commitments from supermarkets, making your operations as efficient and transparent as possible in the eyes of supermarkets is now critical due to increased competition and the recent controversies in the food sector.

Outbreak of Auditing

The image of supermarkets and food suppliers has been tarnished in recent years. From the 2011 E.coli outbreak in Germany to the recent outrage over ‘horsegate’ in 2013, supermarkets are now monitoring their food suppliers and their work practises ever more closely to avoid further brand-damaging outcry from the public, media and government.

This explains the recent shift by supermarkets to carry out unannounced audits and mass balance checks on their suppliers. While your business may be run correctly, having a retailer suddenly turn up at your premises demanding to carry out on an audit can still place a huge burden on your time and resources as they investigate every aspect of your output from quality control to specific ingredient batches.

Consumer Protection First

Because of the scandals, the government (and the independent 2014 Elliot review) and the British Retail Consortium are also increasing the pressure on those selling food to supermarkets. This proactive approach means that your premises, systems and procedures will be audited at some point to ensure your manufacturing processes are compliant with the BRC's Global Standard requirements (including its planned fraud detection modules), covering every aspect of your business from pest control through to management commitment.

Again, such inspections can place a huge burden on suppliers who don't have the correct procedures in place to deal with heightened demand for transparency surrounding food manufacturing.

Be Transparent, Be Traceable

This need to maintain adequate, up-to-date records and offer internal traceability is the stuff of logistical nightmares – in theory at least. After all, retailers and official inspectors must be able to examine your records effectively, tracking all aspects of your operation without the need for you to start pulling open filing cabinets or accrue information from several different IT software packages at once.

To meet these challenges, ERP software offers an effective way for suppliers selling to supermarkets to show complete transparency and accountability. By integrating ERP software with your production lines, packaging, warehousing and more, you will be perfectly positioned to maintain food production records and document food origins plus enforce recipe controls, food safety and audit compliance that can be proven to auditors with a minimum of disruption to your business – and just as critically, to the inspectors’ own schedules. As importantly, your own company’s efficiency will be boosted as well, enabling you to track and manage your food manufacturing operations with ease. In other words, it’s a win-win solution for everybody involved.

The Silver Lining?

While there are many challenges facing the food and beverage sector, the outlook within the industry actually remains positive. According to a recent study carried out by Lloyds Commercial Banking:

89%

of the study’s respondents said that they expect to grow over the next five years, to develop new products, and to enter new markets, creating nearly…

70,000

new jobs in England over the next five years.

And with the right ERP software in place, you will be putting your company in the best possible position to be one of the 89% who will flourish – and not be left floundering in a sea of red tape.

Remember:

• Make every aspect of your operations easy to manage and monitor.
• Deploy sector-specific software to track every element of your manufacturing process.
• Win over supermarkets by making their lives easier for them through transparency.
• Bring in a third party consultant to find the optimum sector-specific software for your needs.

With the right software in place you could be one of the 89% of food and beverage businesses that flourish over the next five years, but what type of software is best for you?

Find out by downloading Sanderson’s free eGuide: "Bespoke Manufacturing Software vs ERP: A Business Case Assessment"