In my last post I outlined the various challenges faced by the CPG industry and specifically discussed the Food Safety and Traceability needs.
In this post I will explain how the Food Safety and Traceability needs can be addressed by SAP.
How SAP can help?
Today companies must increase efficiencies, reduce costs, and ensure compliance with food regulations over the whole supply chain. Hampered by a legacy of nonintegrated systems that impede visibility and perpetuate inefficiencies, many companies recognize the need to standardize on a single platform.
SAP has the necessary features already inbuilt for handling food safety and traceability. Safety measures can be implemented in the whole process chain, right from procurement of raw materials from supplier, during production of goods in the plant till the delivery of the finished product to the customer / end consumer.
SAP can help the CPG industry with:
- Track, monitor, and trace batches and inventory
- Streamline procurement, production and sales processes
- Manage sales returns
- Enable targeted product recalls
Lets take a look at the solutions available in SAP to address all of these challenges.
1) Batch Management:
Following are some of the features of batch management process in SAP:
- Batch Number Assignment: You use this function to assign a batch with a number that uniquely identifies it.
- Batch Specification: You use this function to describe each batch uniquely using characteristics and characteristic values. You specify the permitted value range in the allocated material master record.
- Batch Status Management: You use this function to indicate if the batch is usable or unusable, manually in the batch master record/during goods receipt or automatically in the usage decision in QM.
- Batch Determination: With this function you can use various search criteria to search for batches that are in stock, eg. When posting goods issue, when creating a delivery, etc.
- Batch Where-used List: The batch where-used list shows the path of the batch from its procurement to its delivery to the customer.
- Active Ingredient Management: You use this function to administrate and process materials with active ingredients that are to be handled in batches.
2) Quality Management:
In order to align with legislation and regulations around food safety by FDA and other authorities (e.g., EU Dir. 178/2002, the U.S. Bioterrorism Act of 2002) SAP can help in maintaining quality standards on food safety.
In order to comply with HACCP (Hazard Analysis & Critical Control Points) a regular planned SAP quality inspection of the food processing during procurement, production and delivery can ensure the safety of the food products.
SAP can help Food safety through Quality planning, Quality inspection, recording of laboratory analysis, Quality reporting and Quality improvement.
Benefits:
- Reduced penalty risk
- Decreased risk of food-safety compensation payments
- Reduced risk of bad reputation
- Lower operating costs
3) Handling Unit Management:
Due to the increased global networking of manufacturers, forwarding agents, merchants, and consumers, the communication between all those involved in the supply chain is becoming more and more important. A common numbering standard that is defined by the international standardization organizations (UCC, EAN International) forms the basis for efficient processing in this field.
These standards include the UCC/EAN128 and one of its sub-components, the Serial Shipping Container Code (SSCC), which can be used to identify the handling units that were shipped. Within the supply chain, handling unit data can be transferred from one section to the next, for example, through EDI with EDIFACT or EANCOM standards using the UCC/EAN128 and the SSCC.
A handling unit is a physical unit that consists of the packaging materials (load carrier / packaging material) and the goods contained therein. A handling unit is always a combination of materials and packaging materials.
In SAP Handling Unit Management (HUM) for Food Safety the SSCCs assigned as unique numbers as the handling unit is created. These numbers then serve to identify and track the handling units. The EAN128 numbering system is integrated in the SAP packing function (Handling Unit Management).
In SAP, Master Data can be maintained for packaging instructions and packaging instructions determination records. Handling units can be created at the time of packing in Process Order or at the time of creating a delivery in the sales cycle.
4) Batch Recall:
When a food item with a defect batch is identified then it must be recalled from customers and prospects who received / could receive the batch.
SAP has the functionality to find and recall a defective batch already delivered to a customer and trigger batch specific returns processing.
After the customer has received his order and he realizes that the batch is defective, he notifies the vendor. The vendor creates a sales activity to begin a direct mailing to all recipients of the defective batch. Once the mailing list is determined, the letters are printed. This action automatically completes the first sales activity and subsequently creates individual follow-up sales activities per customer, like creation of returns document and returns delivery.
The quality inspection takes place after the returned goods have been received and booked into Returns. During GR for returns a quality inspection lot is automatically created. After quality inspection, the further handling of the returned goods is decided, like transferring the goods to unrestricted used stock or blocked stock.
The origin of the defective batch can be identified all the way up to the vendor who supplied the raw material.
5) Customer Returns:
The process of Customer Returns or Sales Returns can also be handled in SAP.
The returns order and delivery are created while the goods are in blocked storage. The credit memo is created based on the analysis results of the lab. The optional credit memo or full goods depends on the analysis results. Thereafter, the subsequent order settlement is done.
Food Safety and Traceability is one of the key challenges in the CPG industry. To effectively compete in this environment, the CPG companies must address the food safety and traceability requirements of various markets/geographies. SAP being the market leader in the ERP technology space, addresses all the challenges posed by the food safety and traceability needs of the CPG industry.
Do share your views on this and also if you are from this Industry then let me know how you are addressing this issue.
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