Are outdated core systems blocking your food and beverage company from growth? Here’s what CFOs should watch for.
- Food and beverage companies often run their operations on legacy accounting and production software — turning to spreadsheets to fill in the gaps.
- This makes it harder to understand what’s happening inside your business, prioritize profitability and adapt to meet changing market conditions.
- To discover if legacy systems are negatively impacting your business, look for warning signs like trouble tracking raw materials, inflexible cost control tools, slow recall capabilities and poor inventory management.
Food and beverage producers frequently rely on legacy software or even manual systems to run their businesses. But could those systems be an obstacle to growth that’s hiding in plain sight?
Legacy systems make it harder for producers to operate efficiently. Aging core systems can also stymie executives trying to understand their costs and adapt to changing market demands.
Keep reading to learn more about how food and beverage producers are currently running their businesses and when it might be time to consider a more modern approach.
What core systems are food and beverage producers currently using?
Some food and beverage producers are running their businesses on modern enterprise resource planning (ERP) and manufacturing execution systems (MES). But most firms are still using legacy systems, which often consist of basic accounting software and a simple production system, with spreadsheets to paper over the gaps.
- Food manufacturers doing under $40 million in annual revenue almost always operate on legacy systems.
- Mid-market firms in the $40-$100 million range typically have more complex tools for inventory management and purchase planning but may still use spreadsheets for compliance reporting and recall actions.
- Even producers with a certain amount of sophisticated operational software are still typically using software that is 10-15 years old, in part because for many years, ERP companies didn’t offer solutions that supported batch production.
But as the business climate grows ever faster and more complex, is running on legacy software and spreadsheets still serving your business?
What are the warning signs that your core systems may be out of date?
Legacy accounting software and production systems could be slowing down your business. Look for key warning signs like limited ability to track raw materials, poor inventory management, inflexible cost control tools and poor traceability.
Here are key indicators that your food and beverage business may be taking a hit because of legacy systems:
- Difficulty tracking raw materials: You need to be able to plan and track your raw materials to avoid a production outage. If you’re having trouble keeping your products on shelves, poor materials tracking capabilities could be a major bottleneck.
- Labor shortages: Older systems don’t cause labor shortages, but they do make it harder to adapt to them. Legacy systems tend to involve time-consuming, manual processes that take your team members away from higher-value work, straining your team’s capacity and creating burnout.
- Poor inventory management: Are you wasting time producing products that don’t sell? You may lack the capability to effectively track and prioritize your best-selling products.
- Limited traceability and recall capabilities: Legacy systems may leave you tracing lots and batches or even managing a recall in spreadsheets. This makes it harder to act quickly to protect your customers.
- Rigid cost control tools: Older systems typically only show you standard cost and average cost. This makes it hard to get a clear picture of your costs because you can’t fully account for unpredictable or one-time elements like seasonal products, supply chain disruptions and climate or weather events.
- Trouble integrating newer systems: If you have newer systems in areas like transportation management or compliance, you may be struggling to connect those with your older core systems, making it more difficult to share data between them. This can also make it harder to benefit from newer technologies like AI.
The common theme to these warning signs is that you’re not able to quickly and fully understand what’s happening inside your business. You have limited visibility into materials, inventory and costs — making it harder to minimize waste or boost profitability.
And your team, from your leadership on down to frontline workers, is forced to act more reactively than proactively, making it tough to pivot or move decisively when needed.
What are your next steps?
If you see warning signs in your own business that your systems may be blocking your growth or efficiency, consider exploring your options. CFOs and key operational leaders should seek to:
1. Identify specific pain points within your business
Look at specific pain points inside your business that are being caused by legacy systems. This will help you drill down on what needs to change. You’ll also get a clearer sense of how a transformation could deliver ROI and concrete operational benefits, which will make it easier to build support among stakeholders.
2. Talk with your team about change
Food and beverage producers make vital products that people depend on. This may leave leaders wary of changing existing systems and processes. Have conversations with key team members about change — what it would look like, why it could help your business and how to do it in a way that doesn’t impact production.
3. Consult with an advisor
Talk with a third-party advisory firm that understands both modern enterprise systems like ERPs and the unique needs of food and beverage producers. Your advisor can help you map out what’s possible and how a systems migration could deliver concrete business results.
4. Consider your options
With your advisor, evaluate different enterprise systems available on the market to determine what makes the most sense for your business. Consider both food-specific elements like the ability to track shelf life, but also broader, nonfood factors like how a new ERP would affect your accounting, purchasing and your broader tech ecosystem.
How Wipfli can help
We advise food and beverage producers on strengthening performance, financials, technology and growth. Let’s talk about the challenges you face and how we can help you overcome them. Start a conversation.
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