Tailoring an ERP solution to the unique needs of nutritional supply chains

Nutritional supply chains present companies with a unique set of challenges. Volatile raw material prices combine with the logistical difficulties of handling bulk materials and other complications to raise the risk of expensive errors. To avoid these pitfalls while realizing savings and efficiencies, companies need enterprise resource planning (ERP) solutions tailored to their specific needs.

The need for such ERP solutions stems from key differences between the nutritional supply chain and those of other industries. In the agriculture, feed and food industries, the availability and price of vital raw materials is inherently volatile. The price of wheat, an important component of animal feed, rose globally by more than 100% from 2006 to 2008. Factors beyond the control of any company in the supply chain, such as extreme weather and oil prices, drive such dramatic changes.

Price volatility means agriculture, feed and food companies must react swiftly to opportunities to buy raw materials and implement commodity-related risk management plans to insulate their businesses from macro-level changes. These tasks are further complicated by variability in the quality of raw materials.

The volatility-related challenges add uncertainty to supply chains that are difficult to manage at the best of times. These fundamental challenges relate to the complex cost and discount systems used in the nutritional supply chain and the logistical difficulties of transporting and storing bulk materials. Challenges related to the estimated time of arrival add an extra layer of logistical complexity.

To thrive, companies must effectively manage all of these issues while ensuring they comply with feed and food safety rules and regulations. As the series of feed-related warning letters sent by the US FDA in recent years shows, this is a considerable challenge in its own right.

The costs of falling short of these high industry supply chain standards are severe. Mismanagement of these key business processes results in wrong budgeted costs, purchasing mistakes and regulatory sanctions. In turn, these errors lead to financial losses, delayed deliveries, production problems, unsatisfied customers and a host of other issues.

Key features of nutritional ERP solutions​

The high costs and losses that result from mismanagement means the selection of an ERP solution is a critical decision for agriculture, feed and food companies. Equally, the specific challenges of the nutritional supply chain mean general-purpose finance and operations software lacks features that address all of the issues faced by companies in the sector.

These facts have created a market for ERP solutions tailored to the specific needs of the nutritional supply chain. Such finance and operations software must provide standard ERP functions — or pair with established general-purpose solutions — and help agriculture, feed and food companies handle industry-specific tasks. Adifo Software developed its MILAS ERP solution to meet this need.

MILAS is an industry-specific extension of Microsoft Dynamics AX and Microsoft Dynamics 365 for Finance and Operations. It comes as a complete, standalone ERP solution. Dynamics 365 for Finance and Operations serves as the functional core. This provides business processes that enable greater productivity, as well as the native cloud capabilities that are essential to fulfilling the promise of the intelligent cloud. MILAS is an add on to the latest version of Microsoft Dynamics 365 for Finance and Operation. It ensures the customer can manage processes specific to nutritional supply chains in an optimal and efficient way within a standard solution.

These MILAS features support industry best practices for the most challenging aspects of nutritional supply chains, such as procurement and risk management, sales and purchase logistics and advanced sales discounts and charges. MILAS also supports purchase landed cost calculations, production and recipe and label management.

The ERP solution integrates with other critical pieces of software, including those used by teams working on formulation, laboratory tasks and production. This was a central driver of feed producer Hankkija Oy’s decision to deploy MILAS across its €800-million-a-year operation.

“Thanks to the many integrations between BESTMIX Feed formulation, MILAS AX and Microsoft Dynamics AX we now have a fully integrated feed production organisation. A total solution such as this will give us the opportunity to better service our customers and be more efficient,” Kari Hissa, formulation manager at Hankkija Oy, said.

The benefits of MILAS​

Hankkija Oy and other firms that have deployed MILAS as their finance and operations software have realised a range of benefits. The software is designed to streamline purchasing, warehousing, sales and invoice processes while enabling companies to make better, less-risky decisions. This results in a range of downstream benefits.

Adifo Software developed MILAS to generate significant savings through integrations with accurate least cost formulation and the use of best practice workflows. Robust integration with manufacturing execution systems (MES) is another source of savings. The MES integration has proven to be of particular value to the production planning team at premix and feed additive business Nuscience Group.

“There’s constant communication between MILAS and MES. When the orders are released, important information is passed on to MES, such as production quantity, the due date or even double-stack pallets, container planning and important instructions for the operator. MES also sends information back to MILAS, such as batch distribution, the dosed amounts, as well as the order status,” Sofie Demaertelaere, quality manager at Nuscience, said.

Other benefits of MILAS include automatic order entry controls and sales price proposals that reduce mistakes, a clear discount system that improves customer satisfaction and an approach to raw material and end product sourcing that increases efficiency.

These benefits have led firms including Hankkija Oy and Nuscience to adopt MILAS. Importantly, Adifo Software is continuing to invest in its ERP solution. The investment will ensure MILAS continues to meet the needs of agriculture, feed and food companies and be a supported add on for future Microsoft Dynamics platforms, whatever new challenges arise in the nutritional supply chain.