Have you outgrown your business systems?

Many businesses in the fresh produce sector have so far avoided the implementation of enterprise resource planning (ERP) software and are still running on a combination of basic accounting software and spreadsheets, said Bernard Godward, managing director of Index Computer Systems Ltd.

But is simply having the basics enough in today’s modern, fast-paced industry?

Often it means there is no integration with other systems, such as email, stock control, warehouse tracking, grading or packhouse production, resulting in a distinct lack of product traceability from the grower to the shelf.

“If your business is facing some or all of the following challenges then it is likely that you need to review your current systems,” he added.

• Your customers are demanding more and more information about their orders and want it faster than ever before, but you cannot react any more quickly.

• Your customers are asking for information that cannot be accommodated by your existing set up, without costly resource and effort.

• Your customers are driving down prices and reducing margins and your system just is not flexible or sophisticated enough to help you improve efficiency to combat this.

• Your business is overly reliant on one or two key individuals within your IT team who are the only people that really understand your system.

• There is a high amount of wastage in the business from poor shipments but your system does not provide the ability to track and trace the source at the speed you need it to.

• Your system does not support raw material stock rotation which is resulting in further wastage.

• There is no central database that all employees can access, and therefore your company information is spread across a number of disparate systems, leading to a high level of confusion, error and duplication of effort and data.

• It is difficult to monitor your costs accurately and calculate meaningful profitability.

• The IT department is facing ever-increasing demands for new software or add-ons to help employees to do their job more effectively and to reduce the pressure they are under.

• Your business makes limited use of the internet and demands on staff for information for suppliers and customers is therefore high.

• The business is considering taking on more IT staff to support the business demands.

• There is a feeling that your competitors are starting to get the upper hand.

• You have gaps between your front-end and back-end systems, possibly across multiple sites, which are covered with poor, internally developed solutions.

• Your accounting system doesn’t integrate with your existing Microsoft Office based systems and common email platforms such as MS Outlook, Outlook Express and Lotus Notes.

• The business is facing ever increasing support costs for all the IT systems and a rising TCO (total cost of ownership).

“If some or all of these points are causing you considerable challenges in your business then it is likely that you could see massive improvement by implementing an up-to-date ERP solution. Such a tool can integrate with every part of your business under a common system,” said Godward.

Many businesses have been put off the idea of ERP in the past, mainly due to rumours over high costs, lengthy and painful implementation and the hefty support costs it was thought to require.

There has also been a common perception that ERP is only for the big boys and that small and medium sized companies simply couldn’t justify it.

Godward said this certainly was true in the past but the majority of the ERP vendors have now brought out solutions for the SME market.

However some are better than others and buyers need to ensure that the system will be future-proofed as much as possible as the number of vendors is likely to continue to decrease.

“The Internet has developed into a fantastic business tool, and the plethora of mobile devices and applications out there are enabling employees, customers and suppliers to access key business information whether in the warehouse, in a vehicle on a delivery route or even via a web browser from another country,” he said.

“Some solutions are modular so that you only need to buy, and pay support for, the applications you need. Others, however, are not, and you will need to buy the entire system, and get support for all of it, despite only needing a part of it.

“Integration with common Microsoft email and office systems is seamless if you buy a Microsoft ERP system, but many of the other major players in the market only achieve this to a lesser or greater extent.

“One thing is for sure, whichever product you chose the benefits to your business will be enormous, the challenge is in finding the right product for your business, and a business partner that understands your market and can provide the support you need,” said Godward.

Index Computer Systems (ICS) is a computer systems house, which has provided IT solutions to meet the business challenges of many different organisations.

Index have provided food industry solutions to organisations including Alexander Harley Seeds, EDME Food Ingredients, Rowse Honey, Quality Food Products, TH Clements and Spillers Foods, and has recently signed up MBM Produce, (see below).

Index was the third UK company to become a Certified Microsoft Axapta Solution Centre.

MBM GETS ERP

MBM Produce has awarded Index Computer Systems, the contract to supply a Microsoft Business Solutions Axapta Solution.

MBM is a leading supplier of fresh potatoes and organic produce to the food industry and the solution will provide it with a fully integrated suite of financial, HR, CRM and business intelligence solutions.

The Microsoft Axapta source code and development tools will allow Index to best meet MBM’s needs going forwards.

“We felt we had outgrown our old operating system, which wasn’t flexible or fast enough to meet the needs of our growing customer and supplier base,” said Pepe Bascetta, managing director at MBM.

“We chose Microsoft Axapta because of the system’s rich functionality and because of the ease and scope for further development, much of which can be done in-house, due to the terrific development tools which come as part of the package.

“The system is also very competitively priced and pound for pound, we believe we have a terrific value proposition.

“We also appreciated the vision and support Microsoft will give the product over the coming years. The system is not just future-proofed - we believe it is future ‘enabled’. It will only get better.”

Bernard Godward, Index’s managing director said: “This contract further reinforces our strength as a leading ERP supplier to the food industry.

“We look forward to implementing this solution across MBM and helping it to achieve substantial improvements in visibility of data across the business.”

THE ART OF IT COMPLIANCE

Previous articles focused on the selection and deployment of an appropriate Information Technology (IT) solution for use within the fresh produce industry.

The fresh produce industry is becoming increasingly aware of having to comply with a spate of new regulations governing the monitoring and traceability of food products.

The current scare on Sudan 1 will ensure that traceability will once again come under intense scrutiny. As IT is now deeply embedded in the processes of most organisations, it will come as no surprise that the IT industry is itself coming under increasing pressure from the regulators.

In this article, by ABS’s Bob Rose, we take a look at just some of the implications.

From a global perspective, one of the most important and business-intrusive government initiatives in recent years was the US government’s introduction of the Sarbanes-Oxley Act of 2002. This was written and enacted in response to large and public failures of corporate governance.

The names of Enron, WorldCom and Tyco came to prominence for all of the wrong reasons. In response, Sarbanes-Oxley was introduced to protect investors by requiring accuracy, reliability and accountability of all corporate exposures. It is one of the most complete American corporate anti-crime laws ever introduced.

The act places responsibility unambiguously in the hands of the chief executives. Failure to comply exposes senior management to up to 20 years in prison and fines of up to $5 million.

Sarbanes-Oxley has a significant impact on IT controls, since many of today’s processes are IT driven. For example, the internal compliance team should include a core team member with an IT background to ensure that informed IT related decisions are considered during implementation.

Since financial data resides on servers, the security and documentation of IT systems is imperative to ensure the integrity of the data held.

In addition, the company must have reliable, replicable and audit proof details about the control of and access to the infrastructure that supports financial data.

This has wide-ranging implications as changes to financial data can be triggered by a variety of information sources. Applications such as EDI, spreadsheets, databases, contract documents, faxes and e-mail services will all come under scrutiny.

This will mean that every organisation involved in compliance with the act will have to implement a series of internal controls and procedures designed to store, protect and audit that data.

The IT industry has been aware for some time of the need to get its act together from an auditing and accountability viewpoint. CobiT (Control Objectives for Information & Related Technology) is a framework and set of best practices that has been developed over the last 10 years to improve IT management and provide a model for auditing IT.

It is increasingly being adopted by organisations around the world and it has also been generally accepted as the framework for demonstrating compliance of IT controls to the Sarbanes-Oxley regulations.

So, what has this got to do with the UK fresh produce industry?

The reality is that some may be affected in the near future if they deal with US-listed companies. There is also a general consensus in the UK that for companies to compete in the global economy, compliance with an EU-introduced equivalent scheme is inevitable (when did they ever miss a chance to introduce new legislation?).

Furthermore, as consolidation in the fresh produce industry continues, there will be fewer but larger suppliers left to service the major multiples.

Some may already be part of a stock exchange listed group while others may seek floatation as a means of raising further expansion capital.

The message is that Sarbanes-Oxley in one form or another is coming to Europe. Forward-thinking companies are already considering its implications when investing in new technologies. The IT industry leaders have already introduced wide-ranging measures to put its house in order to ensure that its customers can implement compliance measures.

The new Enterprise Resource Planning (ERP) solutions from the major global suppliers already have built in traceability of all transactions (see page 13).

Security and the ability to verify information sources are high on the list of infrastructure suppliers’ core products. Providers of document management solutions are making it easy to track and trace all documentation sources.

It is difficult to argue that such measures are just more red tape that adds to the burden already experienced by business.

The reality is that in today’s information age, high quality integrated IT solutions are a vital business aid in an increasingly competitive marketplace.

Having built-in traceability is just a by product of a fully integrated business management system from a global supplier.

The real benefits are the ability to dynamically monitor and manage customer service quality and product profitability.

Built-in IT compliance is just the icing on the cake. However, it would be prudent to explore this aspect as part of the selection process where new investments are involved.

CONSUMERS EMBRACE THE ON-LINE REVOLUTION

Three surveys in the last month point to the changing consumer outlook on the uses of IT and the internet in their everyday lives, and point to an entirely different future retail structure.

The UK now has the most extensive broadband market in the G7, UK e-commerce minister Mike O’Brien told the 4th ASEM (Asia-Europe Meeting) conference on e-commerce in London’s Docklands this week.

A new report from Ovum shows that the UK reached the position of the most extensive broadband market in the G7 during the third quarter of 2004. The indicators have been tracked since 2001 when the government set a target for the UK to have the most extensive and competitive broadband market in the G7 by 2005. The indicator for extensiveness is a combination of metrics for the availability of affordable broadband services and the market context. The indicator for competitiveness is a combination of metrics for consumer choice, price and the regulatory framework.

Following publication of new broadband indicators, the e-commerce minister said: “We said we wanted the UK to be the best place in the world for e-business. For those working from home, broadband is now available to 96 per cent of households and more than six million people already subscribe.

“Hosting this ASEM conference for the first time here in London is another sign that the UK is determined to lead the way and to realise the potential of e-commerce for the global community.

“At this time of unprecedented technological change, e-commerce presents tremendous opportunities. But we will only maximise these if we can work together to establish global standards,” said O’Brien. “We need therefore to deepen dialogue between Europe and Asia and develop greater co-operation. We can then create a stronger and more strategic partnership between our two regions.

“This will help to create a truly global information economy - and a more stable and prosperous global economy.”

More than 480 delegates from government, business and academia in the 38 ASEM partner countries, together with representatives from the European Commission, will be attending the ASEM Conference on e-commerce to discuss ways of achieving the potential gains of closer co-operation. The conference is split into five ‘streams’, addressing the main challenges facing industry and government - paperless trading, e-logistics, tackling spam, e-health and e-learning.

Meanwhile, market analyst Verdict found the internet was the fastest growing retail sector last year, attracting one in four shoppers.

With growth rates at 27.4 per cent, the figures for buying online are six times better than for the traditional retail market over the last year, it says.

Part of this success is down to the trebling of shoppers using broadband connections, the company said.

People are not only shopping in greater numbers but were also spending more as companies improved the quality of their online offerings.

In the high street, the amount of goods ordered in-store for home delivery dropped by 16 per cent, in spite of the overall increase in the home delivery market.

The Verdict report calculated that £1 in every £7 spent in the British retail sector in 2004 was on goods delivered to the doorstep.

On the other side of the coin, however, consumers are also very concerned about the use of radio frequency identification tags (RFID) in retailers, according to a new survey. More than half of the 2,000 people surveyed in the UK, France, Germany and the Netherlands, said they had privacy worries.

A number of consumer groups have, in recent months, expressed fears the tags could be used to monitor shoppers once they had left the shop. Another concern, for 59 per cent of those surveyed by consultancy Capgemini, was that the tags would allow data to be used more freely by third parties.

Ard Jan Vetham, Capgemini’s principal consultant on RFID, said the survey showed retailers needed to inform and educate people about RFID before it could become accepted technology.

“Acceptance of new technologies always has a tipping point at which consumers believe that benefits outweigh concerns.

“With the right RFID approach and ongoing communication with consumers, the industry can reach this point.”

Tesco is currently trialing the use of the tags at one of its distribution centres, allowing it to more rapidly track its inventory.

One US consumer group, Consumers Against Supermarket Privacy Invasion and Numbering (Caspian), has claimed RFID chips could be used to secretly identify people and the things they are carrying or wearing.

EDEKA’S VFM EDGE

A leading European retail chain, specialising in fresh produce, is looking to get a competitive edge through the use of improved communication technology.

Edeka’s fresh produce division has invested in modernising its business communication systems with farmers and suppliers.

Based on Microsoft.net and developed by VFM International, the company has implemented I-Deal, which it said will help it improve transparency in the fast moving and volatile fresh produce market.

The division, Edeka Fruchtkontor said it can now target purchases better and gain considerable price advantages, while suppliers can make time and cost savings as well.

Alfred Hofman, division managing director, compares the move to the introduction of the fax-machine in the 1980s. “Initially, our suppliers were a little sceptical, but then they were quickly won over.

“This communication channel has in the meantime become outdated, although it greatly boosted the efficiency at the time,” he added.

The company is now looking to replace its out-moded systems with the introduction of an internet trading platform, based on Microsoft.net.

Edeka purchases more than a million tonnes of fruit and vegetables a year, with around 30 per cent of that being sourced on the spot markets.

“This is an extremely fast business which demands quick decisions,” said Hofman.

The new trading platform allows Edeka to see a sharply focused picture of the market and increase the businesses communication efficiency. “Cost reductions are a major goal and better purchasing decisions lead to more profitable deals,” he said.

The new system will lead to benefits for all 9,100 Edeka shops, which will be able to offer high-quality fresh produce at competitive prices.

Jonas Emgard, chief executive of Swedish VFM subsidiary, Lund, said: “I-Deal boosts the profitability of the fresh produce trade through direct on-line co-operation. It was specifically tailored to meet the requirements of the fruit and vegetable trade.

“Via an internet portal, I-Deal provides all trade partners with direct, real-time access to the latest price lists and the terms of delivery,” he added.