When we tell people we work with food manufacturers, we are often asked if we have software for “food processing”.  Conversely, if we tell people we provide food processing software, we are asked if we also work with “food manufacturing software”.  So what’s the difference? 

Not much.

First we should define what we mean by “processing” and “manufacturing”.  Processing generally refers to what we call “first level” manufacturing.  Processors typically take a raw product from the field, and turn it into an ingredient useable by a “second level” manufacturer.  Turning raw tomatoes into tomato paste, for example, and packaging it in containers that are easily sold and distributed for a variety of uses is typically done by a processor.  The manufacturer on the other hand purchases the paste and uses it as an ingredient in a more complex product, such as spaghetti sauce, or any number of products that require tomato paste.  Both processors and manufacturers add value to the product.

Processors are generally concerned about:

  1. Food safety & traceability
  2. Cost of processing (availability of primary ingredient/commodities, fluctuating market costs)
  3. Regulatory compliance
  4. Sales
  5. Profitability

Manufacturers on the other hand are generally concerned about:

  1. Food safety & traceability
  2. Cost of production (generally available ingredients, fixed costs)
  3. Regulatory compliance
  4. Sales
  5. Profitability

As you can see, there is not much difference.  Cost of processing and production includes labor, materials used in the process or manufacture, other ingredients, packaging, transportation and other regulated costs, and labeling.  Emphasis and priority is placed on any one of the costs based on product, market, and other pressures, including corporate marketing strategies (i.e., low cost leader vs. segment innovator).  This is important because this is where we find the differences – not in the business requirements, but in how each type of organization implements the functionality.

Let’s be clear.  In manufacturing jargon, “processing” has a very distinct meaning.  Process manufacturing involves ingredients and formulas that are often made in a batch.  Once produced, these products cannot be disassembled – think of beer for example.  Process’s cousin, discrete manufacturing, involves bills of material and routing.  Discrete products can often be disassembled, but not always, back to their raw materials – think of a boxed rice mix designed for the consumer.  If you are a “process” manufacturer, you have unique needs over discrete manufacturing and you should be clear about the differences (which are the subject of upcoming articles).

bcFood with Microsoft Dynamics NAV has the functionality to provide a great solution for first level processors as well as second level manufacturers, for both process and discrete products.  Foremost, given the current regulatory environment, is its ability for complete product traceability from the source, through production and final shipment which not only provides peace of mind, but documentation and country of origin labeling as well.  Production capabilities provide for both process and discrete manufacturing disciplines so mixed-mode manufacturers no longer have to choose one over the other.  And finally, margins and profitability are not left to chance.  There are several means throughout the system, and especially in the production and logistics management modules to capture and report costs accurately. 

There aren’t many differences between food processors and manufacturers from the standpoint of an ERP provider.  What’s important is that the business priorities are well defined and the provider take the time to understand them.  A great solution will work for both.