Over the years we have had discussions with many companies in the food wholesale and distribution industry who were looking for software suitable for their business. Most of these companies are looking for capabilities which are commonplace in many food distribution solutions including lot tracking/traceability, landed cost tracking, flexible pricing and multiple units of measure.
Although these features will fulfill the requirements of many in the food wholesale and distribution industry, depending on the specific activities and product mix of your business, there may be additional requirements. The biggest differences amongst appropriate software solutions is when it comes to “catch weight” functionality.
Companies dealing with canned foods, frozen or dry goods can benefit from ERP software with food distribution specific features. However, when speaking with food companies that deal with meat, fish, poultry, produce or dairy the term catch weight often becomes part of the discussion.
What is Catch Weight?
Commonplace in businesses dealing with produce, meat, poultry and fish this term generally refers to the specific weight of a specific batch of product which is close to the average or standard weight used for that product. For example, you may sell a 16lb case of lamb chops, but depending on the actual cuts of meat in the case it may only weigh 15.7lbs or maybe 16.3lbs. You could have 20 – 16lb cases each with a different actual weight.
Think to yourself:
- How are these be stored in your inventory?
- Do you sell them each for the same price or will they be sold by their precise weight?
- Do you break open a case and sell by smaller weights?
If used in your business, catch weight may be the key determinant in which software you choose.
When it comes to catch weight functionality it is important to know your requirements, as this is only one version of catch weight and there are many others out there. A potential software provider may tell you that their system can deal with catch weight, but if they define it differently than you do, it may not meet your needs.
In order to avoid any confusion, make sure you have a clear understanding of your requirements and be as specific as possible when speaking with software vendors. If you do require catch weight functionality make sure that it becomes an integral part of your search, and don’t waste your time looking at software without it.
For those businesses dealing with canned, frozen and dry packaged goods, in which the weights and sizes will be standard each time, it is unlikely that you will require catch weight functionality. This can potentially provide you with more software options to choose from with lower price tags. In this situation a Wholesale Food Distribution Software with features such as the following is likely what you will need to run your business.
- Lot tracking
- Market Pricing
- Landed Cost Tracking
- Units of Measure
- Flexible Pricing
- eCommerce Integration
This feature should at a minimum indicate which specific lots or batches have earlier expiry dates to allow you to ship them first and avoid sending those that have already expired. More robust software will tell you with the click of a few buttons which vendor sent a certain batch of product and then to which customer(s) you shipped the product. In the case of a product recall this will make your job a lot easier and alleviate the stress of managing this process manually.
Lot tracking (or batch tracking) is one of the most important aspects of a software system for a food wholesaler or distributor. In order to comply with the FDA’s Food Safety Modernization Act or the CFIA’s Safe Food for Canadians Act, proper lot tracking must be maintained. This is not discretionary; all wholesalers and distributors, and for that matter manufacturers, are required to be able to trace the path from supplier to customer especially in the case of a recall. For many businesses, this tracking is a manual exercise, which can be cumbersome and costly in the long run.
The FDA and CFIA strongly encourage the use of software to automate this process, and to facilitate faster and more accurate recalls. In fact, there are funds/grants available to encourage this type of investment, such as:
More robust software will tell you with the click of a few buttons which vendor sent a certain batch of product and then to which customer(s) you shipped the product. In the case of a product recall this will make your job a lot easier and alleviate the stress of managing this process manually.
With improper or non-automatic lot tracking, you may be required to recall all product produced after a certain period of time. This can be excessively costly if only a portion of the product has been deemed unsafe. However, without proper lot tracking software, this may be the only way to ensure fast and accurate recalls.
Ask your Food Distribution ERP Vendor for:
- Internal and external lot number tracking
- Pre-assignment of lots to facilitate FIFO methodology
- Manage best before and expiry dates
If the price of the products which you are selling change on a frequent basis, manually updating the cost of the product and selling price can be a burdensome and time consuming task. The ability to import updated information on a regular basis from an external source such as Excel can save much time and effort.
Landed Cost Tracking:
If you are importing products from out of the country, you are likely exposed to costs over and above the cost of the actual product. Import customs and duties, brokerage and freight charges should all be added into the cost of the good you are selling in order to know the true cost of bringing the product into your warehouse. This in turn allows you to set a sales price that properly accounts for all costs and to achieve your desired margins. Many companies do not track this properly and often include these costs as general expense items, or try to track this information outside of their accounting software which could lead to errors. This does not allow the business to know its true cost of goods. A well designed landed cost feature within a food wholesale software or ERP system will provide your business with the information it needs to price your products appropriately.
Multiple Units of Measure
Unlike most durable goods, food items are often sold using a variety of UOM. For example, product can be sold by weight, volume or in groups that contain multiple items. Your food distribution software should be able to accommodate multiple units of measure.
Flexible Customer/Contract Pricing
Contract pricing is appropriate for a variety of industries but is often well used in food distribution. Your ERP software should automatically allow for different prices customer to customer. Preferred customers may be given preferential rates, for example, and these should be easily accommodated by the software. Customer pricing allows you to set customer-specific discounts as well as discounts that come into effect when an order reaches a certain size. Contract pricing is a similar feature that will allow you to define price ranges for customers that can expire at a defined point in the future – for example, a temporary sale or promotion.
In order to make the right decision when it comes to food distribution software, make sure you fully understand and outline your existing processes and requirements and address these with each software vendor during the sales process.
eCommerce Integration / Order Portal
It's vital that most businesses selling in North America offer an online option for their customers. This can be an eCommerce store or it can be an order portal that simple simplifies the order entry process. Read about how ECS Coffee grew their business with eCommerce Integration.