SOPs for Food Processing Industry
Food Processing Industry
The very first fundamental we believe is worth covering is why do we process food? The history of food processing goes back thousands of years. An instance of this is when we learnt that cooked meat is more easily digestible than raw ones. Today, we process food to make it more edible (safe to eat), preservable (in terms of its lifespan and retaining its health benefits), and palatable. Production of food is essential but food processing helps us meet our food consumption requirements efficiently. This makes the food processing industry a critically essential one for our very survival.
With increasing population, the global demand for food will also increase proportionately. The food processing industry plays and will continue to play a critical role along with food production in meeting the ever-increasing demand for food. Growing urbanization will further fuel the demand for processed food. The food processing industry is roughly valued at a range of USD 2-3 trillion globally. Because of the contribution of the unorganized sector, arriving at a precise value is tough.
Along with governments, businesses have a big role to play in meeting the market demand for processed foods. This not only extends to fulfilling local and domestic demand but also for international trading. While we have placed global causes on the table, we must also think as businesses and address our challenges in building world-class business processes and operations.
Challenges Faced Due to Poor Processes and Management Systems
Unsystematic Purchase Decisions. In the food industry, it is very important to ensure that excess or deficient inventory levels are avoided by businesses. Otherwise, it will lead to a shortage of supply in the market or inventory getting wasted. Even if the older inventory is kept in the stores, customers always prefer newer stock. These situations are affected by how businesses make their purchase decisions. The inventory procurement decisions also affect the ability of a business enterprise in ensuring smooth warehouse operations and achieving its cash flow objectives. The procurement or purchase decision-making typically covers addressing order quantity, reorder time, lead time, choosing vendors/suppliers and logistic partners, storage requirements and availability, etc. These decisions cannot be left to uncertainty. Hence, a well-planned procurement policy is required so that these decisions are made on the lines of meeting the predetermined business objectives and that such decisions do not cause any chaos or disruption. For example, before placing an order it must be ensured that the required space would be available in the store or warehouse for the arriving inventory. Or say, if the lead time from one supplier is not good enough to refill the retail shelves on time, an eligible listed supplier may be considered for the order.
Space and Storage Issues. Wherever inventory is involved, there also arises the need for space and storage. Whether it is a store or a warehouse, businesses need to ensure that the available space is not put under duress because of excess stocking, storage standards are maintained, and there is smooth and easy flow of incoming and outgoing inventory. And these objectives cannot be achieved without effective layout planning and a planned framework of functioning. To avoid over-stuffing, businesses must align their procurement decisions with space availability. Ensuring safe storage and handling of inventory calls for adherence to operational standards and procedures. For incoming and outgoing inventory also, standards and procedures must be defined pertaining to landing and dispatching areas, checking and labelling, packing and unpacking, issuance of bills and receipts, roles and positions, etc.
Haphazard Logistical Operations. Logistics is the function that is responsible for the movement of inventory along the supply chain to the final distribution point or and delivery. Logistics operations are affected by procurement decisions, storage requirements, and distribution and delivery commitments. However, many businesses eventually end up with disorganized logistical operations because of not following any planned operational roadmap. Firstly, the logistical abilities must be able to meet the demands of purchase ordering. At the same time, underutilization of the logistical assets should not be a motivator to push more inventory into transit. Secondly, the logistics lead time must account for space availability in the store or warehouse so that there is no over-stuffing. Thirdly, logistics operations must meet the standards of commitments made for further distribution or delivery. If these considerations are not factored in, logistical operations are bound to create problems.
Barrier to Business Process Automation. A fundamental requirement for automating a business process is to have that process defined in terms of operational standards and procedures. Automation of those activities is not possible which are done differently all the time. And such circumstances arise when a business is not process-driven and its operations are carried out in a free-fire mode. When the rules are not defined, it becomes very difficult to choose any automation solution. The automation tool or software must know what you are automating or what you want it to do. If a business process is not defined, its automation requirements also cannot be specified.
Stagnancy. A serious consequence of having poor processes and management systems is on the growth prospects of a business enterprise. It is easier to improve and replicate planned and proven ways of working. But if a business enterprise has no hold over its operations, it will be never confident enough to do more or do better. Suppose that a health drink company plans to ramp up its marketing and distribution after positive market feedback. This will lead to increased sales operations and more workload on the existing sales team. But in the absence of operational standards of performance and output, it would be extremely difficult for them to address its additional staffing requirements. This inability to take a timely decision will slow them down in capturing the market opportunity. Or worse, they might lose it to competition.
Benefits of SOPs (Standard Operating Procedures) in Food Processing Industry
Better QMS (Quality Management System). Food processing can be of three types – primary, secondary and tertiary. But irrespective of the type, the standard of quality of the food cannot be compromised in the process. For example, shelling nuts is a form of primary food processing. In this process, it has to be ensured that the output is free from any shell skin and shell dust. The better the shelling process is the better will be the output. Or when bakers bake bread (secondary food processing), they have to check if the ingredients are of the right quality and the dough has been prepared correctly using the right proportions of the ingredients followed by the remaining sequence of activities. Following the standard procedures in food processing is essential to get the right final output. If procedures and the operational standards are not maintained in the process, the final output will not be able to meet the quality standards. This can not only hurt health and sales but also invite regulatory penalties.
Better Procurement Control. We discussed earlier the importance and requirements of systematic decision-making in the purchase and procurement of inventory in the food processing industry. So, how can that be achieved? The answer is SOPs. Decision-making gets significantly aided when it is guided by a mapped roadmap. By defining the purchase SOPs, businesses can specify the conditions when a reorder has to be placed, predefine a mechanism to determine the reorder quantity, map the criteria for selecting a supplier for the purchase, specify the authority-responsibility to initiate, authorize, and execute the purchase, etc.
Better Warehouse Management. Extra efforts are needed in the food processing sector to ensure the safe storage of inventory. Warehouse SOPs can help to ensure that there is no excess stock burdening the available space, goods are received, handled, and stored following the required standards, there is no pilferage or wastage, due quality checks are performed, entries are made into the warehouse software on time, warehouse assets are properly used, etc.
Foundation for Automation. Process automation is feasible when the processes are defined. With SOPs, how the business operations are to be executed are defined and mapped with procedures and standards of performance and output to be maintained. These procedures and standards become inputs to define the automation requirements and for better business process management (BPM). Say, the HR process has to be automated. Once the HR SOPs for various operations like recruitment, onboarding, termination, performance appraisal, etc. are defined, these SOPs can be shared and discussed with the IT team to develop or identify the right software application where these rules and guidelines can be incorporated and the HRIS stands in congruence with how the HR activities are supposed to go.