SOPs for Food Processing Industry

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.