Don't pack IT in
Think again. Making cutbacks in IT investment may seem the thing to do in the current economic climate but could prove short-sighted, says Adam Baker
The purse strings of companies in all industries are tightening and the meat sector is no different. Companies are always looking for areas where they can save money and stepping back from investment in new technologies, as a way of making quick-fix cutbacks, always seems an attractive option. Yet this cost-cutting exercise may mean companies will lose out in the long-term. Despite all the suspicion surrounding IT, its purpose is to make life easier. So by using outdated software and ageing equipment, productivity and profit margins could actually be hindered, and continued investment in IT systems every few years might just be the better policy.
“The current economic climate sees us continuing to be very busy and acquiring new customers,” says Keystone Software business development manager Paul Broderick, “but we have recently noticed a considerable drop in enquiries, especially from meat and other food companies. We attribute this to companies consolidating and reducing capital investments for a while. In general, the meat industry does not make great use of IT and technology, but the other sectors in which we operate do, and this protects us from such a slowdown in any single sector, which means our meat customers can remain confident in our continued development and support.”
For many years, the meat industry has been criticised for not acting fast enough when it comes to new developments in computing. And while companies have been improving in the field of IT, there is now so much on offer to help businesses, that it should be welcomed, particularly in these uncertain financial times.
Broderick adds: “The answer is not just to work harder, but to work smarter. This means modernising, enabling the entire business operation to become more efficient and compete with the ‘guy down the road’ who already has embraced the technologies available. In every sector of industry, it is clear that companies surviving the ‘squeeze’ are those that include and use IT and technology effectively. That also includes the internet and tools such as e-mail or mobile phones. The meat industry as a whole is lagging behind by a country mile when it comes to taking advantage of IT. But in the last couple of years, in particular, there has been a significant increase in demand for ‘modern’ IT solutions in the meat supply or delivery community, a demand that is accelerating.”
Keystone, a Lincolnshire company formed in 2000, has devised its Khaos Control software, which can be used in the food industry as a business management system. This can be tailored to an individual company’s needs and can also be used by mail-order companies and firms that need to keep check on warehouse stocks. Khaos Control, claims the company, can create a fast order processing (SOP) system, which allows traders the flexibility to sell more quickly and effectively. The software can feed all SOP data, such as price lists and promotions, into the computer’s memory, meaning that the sales order will respond instantly to a user changing values, for example by adding new items. Buttons are available on the user interface to show customers’ past purchases, previous prices paid, when deliveries of stock are expected and customer debt breakdown.
There are also many “go to” options available, which can display stock item details, a customer’s record and invoice management.
Khaos Control’s sales order screen allows quick reordering, says the firm, by showing what the customer last purchased, so that a new order can be created quickly. The software can also create price lists for different sectors in the industry – for example, a ‘general meat’ price list, as well as a specified price list for customers with individual needs. These might include customers in the hotel trade, who need meat prices, or customers who run fast-food outlets, for example.
The internet also provides many new opportunities for the software to be taken further, which Keystone feels companies should be investing in. “The worldwide web is not just about mail order and shopping carts. The internet is an encyclopaedia of almost everything, companies and people. When you come across a new contact, business or personal, how often do you want to find out some background information on them, and use the internet to do so?” asks Broderick.
“This medium is a channel to ‘touch’ customers and suppliers, frequently, 24 hours a day. It is a low-cost dynamic advertising hoarding. Using simple, easy-to-use technologies, average staff members can keep a website live, up-to-date and interesting. You could publish recipes, run special offers or campaigns, create customer areas for them to log into and input their ordering or account data. You could even include staff changes, profiles and photos, which bring faceless telesales voices alive, as well as FAQs, industry comment, automatic feeds from other sources or links to other sites – for example, EFSIS, MTJ and so on. All are valid content for a possibly static and boring, cosmetic website.”
While you are out of the office and want to get to your back office systems, say, to check today’s orders or to see if your biggest account has paid this week’s statement, the internet could provide a ready-made and secure vehicle to directly link you to your back office application and database – even late on, when the office is closed.
“You can look at production line webcams over the web or watch the cutting plant and vans loading – all live. You can see what is going on, or not, even at, say, 2am – and all of this from home,” says Broderick.
Another business that has been providing software solutions to the meat industry for many years is HCS Remora, based in Blackburn. One product on offer from the company is its Lairage Intake System, which gives full traceability in the movement of cattle, with a passport management system. Using electronic data exchange to log and track animals from the farm to the meat plant, a cow’s date and farm of birth are logged into the system, as well as its breed and all movements in its lifetime. Managing director Joe Hurst says: “We are heavily involved with the livestock sector and offer full traceability from farm to dispatch in ‘real time’.
“Technology is changing all the time and our system just keeps evolving with it. RFID is certainly being increasingly used throughout the food chain.”
Over the last five years, Hurst has also seen the meat industry move to embrace IT more. He reckons that while some have accepted IT through necessity, the majority are seeing the real benefits of having accurate information with which to run their businesses. The credit drought has also not dampened spirits or innovation, he argues. “It is tough for us all at the moment, but the meat industry has proved its resilience many times in the past and will do so again,” he says.
To help it move one step ahead of its competitors, HCS Remora has worked in partnership with the Isle of Man Fat Stock Marketing Association to develop its traceability software, by liaising closely with farmers. Advancement in technology will help producers to make decisions more quickly in future – whether it be in a meat market in London or a remote farm on the Shetland Isles. “The internet is a medium for people involved in our sector, who often work remotely, to have more information at their fingertips and offers a means to easily integrate data,” says Hurst.
The UK meat industry has been well served by companies such as Keystone and HCS Remora in the provision of innovative software solutions, but this year saw a new kid on the block – SignalDemand. In July, the North American firm announced its intention to expanding its international operations and opened an office in London, to add to its operations in San Francisco and Chicago. The company specialises in technology solutions on pricing and has worked with the meat industry in the US, with firms such as Cargill Meat Solutions.
CEO Mike Neal says: “Signal-Demand delivers margin optimisation software that enables manufacturers to maximise profitability, even as costs and markets change around them. The software relies on advanced econometric models, optimisation algorithms and activity-based costing techniques, which automatically input the cost of ingredients such as corn, wheat or soybean oil, to determine how much to charge for finished products.
“Companies can also calculate how high or low their prices need to be in the future and what product mix best fits their conditions.”
Neal says SignalDemand has seen huge advances in two key aspects of pricing technology recently – in the form of complexity and delivery model. “When pricing technologies started out, they were mostly industry-specific and relied more on static formulas, rather than adaptive algorithms, to reach a single output – price. The evolution we’ve seen is the ability of pricing software to use much more complex inputs and come up with much more complex recommendations that include price, product mix and more, over both short periods of time and long-term projections.”
The US firm saw a gap in the market when it observed that market volatility represented an opportunity for meat processors to improve profitability. By applying analyticals to link demand with the current pre-sold positions, available inventory and all fabrication options, SignalDemand saw that meat processors could provide consistent and accurate pricing for their customers, while meeting corporate objectives and significantly improving profits. As well as its ‘Price and Response’ software, Neal sees other areas where the technology can progress and feels the meat industry is a lot better in embracing IT than people think. “The advent of on-demand technology has made delivering these more complex services much easier. The Software-as-a-Service (SaaS) model allows companies to use SignalDemand without having to put costly IT infrastructures in place.”
He adds: “Like other industries, the meat industry will embrace technology that demonstrates a measurable return to their bottom line – this holds true for technology like ours, and also for technology that streamlines the manufacturing process, or that helps farmers make smarter decisions. Our experience has been that the meat industry includes many forward-thinking companies, who are more than willing to adapt and evolve when it helps their businesses.”
Here’s to the future
The word “traceability” has been bandied around the industry for some time now and software experts put this topic foremost in importance. Linked to this is the development of radio frequency identification (RFID) tagging, which Systems Integration managing director Rob Stephens feels has progressed in the last few years. The Staffordshire firm says its software offers improve profit through greater operational control, by reducing production costs, but the current economic climate has meant changes to the business. “At the moment, processors are cautious, but are willing to evaluate how we can reduce our operating costs, which gives us a sales opportunity. Proposals have to identify a good and speedy return on investment,” says Stephens.
“The larger processors have recognised the benefits and cost savings that IT solutions can bring. They are willing to research new technologies and how they might be applied to the industry. The industry as a whole is looking to new technology to help bring about supply chain efficiencies, and to satisfy customer expectations for product quality and safety. Small to medium processors have been slow to react, due to the perception that IT is just an expense, but the reality is that even the smaller processors can identify good returns on investment through improved process and business efficiencies.”
One such product that incorporates traceability and RFID is Systems Integration’s Boning Hall Intake application program. The software can read tags on the carcase or the hook and can weigh and label the outputs from the boning hall, where yield information is available through Systems Integration’s Yield Tracker. The software can then be accessed from anywhere in the world.
Economists are divided on whether the economy is already at its bleakest, but there seems little doubt that continued investment in IT will help companies ride out this particular financial storm. With the market getting more competitive, IT companies are focusing on the latest software to improve efficiency and maximise profits. And this can only be a good thing for those involved in the meat industry.
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