Customers Cooking with Cloud ERP but More Ingredients Needed

April, 2019

bakery202 - Customers Cooking with Cloud ERP but More Ingredients NeededCustomers are increasingly asking for ERP solutions that address the needs not just of their industry, but even more narrowly, their sub-industry. A number of ERP vendors, in response, are focusing their efforts on meeting the unique needs of sub-industries and even micro-verticals.
One such vendor is Oracle NetSuite, which has increasingly gained small clusters of customers in certain sub-industries. For example, the cloud ERP pioneer has recently found itself with several customers in the bakery industry, a subvertical of process manufacturing, with some unique needs that are not easily met by generic manufacturing systems.
At Oracle NetSuite’s recent user conference in Las Vegas, we spoke with two such bakery customers and learned how the cloud ERP vendor is either addressing their needs—or how the bakeries are turning up the heat for NetSuite to address them.

Sugar Bowl Bakery

Sugar Bowl Bakery came from humble beginnings. It was founded in 1984 when five brothers bought a small corner bakery in San Francisco. They had emigrated from Vietnam and spent all their money on the bakery. Today the company has two production facilities, with a third coming soon, and seven warehouses. Its cookies, pastries, and more are sold across the U.S. Like all fast-growing bakeries, the company needed better visibility into its inventory and warehouse production and to streamline business processes.

Sugar Bowl Bakery had been using NetSuite since 2010, but Shelly Gore, the bakery’s NetSuite administrator, said that before she arrived in 2017, the cloud ERP system was being used in a limited fashion, with many add-on systems tied into it. That started to change when Gore joined the team, but two things really moved the needle: NetSuite’s Advanced Manufacturing solution and switching to standard-based cost accounting from lot-based accounting.

Introduced in 2016 via NetSuite’s purchase of iQity’s cloud business, NetSuite Advanced Manufacturing is an integrated cloud solution that NetSuite claims can replace the disconnected systems that many manufacturers use. It offers functionality that goes beyond what NetSuite had previously offered for manufacturing. For Gore, this extended functionality was critical. Of all the new tools, Gore first praised the lot traceability function in the Advanced Manufacturing solution.

“It is forward-backward tracking. But also with Advanced Manufacturing, you issue the material. [She picked up a water bottle to use as an example.] If I issue this water to this work order, I do it right there. With the serial number, I can zap it with the scanner and all of that. And so yes, it’s very well suited because of that reason. I think that’s the most important thing that they have going. Right above lot traceability is everything else.”

Gore said the results have been sweeter than one of Sugar Bowl Bakery’s pastries.

“The biggest thing with Sugar Bowl is the maturity. By putting in Advanced Manufacturing, they are very disciplined, the most disciplined floor I’ve ever seen in my life. So we get really good data. It took them a while to figure out what to do with the data, so the different levels could use those different reports. They are maturing all the time because of Advanced Manufacturing and the data collection.”

Enjoy Life Foods

A second bakery we spoke to also improved processes with the Advanced Manufacturing solution, though the bakery is looking for many additions from NetSuite. Enjoy Life Foods is the leading maker of allergen-free, gluten-free food in North America. Its clients and distributors include Walmart, Amazon, and CVS. Enjoy Life Foods moved to a bigger facility in Jeffersonville, Illinois, in 2015.  

The company was acquired by Mondelez in 2015. “When we were building a new facility, we knew that our existing ERP with Fishbowl [a QuickBooks inventory management system] was inadequate to be able to support the needs of the organization,” said Damon Jackson, supply chain lead, E2E, for Enjoy Life Foods.

The bakery needed a better solution to manage the entire baking process, all the way through packaging and finished goods, and shipping out the door. The company looked at a few ERP systems before choosing NetSuite. Enjoy Life Foods is growing rapidly, and Jackson is generally happy with NetSuite, though he continues to work with the cloud ERP company to fine-tune the solution and press for additional functionality.  

Additional Functionality Needed

Both Jackson and Gore indicated that, although NetSuite’s efforts are admirable, there is still work to do. For Sugar Bowl Bakery, Gore said there are two weaknesses:

“NetSuite doesn’t have shift-based tracking. So you track at the work-order level. We would like to have shift-one and a shift-two tracking. I think it’s a weakness. A lot of customers want it. There is a way you can fudge it. But I’d like to see NetSuite do this, because they will do a much better job than I’m going to do trying to customize it myself.”

Furthermore, Gore said that “standard-based cost accounting is fantastic; it’s got all the variance accounting. However, it summarizes things where I would like to get to the detail. It’s a minor point. But I think if you could build it in where you could keep the detail and still summarize it, do both.”

Gore said she hopes NetSuite’s recently announced SuiteSuccess for Planning and Budgeting Cloud Services (PBCS) might provide a place for that functionality to live. PBCS is NetSuite’s new planning and budgeting solution that tracks performance against real-time planning.

As for needed improvements for Enjoy Life Foods, Jackson mentioned several. For starters, he needs an improved way to see his losses and track his scrap. When you work with hundreds of components in a busy factory, “you’re going to have some waste,” Jackson said.

“Being able to scrap an individual component, and being able to track it and then understand what your loss percentages are— NetSuite doesn’t have that capability today. But we’ve been talking with their Advanced Manufacturing team around some of the opportunities that we have identified within their system to try to get those corrected. They were just down in the facility three weeks ago, and we went through all of our wants or asks of NetSuite. They created a list. Now we have to go back and prioritize what we want them to work on.”

Bakery-Specific Requirements

Shift-based tracking, standard-cost methods, and better scrap reporting are requirements for many process manufacturers, not just bakeries. But Jackson’s expectations went on to some requirements that are really bakery-specific.  For example, he said he also struggled with NetSuite regarding moisture loss in the production-baking process and being able to account for that in his costing. We asked if he worked with NetSuite on that.

“No, we actually created an internal fix until we can work with NetSuite to come up with a solution. Because what we were seeing was … we had this process where I’m adding in 750 lbs. of ingredients, but I’m only netting out, say, 740 lbs. of actual dough. Then when I get that all the way through bake I’ve lost another 15% just on moisture loss through the bake process. But NetSuite isn’t set up to account for that moisture loss. We ended up accounting for it financially, because I was showing a financial loss that wasn’t real. We’ve since identified a workaround until we’re able to work with the Advanced Manufacturing team on a solution for that.”

Jackson has also worked with NetSuite on creating reports regarding food safety requirements.
Regarding the HACCP (hazard analysis and critical control points) requirement, he said:

“From a prior-traceability standpoint, we’ve had to work with NetSuite to create some standards reports to be able to pull it, because we have to be able to do a trace within 24 hours of notification of an incident. At the end of the day I need to be able to trace my product. I need to be able to know how much I consumed and to what batches.”

Avoid Becoming a Swiss Army Knife

NetSuite is not the only ERP vendor placing an increasing focus on industries and sub-industries. Acumatica offers industry-specific editions of its ERP for retail, manufacturing, construction, field service, commerce, and more. And for years Infor has touted its solutions for specific industries, including bakeries, where it no doubt has dealt with all of the issues that NetSuite is now facing. Likewise, Plex has been disciplined with a narrow industry focus on manufacturers of automotive parts, industrial equipment, and a few others, including certain types of food and beverage makers.
Savvy buyers expect more from cloud ERP vendors than generic solutions for broad industry segments.

On the other hand, if NetSuite does go down the path of serving sub-industries, it will need to choose carefully. Like a Swiss Army knife, being able to do everything in a single system can make things very complicated very quickly. Where appropriate, it may choose to let partners extend NetSuite by means of its platform. This would allow NetSuite to better serve those sub-industries without unnecessarily burdening the core application with functionality not needed by the majority of its customers. As the cloud ERP market matures, it will be interesting to see how NetSuite, and other cloud providers, address the needs of the various sub-industries.

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