Matthews Foods plc, with a turnover of 42 million, is the UKs leading independent supplier of butters and spreads, producing both branded and own label products for the retail, food service and prepared food trades. It supplies all the major retailers and also produces products such as the Pure (dairy free spreads) and Filippo Berio Olive Spread brands.
In the mid 1990s the company made a 5 million investment in new processing facilities at its head office and production site in Ossett, West Yorkshire. This included an investment in Geac System21 ERP software - an integrated suite of finance, distribution and manufacturing software applications. At this time many companies were investing heavily in ERP applications to improve the efficiency of their internal operations. Although this was recognised by Matthews Foods it was the external pressures which had the biggest influence according to Ian Webb, Information Systems Manager at Matthews Foods:
Major retailers such as Tesco were totally committed to doing business with tier one suppliers by electronic data interchange (EDI). Without this capability we would not have been able to do business with our major customers. We invested in System21 so that we could align our order fulfilment and manufacturing processes effectively to meet the constant stream of EDI orders.
System21 has now been core to Matthews Foods for the last nine years and provides a wealth of information on a daily basis. This includes all the thousands of daily supply chain transactions, raw material and finished product costings, as well as all recipe information for up to 100 different recipes which change on a regular basis.
However an ERP system cannot run an efficient food processing plant on its own. Hence Matthews Foods has also invested in specific applications for manufacturing control (Schroeder), Quality Control (QCPro), labelling (Domino) and automated warehousing (Agility).
These systems provide a solid infrastructure to support Matthews Foods plant in Ossett, which incorporates five production lines in a process manufacturing mode. It produces 100 different recipes, which with different sized and labelled packaging provides 250 stock keeping units. Typically it is geared towards fast, bulk and continuous production of 100s of tonnes of a given spread, all driven by production schedules.
The flexibility of System21 means that it can handle mixed mode manufacturing, and has therefore been particularly beneficial in supporting Matthews Foods recent growth. In December 2001 the company bought another food processing business in Elland, West Yorkshire, to diversify from butters and spreads. The new division, now branded New Ivory, is a component manufacturer and produces discrete quantities of sauces, dips and dressings. These are typically found in supermarket pre-packed salads or within value-add meal solutions.
Unlike Matthews Foods, New Ivory sells to other manufacturers who then supply the supermarkets. Therefore its sales order processing requirements are less sophisticated than Matthews Foods, and hence EDI is not a requirement. However, its manufacturing planning process is vastly more complex. Yet, to date, this had been carried out purely on spreadsheets. As a result Ian Webb assessed the potential for using System21, and concluded:
Essentially New Ivory was a green field site in terms of IT and very different to our own requirements. System21 is completely geared to the food industry and having assessed the spare capacity on the IBM iSeries 720 server we soon realised we could provide New Ivory with all the elements of System21 that they needed via a 1MB leased line, with no detrimental impact on IT performance in the main plant. This meant we got the basic infrastructure up and running in just one month.
Manufacturing software is slowly being introduced to replace spreadsheets in order to help streamline this operation. Its complexity means that it cannot be driven by basic production schedules. Instead it requires Works Orders in order to plan production around hundreds of discreet products over a three week window.
The production process incorporates three phases mixing, filling and packaging. Each step can take different amounts of time depending on the product being made hence it is extremely difficult to plan and optimise. The recipe and product information held within System21 is critical to the efficiency of this operation, for which turnover has now grown from 2million to 7million since the acquisition.
Although the IT infrastructure now supports both operations very well, Matthews Foods cannot afford to stand still. Ian Webb said:
Like many food processors we have a selection of best-of-breed systems which have been bolted on over the years. System21 provides great integration between the finance, distribution and manufacturing applications and a Geac supplied Trusted Link application provides us with excellent connections to our retail customers. But the next step for us over the next year or so is to achieve better plant level integration.
Matthews Foods is currently following a manufacturing integration strategy. This is to ensure its manufacturing systems can communicate with each other. Historically there has been separate processes for manually re-keying data into the separate systems, which is prone to error. One significant risk with this relates to products Best Before Dates. If the wrong date is entered, not only could the company face a recall fine of up to 40,000 from a retailer, but it would have a material impact on Matthews Foods own inventory management and distort its planned sequence for stock usage. Therefore, there must be one accurate source of commonly used data.
Matthews Foods is looking to create this single data source on a Microsoft SQL Server-based industrial database. This will hold product and production data and each manufacturing system will eventually be interfaced to it. However, in order to protect the data source only certain users will be allowed to enter or manipulate data. Hence System21 will act as the single data entry mechanism, as it can enforce user security.
To further Matthews Foods performance it has also deployed a business performance management tool which provides sophisticated online analytical processing of live transactional data from System21. This is used by the finance team and has reduced management accounting collation time significantly. Daily sales analysis is also performed against forecasts and a range of key performance indicators (KPI) are a valuable daily tool at an operational level.
Although typically business performance management tools are the domain of the finance department, they are also playing a significant role in Matthews Foods manufacturing operations, as it is now being used to store recipes, product and manufacturing data taken from System21. It is also being used to conduct capacity forecasting and a variety of what if analyses.
This graphical tool also assists the New Ivory site by showing Works Orders for a product and all three production phases, whilst clearly presenting a simple view of all production plans over a three week period.
During 2005 Matthews Foods will ramp up its integration work, but not just in the manufacturing process. Matthews Foods will extend its use of Agility automated warehousing software, which is currently used to manage around 20% of its finished goods stock which are held in Ossett. This will be extended to control raw material stocks and therefore help feed accurate information into its manufacturing planning process. All inventory location data is held within Geac's Warehousing module so that warehousing staff know exactly where to pick goods according to precise production and despatch requirements.
Matthews Foods will also be working closely with Geac to gain an accurate view of the rest (80%) of its finished stocks, which are held in Leeds in a third party logistics arrangement. Geac is currently building connectors in order to provide a data interface between the two companies. Effectively a user at Matthews Foods will soon be able to conduct an up-to-date inventory check via System21 which will immediately make an enquiry onto the SAP-based inventory system. This will replace a manual system, enabling customer service staff to provide even more accurate delivery date promises to customers.
Ian Webb concluded:
We have an operational target to provide 99.5% of our orders on time and in full. To do this consistently we require ultimate efficiency in our plant and supply chain and we need accurate business performance information without delay. Without doubt IT is an essential component in this quest.