Every time you go online to look for the best ERP software, you get the same tables to compare: user limits, number of modules, cloud versus on-premise. None of those factors is a solution to the question that really counts for a food or grain business in India.
Is there any scenario that involves the purchase of a mandi, where weight and moisture deduction, as well as the adjusted price, have to be captured in a single purchase entry? Is it able to follow the same product through 3 different quality grades at the same time? Is it able to create a proforma invoice from a transaction record without having to create it manually.
These questions are what make ERP software for small business in food and grain business different from the other types of small business ERP software, and usually aren't mentioned anywhere in comparison guides. This post is for small food and grain businesses who are past Excel, WhatsApp threads and in need of an ERP platform designed for agri-processing.
Why Generic ERP Solutions Don't Work for Food and Grain Business
The best ERP software crop comparison tools, feature checklists, and star ratings were designed for retail, services, and discrete manufacturing. Within that context, inventory is based on SKU, procurement on purchase orders and compliance is mostly based on GST. But small food and grain enterprises are distinct in all three areas.
Inventory is not SKU specific, it's a quality variable. It is possible to have two lots of paddy with the same item code but different moisture content, grain length, and percentage of physical damage. This separation is lost with inventory management software that only keeps track of stock at the level of items, as quality data will never link to stock records, and you won't know what you have, only how much.
Procurement is by commodity – not by orders. Buying is done at the mandi or through agents, where weight is deducted and moisture is deducted on the mandi gate, and where prices may be negotiated subsequent to arrival of the truck. In most cases, ERP software companies set up a standard purchase order (po) process where a po is issued in advance of the transaction and has a fixed quantity and confirmed price. This is not the way commodity buying works.
Compliance is layered. In India, food businesses have to deal with GST, FSSAI and if they are exporting, APEDA and the requirement of the importing country. GST is covered in generic ERP guides, or even more rarely, comes after the ERP system is in place and switching is costly.
Five Questions to Ask When selecting an ERP platform
These are the questions that generic ERP platform comparison guides do not ask but that make the difference when it comes to whether a system actually works for a food/grain operation.
- Does This ERP System Address Commodity Payments, not just the Purchase Orders?
Direct the vendor: how do you handle if moisture deductions alter the amount billed after a vehicle has arrived? If a configuration is required, the system was built for a set amount of purchase. Moisture, weight adjustments and price corrections are routinely entered with the ERP system software for the commodity business, not as an override.
- Is the ERP Platform able to integrate Lot & Grade Level inventory?
The same food/grain product can have multiple quality grades, with each quality grade having different buyer value and compliance status. At the item-level, inventory management software does not differentiate between Grade A and Grade B paddy from the same supplier – or between a lot that passed your quality test and a lot that hasn't been tested yet. Request: Current Stock by Lot, Quality Grade, Test Status & Lab Date? If the system can't answer that in a standard report, then it's not built for food processing.
- Is this ERP system software compatible with offline use?
Food processing plants are often situated in semi-urban/rural areas where connectivity is often intermittent. Any live internet connectivity required for gate entry, production recording or weighbridge capture in connection with the operation of an ERP system software opens up gaps in operation every time the Internet connection drops. What do you think will happen if the internet connection is down while the vehicle is being weighed? If it is wait for connectivity, then that's a business risk because there's no gate that doesn't open at this facility.
- Is Export Compliance Built In?
In the case of food and grain businesses exporting from India, the compliance with APEDA, generating proforma invoice, issuing challans, and tracking documents are all regular activities. With the best ERP software in India for food exporters, these functions are all tied to the same transaction records that were used for procurement and quality – so it takes seconds to create a PI, not an hour of cross-referencing. Ask: Where does your system create a proforma invoice, from a transaction or do they create it outside of your system?
- Does This Manufacturing ERP Software Take Care of Agri-Processing By-Products?
In one production run, head rice, bran, husk and broken rice are produced during rice milling. When dal is milled, a product called splits, powder and husks are obtained. An Manufacturing ERP software for discrete manufacturing (one defined input, one defined output) is not modeled. Inventory by-products from the top erp software for agri-processing are recorded at the run level, so that by-products don't get lost in rounding. Question: Is it possible for your system to separately track production by-products, and log them in to inventory at the run level?
How to Shortlist ERP Software Companies for a Food Business
With the 5 questions above, the structured shortlist is more of a feature comparison that will be a much better option. Request vendors to showcase your process, not their "normal" process. Develop a four-step scenario based on your own business: Gate entry for a mandi purchase, quality test against that lot, processing run with that stock, a proforma invoice for the finished product. Evaluate short-listed ERP software companies in the same framework.
Vendors with an ERP platform that can process all four steps, including without workarounds or customizations have proven their capability in the food sector.
If the vendor has to explain to you how it works, then they are demonstrating to you a weakness they will address after the sale. Check if the best ERP software shortlist candidates can provide a reference from one of the food/farm/grain businesses in which they have an active deployment. Generic top ERP software rankings are based on the number of features or the review score each would be irrelevant to whether the software has been implemented on the floor of an agri-processing facility.
ERP Software for Small Business FAQ
What is ERP software for small business and what is the difference between a general ERP?
ERP software for small business is built to suit smaller operations with a limited number of users, streamlined onboarding processes, and basic modules instead of enterprise-wide suites. The difference between a general ERP software and a system that is appropriate for food and grain businesses is the ability to process commodity procurement, inventory with quality and agri-processing by-products out-of-the-box or if that's not possible, the ability to be configured to achieve that.
Which features do I need to check for the best erp software in India in food processing?
The ideal ERP software in India for a food processing business should be able to track Lot level inventory Management Software, link quality-test, enter procurement from the mandi, work offline at the food processing unit and generate documents from the transaction. These are more likely to be covered by Erp software companies that develop specifically for agri-processing as compared to general purpose SME Erp vendors.
What is the best way for a small food business to compare ERP software companies?
Repeat the same demo scenario with each of the shortlisted ERP software companies vendor - follow a realistic four step business process of your operation. Find out which ERP platform is capable of doing it without workarounds, consult the references of similar businesses and don't use the number of features or typical "top ERP software" lists, which are not weighted by the food industry.
What is the difference between ERP platform and inventory management software?
Inventory management software takes care of inventory tracking including quantity, location and movement. An ERP platform integrates inventory with procurement, quality, production and dispatch in a single system, which means that the data generated from one workflow is displayed in all other workflows. The transition from standalone inventory management software to complete ERP system software is a relative match-up for small food businesses that struggle to get a handle on what they are actually selling and dispatching out the door.
Why Food & Grain Processing ERP Software is the Perfect Fit?
Manufacturing ERP software is suitable for the food and grain industry or not, it depends on whether it is capable of handling variable-input, multi-output production or not, that is, a milling run that is able to produce head rice, bran, husk and broken rice from paddy. It also relies on whether or not it supports commodity procurement that deducts moisture, and whether it supports correlation of quality test record to an inventory lot against which it was run. This means that these requirements are different from those required for manufacturing ERP software for general production, and hence, agri-processing software comes under its own category.
Conclusion
When the difference between what is in the books and what's in the warehouse begins to cost them money - whether through procurement mistakes, quality issues or documentation lag - most small food and grain businesses find that Excel and disconnected registers are not the answer. The right erp software fills that void. The incorrect one generates a higher cost of the same issue.
These five questions above eliminate the comparing of ERP platforms and highlight the areas that are important to a food and grain business: commodity procurement, lot-level inventory, offline reliability, integrated export documentation, and agri-processing production tracking. Only shortlist vendors that can provide a demo of their workflow, including all five.
