Commodities markets can be notoriously volatile thanks to a blend of fluctuating prices and operational pressures. One solution that manufacturers are increasingly turning to is iRely, an innovative software company. Sudhakar Kaup, vice president at iRely, talks to Andrew Pelis about how the company gives manufacturing companies an edge.
The world of commodities is an ever-changing mass of fluctuating prices and new production techniques. When Harris Tea Company, the largest private-label tea packer in the US, needed a fresh approach to its IT integration, it turned to iRely.
iRely has an impressive client base of 380 customers located across 12 countries. Its innovative software is increasingly gaining a solid reputation for improving margins wherever a commodity business is in trading or production mode.
iRely has a solid knowledge base built around its software design, as Sudhakar Kaup, vice president, explains. “We designed a solution to a problem but did so over a period of 10 years, utilizing the vast knowledge base of experienced commodity companies.
“Essentially, iRely helps to improve quality management systems at every step,” Kaup continues, “from receiving the commodity into a factory, blending different ingredients, packaging and distribution.”
One of the first benefactors of iRely software has been Harris Tea, based in Moorestown, New Jersey. The company, part of Harris Freeman, provides private-brand tea programs for the vast majority of retail and wholesale grocers, specialty food stores, drug chains and mass merchandisers nationwide.
“Harris Tea doesn’t grow tea itself but has cultivated relationships with suppliers in key growing regions for its supply,” states Kaup. “It primarily operates within the private-label market for tea and is the largest company of its kind in North America. It concentrates on distribution into the retail and food service sectors, and despite the general economic downturn, its business has proved relatively stable as consumers have become very value-sensitive.”
With three sites situated in New Jersey, California and Georgia, quality is of paramount importance. Using iRely software has enabled the business to manage quality throughout its entire supply chain, as Kaup explains. “We have an extensive quality engine built into the iRely system that covers everything, and from the moment the first vendor sample comes in, it is captured and tracked at every step through to pre-shipment, shipping, blending, packaging and distribution. Everything is completely traceable, from farm to fork, which is crucial in today’s regulated environment.”
The Food and Drug Administration (FDA) plays a vital role in regulating America’s food and drink industry, and iRely has to comply with stringent FDA checks (including good manufacturing practices) before it can be offered to commodity businesses.
So what was the catalyst for iRely’s development? Kaup and colleagues had previously worked extensively within the commodities sector in various IT roles and had seen a software focus on front-office automation only, which was great for accounting and sales but did little to enhance operational excellence on the shop floor.
Kaup takes up the story: “We saw that most companies focused on typical ERP systems that did not distinguish from the issues prevalent for manufacturing companies who were into commodities. For those businesses there are two distinct parts, and aside from the front office, there is a strong emphasis on manufacturing.
“Because challenges associated with procurement and manufacturing of commodities are unique,” he continues, “it requires a different kind of risk and quality management to work effectively. We felt that there were no software packages around that helped to create operational excellence on the shop floor and came to that conclusion after evaluating lots of ERP systems that simply could not manage the commodity side.
“We were able to leverage the vast knowledge base of leading commodity experts to create a system for the plant floor that is able to manage risk from commodity price fluctuations through all the key processes associated with procurement of the commodity and the entire production cycle. We developed iRely software over a 10-year period. Harris Tea went live with the system a couple of years ago across all its locations,” Kaup concludes.
The system is ideal for companies that have already adopted lean manufacturing techniques, and Kaup says that part of its attraction is the ability to have information readily available at any time. “Right now, using iRely, I can go into any factory using the system to view each production line and to monitor efficiencies (including shrinkage) in a real-time environment. At Harris Tea, the introduction of iRely systems has really changed the culture in the business.”
One of the biggest factors of iRely is the ability to trace product back through every phase of the process. The system provides the ability to trace the finished product from the store shelf backward all the way to the vendor that the commodity lot was procured from. This helps ingredient identity for both branded and private-label companies (whose customers trust them with their brands).
“Private-label packers like Harris Tea take the responsibility of protecting the brand name of their customers very seriously,” Kaup comments. “We can tell by picking up a box off a store shelf and typing in a code exactly which tea went into which box, where it was procured from and where else the tea went, just from a few computer clicks.”
That ability is perhaps best exemplified by the complex world of tea production. Often, different teas arrive at a factory from around the world. They are combined in the blending process, so it can become a challenge to keep track of which batch of which tea went into a product.
“The normal ERP package cannot handle this complex blending function, and a key function for any commodity business is mixing ingredients. The same tea hailing from the same estate in two consecutive years may produce differing qualities, and these companies have to be able to produce consistency, which the customer has come to expect,” Kaup explains. “iRely helps to manage that blending and recipe management and can take into account any substitutions as well as quality.”
Kaup suggests that iRely software has been designed specifically to serve manufacturing businesses that have commodities as a core. “If that commodity needs futures, such as sugar, coffee or cocoa, we have a futures management module available to help the business manage risk. It gives a company a real-time view into its combined physical and futures position, thereby providing the vital look at prospective profit and loss that can be invaluable,” he asserts.
iRely software aims to enhance visibility, productivity and efficiency. It provides a live scorecard of a commodity trading and manufacturing business facilitating better management of volatility inherent to the commodity business. One-time data entry into the system generates a variety of useful reports and alerts through which a commodity business can manage its operations more efficiently.
Kaup says that in the event of recalls, the system’s traceability technology reduces days of work to a mere few clicks on a computer. iRely software enhances visibility of the commodity throughout the manufacturing process. It is designed to mimic operations on the shop floor, providing real-time inventory tracking, including work in process, integrated lot traceability, yield management and integrated quality capture at every step of the process.
So what does the future hold for this futuristic software company? “We have over 125 employees today, and up to a dozen of us are heavily involved in trading and shop-floor operations discussions with business. We’re always learning new things and strive to introduce greater operational excellence into iRely. Each year we introduce new upgrades and ideas for our customers,” Kaup says.
“Commodities have always been around and always will be. It’s just that we’ve found more and more innovative ways to package them. With greater innovation is the challenge of operational excellence, and that’s where iRely is able to help business.”
