The food and beverage industry is complex, with myriad rules and regulations intersecting with the specific needs and challenges of each business. Jessica Olivier from RSM Australia explains how professional support can help.
Food and beverage companies all have to comply with industry regulations but depending on the products being made and the size of the operation, how best to comply with those rules varies.
With the right professional support, manufacturers can improve operations, leverage data and analytics for better decision-making and improve their ability to comply with such regulations.
Below, I provide two examples of how RSM’s experience and expertise in the food and beverage industry helped develop tailored solutions for the specific needs and challenges of its food and beverage manufacturing clients and help them achieve excellence.
The first case study highlights the problems beverage manufacturers face when they outgrow their existing Enterprise Resource Planning (ERP) system and migrate to a replacement system, generally every five to ten years. However, some factors may decrease this timeline, including rapid or global expansion, new business lines, digital transformation, and M&A activity.
The second case study looks at the best way to manage post-merger/acquisition integration and compliance.
Case study 1: Data audit to optimise asset tracking system
A multinational food and beverage manufacturer had concerns about their fixed asset register, an essential tool for tracking assets and claiming accurate tax deductions.
They were concerned about the accuracy, reliability, and compliance of their register, and needed help to perform a comprehensive data audit to identify anomalies and deliver recommendations for remediation.
The challenge was that this manufacturer had recently migrated to a new ERP system, which resulted in data inconsistencies and duplication, manual entries, wrong calculations, and a mismatch with the ATO asset depreciation schedule.
The manufacturer engaged RSM’s audit and data analytics services to tackle this challenge. Using Alteryx and Power BI, they developed workflows and tests to prepare the data for analysis and created visual dashboards to support the investigation.
It was important in this process to work closely with the manufacturer to fully understand the scope of their fixed assets and leverage their existing data and analytics tools to the full potential.
RSM’s data and analytics team conducted analytical tests and developed Power BI dashboards to enable more thorough analysis.
Anomalies were investigated and an updated and precise fixed asset register was created, implementing systematic improvements to simplify the process. The possibilities of automating data matching were explored.
The outcome was this manufacturer received a comprehensive breakdown of fixed asset register errors and how they had been resolved.
Correct depreciation calculations were applied to each asset, allowing the manufacturer to reconcile their data and adjust their ATO submissions for tax purposes.
The manufacturer’s internal team is now well-equipped to view real-time data on fixed assets, investigate anomalies, run trusted reports, and have clear oversight on depreciation calculations and asset activity. Auditable data trails were established to ensure that any data changes can be tracked, while built-in anomaly detection automatically alerts stakeholders to any data discrepancies.
The client is now completing a similar exercise in its overseas operations.
Case study 2: Finding post-acquisition synergies
In relation to mergers and acquisitions, 2023 saw subdued activity primarily due to factors such as rising interest rates and general economic uncertainty. Expected favourable economic conditions in 2024, together with the increased availability of capital, should lead to a recovery in deal volumes.
After an acquisition however, getting synergies from both of the businesses is one of the age-old headaches in the commercial world.
In this case, a global beverage manufacturer had acquired a well-known Australian beverage company and needed support to manage post-acquisition integration and compliance. They wanted assurance that their nationwide new Australian operations were compliant with internal company policies and standard operating procedures, and that their local teams were aligned with the new requirements and best practices.
This client completed their acquisition of a well-known Australian beverage manufacturer in 2020, just as Covid was unfolding. They needed a trusted and skilled team to conduct a thorough audit of operations.
RSM Australia’s national head of Risk Advisory, Jean-Marc Imbert, and his team had extra challenges with this project navigating Covid lockdowns. But the company was able to work around lockdown limitations by leveraging its national presence and engaging its risk advisory teams from across the country to conduct reviews at local manufacturing sites.
Working closely with local management, RSM’s team examined the client’s business to understand key parameters, including:
- product range;
- point of difference;
- manufacturing methods;
- inventory management; and
- sales and distribution strategies.
This gave RSM a strong foundation from which to conduct assessments and deliver detailed compliance reports to the executive team, including exceptions and recommendations for improvement.
As a result of this process, the client achieved significant improvements to controls, enhanced standard operating procedures, and assurance of the acquisition’s compliance, bringing peace of mind for the executive team.
At a site level, RSM guided management through the new requirements – helping them to identify gaps in best practice, understand new practices and protocols and gain confidence in implementing them.
Our extensive compliance and internal audit experience – including in manufacturing – was helpful when it came to applying lessons learned and value-add with teams on the ground or executives at HQ.
This project showed just how advantageous it is to bring the audit team in early and ensure they have everything they need to build robust knowledge of the business and how it needs to operate.
Jessica Olivier is the national leader, Manufacturing and a partner in the Tax Services division in Sydney for RSM Australia.
This article first appeared in the April/May edition of Food & Drink Business.
