Least Cost Formulation software
In these are unprecedented times for food manufacturing, especially within meat processing sector, many recipe-based product lines have been rationalised, as supermarkets focus on core high volume products to meet rapidly changing consumer buying habits.
Whilst product ranges have been slashed by the supermarkets, there’s been a huge demand swing for staples like burger patties, sausages, meatballs and mince, as highlighted recently by the BMPA. Inevitably, this has had a huge impact on planning, management of raw material and production costs.
Introducing Least Cost Formulation
At SI, we know that manufacturing products that meet with repeatable standards, in the most cost-effective way, is a complex analysis process. This is especially the case when processes involve optional input materials with varying costs and factors.
Within our Cost Modelling software solution, Least Cost Formulation steps up planning controls by taking account of specification variances of available raw materials (E.g. VL grade), whilst still delivering at least cost.
Delivering new recipe variance controls
Cost Modelling delivers a detailed understanding of a processor’s costs and how they are assigned during the production process, whether direct or indirect. Least Cost Formulation steps up the control as it:
- Allows planners to take account of variance in specification of available raw materials (E.g. VL grade), but still attain the strict customer specification & quality (within allowed tolerances), delivering at least cost.
- Accounts for all of the costs associated with production, including ingredients, line and equipment changes, and the eventual transfer costs for the mixed product.
- Considers staffing and running costs.
- Accurately calculates the optimum formulation, a job which would take days to accomplish using spreadsheets; spreadsheets that would be out of date before they are published.
- Provides advanced insight into the real costs for finished goods, and in turn offers the opportunity to maximise margin(s).
Transformational benefits for margin management
Today, the combination of our Cost Modelling solution and Least Cost Formulation is solving many of the production planning challenges faced by the meat processing sector.
For both existing and new product lines, LCF shows food processors how to maintain and even support margin growth throughout their operations. So, no matter what consumers, supermarkets and food service customers throw at the sector in the future, SI’s LCF and Cost Modelling applications will be there to support them.
For finance, supply chain and production planning teams, with the responsibility for controlling costs and delivering consistent quality, implementing LCF is transformational and offers measurable returns.