Least Cost Formulation
Optimise your recipe-based products with SI’s Least Cost Formulation
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.
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. This is the reason why SI developed our Least Cost Formulation solution.
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.
SI’s Least Cost Formulation is providing advanced insight into the real costs for finished goods, and which in turn offers the opportunity to maximise margin(s). 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.
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.
Least Cost Formulation steps up control and takes account of variance in specifications for available raw material.
“It accounts for all of the costs associated with production, including ingredients, line and equipment changes, and the eventual transfer costs for the mixed product. It even considers staffing and running costs. By running all of the variables through the solution, LCF 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.
‘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.’
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SIs Purchase Order Processing application, part of the Integreater food ERP solution, manages all of your purchase orders, whether it’s raw materials, packaging ingredients or services or non-stock items. The application minimises the opportunity for manual error and delivers complete order visibility and delivery verification throughout your food manufacture operations, to check what’s ordered has been delivered. Set up for multi-site multiple site food processors, break orders down by specific delivery addresses, and stores all supplier information including price lists, supplier approvals and accreditations.