Cost Reduction Strategies through ERP in Food Manufacturing

Cost is a crucial factor that decides the existence of an organization. Every company strives to reduce costs without compromising the quality of output. 

In pursuit of cost saving, a food manufacturing software i.e. a food ERP, can help organizations immensely in streamlining operations, meeting compliance, improving quality and reducing costs. It not only can save visible costs like labor costs, raw material costs, overhead costs etc, it also saves invisible costs like inventory storage costs, cost proportionate to time loss etc.

To amplify cost savings, there are various strategies which when followed religiously can aid organizations achieve a competitive edge in the market.  

Read below if you are keen to know those strategies:  

• Apply FEFO - First Expiry First Out (FEFO) inventory management technique ensures that perishable materials are utilized in time. The technique helps to reduce wastage and hence saves costs.
  

• Utilize alerts- Organizations can define active ingredients and set a threshold level, known as reorder point. Food ERP software can provide alerts if active ingredient touches the threshold level. Utilizing the power of alerts will avoid sudden halts in production due to unavailability of basic ingredients and avert losses.
  

• Dynamic Pricing- Dynamic pricing algorithm of ERP helps to adjust product prices based on factors like demand, market trends, maximizing profitability and remain competitive in the market. Although dynamic pricing does not impact costs directly, but it helps to optimize revenue generation which can offset other costs within the business.
  

• Production Planning: Utilize planning ability of ERP to ensure that your production plan is as per demand.  MRP and MPS strategy helps to procure raw material according to demands, and plan production so that neither sales opportunity is lost, nor inventory is over stocked. This accurate planning and strategy save huge cost, optimize resource allocation, and help in revenue generation.
  

• JIT Production- Lean manufacturing principle like Just-in -Time (JIT) production can help food manufacturers to reduce inventory holding costs, minimize waste and streamline operations. By applying such technique through ERP modules, organization can maintain continuous flow of production and avoid bottlenecks which will eventually reduce costs.
  

• Material sourcing- ERP analytics provide insights for optimal sourcing strategies. Analytics give a fair point for raw material sourcing, ingredient sourcing, packaging material. It also helps to include options for local sourcing, bulk purchasing, or strategic partnerships, to secure the best prices and minimize procurement costs.
  

• SKU rationalization- ERP analytics can help to identify and rationalize underperforming product variants which will enhance inventory management, reduce chaos in distribution and can lead to cost savings in manufacturing and warehousing.
  

• Supplier Consolidation- ERP driven supplier analysis can help food manufacturing organizations to negotiate better price, reduce administrative overhead, achieve economies of scale, and streamline procurement processes.  

Food manufacturing ERP system is an inevitable part of food manufacturing unit. But only the efficient and proven ERP can do justice to your investment. BatchMaster ERP is one of the solutions which has served more than 3000 clients across the globe in past 30 years. With industry specific expertise, and features, the solution can give in-depth insights of your production process and helps you to save costs where-ever possible. 

To know more about BatchMaster ERP on how it can help to save costs, discuss it with our experts. Connect with us on sales@batchmaster.co.in.