One of the most overlooked sources of profit in a formula manufacturing organization is in the existing business processes. There is much attention spent on gaining new sales or adding new products. However, little energy is focused on existing practices.
A crucial element to the success of any company is adding new sales. However, immediate profit can be found in your existing product mix, with your current customers and supply chain.
Let’s consider the top four things you can do today with the help of batch manufacturing software, like Vicinity Software. You can ensure your organization is getting the most out of your existing relationships, your operations are efficient and you do not need to change much of what you are doing today.
1. Reduce Inventory Shrinkage
How often are you performing a physical inventory? Is it more than once per year? Do you have to count all of your stock or just specific items? Your organization should be achieving very high levels of inventory accuracy with an ERP software, such as Vicinity Software.
2. Reduce Formula Loss
What processes do you have in place to review formula yield? Do you look at the recipes with the highest or lowest yields? Do you compare the actual yields vs. theoretical yields? If a formula routinely requires more material than expected you may have a problem. For instance, varying yields can cause raw material shortages. Delayed shipments occur. Orders are expedited. There are increases in quality control additions. Each of these scenarios erode profits.
3. Manage Material Costs
In changing economic conditions, it is one thing to know your actual production costs. However, it is another to anticipate changes before they happen. Far too few formula manufacturers can see future production costs until it is too late. Vicinity will virtually automate this process. If you know that material prices have changed. If you know the result of production costs. You can take corrective action. Therefore, profits will increase without making significant changes to your production process.
Read more on managing material costs here.
4. Follow Up on Sample Opportunities
Most formula manufacturers provide samples to new or existing customers. However, very few have a mechanism to track these samples and follow up on the results. Does your organization ship samples? What is the process to ensure the samples are driving sales? You will find that the process of taking and fulfilling a sample request is much more complicated than just filling a typical order.
To learn more about how batch manufacturing software can improve your business operations, stay tuned for future blogs on fixing each of these issues, or contact us today.
