Maximizing transparency for better business decisions
As a manager in the nutrition supply chain, your primary goals are profitability, competitiveness, and market success. Achieving those goals hinges on making the right business decisions at the right time. But you can only do that if you always have accurate data at your fingertips. So how can software help you ensure optimal decision-making through operational transparency?
You want to increase your revenue and profitability. Therefore, you need to make good investments that provide a fast ROI and work more effectively and efficiently. To achieve this, you first need to measure all these things. How can you decide where you should focus your efforts if you don’t know what revenue, profit, and growth each business area is responsible for? The same goes for your product range, production facilities, and so forth.
And you need access to that data in an understandable format at a moment’s notice. As a company operating in the nutrition industry, what information is crucial to the success of your business? Let’s investigate tools that ensure you have this information at your fingertips.
What will raw materials cost tomorrow, next week, and next year?
For a start, you need to understand and predict the raw material costs. In the nutrition industry, the margin is highly dependent on ingredient prices. And since most ingredient prices are volatile, you must constantly track them over time and for each of your production sites, since contracts and freight costs will vary.
Most of the time it’s not enough to look at historical data; you also need an easy overview of predicted future raw material prices. That information should be based on different sources, such as your purchase contracts and market prices. Also, you should be able to compare and combine both (if you are short of an ingredient, the demand will be covered partially by a purchase contract and partially through spot buying).
How much do production and transportation cost?
Production and transportation costs (both inbound and outbound) are another key factor in your success. Production costs might vary by product group, packaging type, and urgency of the order — If you can’t control these elements, you can easily slip up and make bad decisions.
Transportation costs will vary depending on how you combine your customer orders or purchase orders, which trucks you send to which destinations, whether or not you use external carriers, and which ones you use. So there are lots of variables you need to consider when you’re evaluating your logistics team and/or production department.
Inventory availability, rotation, and costing
Perilously low inventory levels will cause operational problems and production breakdowns. Too much inventory ties up capital that could be invested in other areas of the company. So, it’s essential that you always have a clear overview of your inventory, and that the system provides you with accurate predictions and simulations of how you can carry the least amount of stock without hurting your operations.
Sales pricing
The nutrition industry is highly competitive, and customers are very price-sensitive, so a well-controlled sales pricing system is key to revenue growth. To set your list prices you need an immediate calculation from the system: what are the materials and other costs? What is the expected margin for a certain target group? And what additional discounts and charges can or should you offer to achieve the sales you forecast?
Of course, you also need to be able to simulate the effect any price-related actions will have on profitability. Certainly, you need to attract customers with an automatic rebate system, but over-discounting can quickly lead to negative margins. So you need a system that provides flexibility but also highlights the effects on your profitability. Only then can you make smart pricing decisions.
An industry-specific software tool like BESTMIX offers real-time data analysis and what-if scenario modeling, with the help of which you can confidently adjust pricing strategies to maximize revenue and maintain healthy margins. In the nutrition industry, where a 1% increase in prices can translate to millions in additional revenue and vice versa. Having the right sales pricing system can be a game-changer for your business.
What about the future?
When making decisions about the future, you have to be able to make some assumptions: how much are you going to sell in a given period, in a given region, or a particular product range? Simply put, you have to be able to forecast your sales.
But of course, if you make wildly inaccurate forecasts, it will hurt your business. So any system you use should support accurate forecasting, data comparison between different forecasts (such as optimistic/pessimistic), and data comparison between plan and realization. Then you can monitor performance and adapt your strategy when you need to.
So how can BESTMIX help?
To make smart business decisions, you need a tool that provides flexibility while highlighting the parameters that affect your profitability.
So you need a partner you can rely on, one who can advise you on how to set up your business system in such a way that the data you need will never be more than a few keystrokes away. You need a system that will give you the right information at the right time in an easy and accessible way, so you can make informed decisions fast.
BESTMIX Software is such a tool. It allows nutritionists and formulators to manage and optimize the nutrition and cost attributes of feed and ration formulation. By combining state-of-the-art technology with the input of experienced nutrition industry professionals BESTMIX Software offers industry-specific tools for least-cost feed formulation, quality data management, ration calculation, cloud services, and ERP. With the help of these tools, BESTMIX Software can boost your company’s efficiency and profitability, saving you money across multiple flows and processes and allowing you to focus on your core tasks.