To understand if you are a company who falls into this trap, let’s first fact check to see if you have any of the most common problems:
- An ERP/MRP System which is separate from your quotation system or purchase system?
- A ‘manual’ method of calculating your product costing using basic spreadsheets and calculators, in turn leading to a ‘manual’ method of calculating your sale price?
- A lack of visibility of the effect material cost price changes have on the profitability of your products.
- An ‘ad-hoc’ schedule for ‘remembering’ when a product should be re-costed for the customer without set dates or triggers which would help this process.
- Difficulty in understanding how the labour charges for the production can differ between different production methods/machinery.
If your company can tick the box next to any of those, then unfortunately you are indeed one of the companies who are currently falling into the trap of being so focused on getting on with business, and selling your product range – you lose sight of the profitability of your product range.
This can be serious for your company as all too often a full order book can look to the untrained eye that your business is doing really well. It may be very difficult to obtain your competition price structure and therefore your only visibility and guide for your own pricing and placement within that market can be by looking at your own products. However without the profitability set correctly against your products, you and your staff become ‘busy fools’ – working to maintain an ever-reducing profit margin without any visibility of how that is being eroded over time.
The only way to truly solve this kind of problem is to setup strict guidelines within your company.
Examples of this could be:
- When a material price rises – staff should re-evaluate all products using that material and adjust cost prices accordingly
- When a quotation is raised for a customer, staff should check against the products to see the last time the selling price was re-calculated – if it’s outside a set time you have identified – a new costing and pricing calculation should be undertaken by your staff.
- If you introduce a new machine or change staffing costs within your business affected products should be re-costed accordingly.
If your current systems do not allow this kind of action to be performed automatically, it could be time for you as business to consider the impact this gap in your abilities is actually costing your company.
It may be that you as a business are crying out for an integrated system which could handle all of this for you, within the wider environment of handling the rest of your business as well – however you feel the costs of implementing such a system would be too great?
I’m here to tell you that that’s simply not the case. With our system – Receta – the actual costs of implementation in terms of both the actual costs of the software AND the staffing costs needed to complete the integration/start-up of the software are by FAR outweighed by the savings in terms of efficiencies and improvements to your bottom line.
Why not contact us now at firstname.lastname@example.org and arrange for a free demonstration. We will arrange a screen-share meeting at a time to suit you and tailor our demonstration to show you the key features which overcome the problems you currently face in your nutraceutical business.