Animal Nutrition

The importance of aligning cost management and supply chain

In order to handle the possible variables interfering with the supply chain some control aspects need to be considered

 

Plan and deploy efficient systems within budget; control correct cost, flow and storage of raw material and inventory and product finishing are all part of the logistics process of a food company supply chain.

 

Several benefits are attributed to effective supply chain management, such as reducing costs, increasing market share and sales, and strengthening customer relationships.

 

Among the main challenges that deserve attention are product range, products with shorter life cycles and increased use of suppliers and cost management. It is necessary to understand the sources of uncertainty and reduce them in order to design the perfect strategy.

 

In order to have standardized performance metrics in a supply chain, the SCOR model is commonly recommended.

 

SCOR associates the concept of benchmarking with analysis of best practices and creation of management methodologies. Standardizing indicators provides for organized, easily accessible performance benchmarks.

 

Another positive point is the accuracy of the system and ease of comparison with other logistics chains. Because metrics are standardized in this model, it is possible to know the calculation formula.

 

Cost management in the food industry

 

Cost management practices must be in place to secure the supply chain process of a food industry. Quality control is one of key factors to be considered within cost management in a food industry. The most common challenges are seasonal variations that interfere in the characteristics of raw materials, multiple production lines within the same company with different quality controls and maintenance of hygienic conditions.

 

Another important fact in a company is waste. Recycling waste can reduce the cost of industrialization, add value to the product, and reduce environmental pollution. Avoiding disposal also avoids hiring a contractor to do this job.

In order to stay competitive in the market and reach aimed results, new product research and development, mainly about sale prices, come as an opportunity in cost management.

 

With all the examples above, it is possible to realize that almost all aspects related to logistics and supply chain are closely related to cost management practices.

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