Knowing the ins and outs of your Food and Beverage profit margins can be a puzzle.

We get it.

And if you wanted a puzzle, you’d probably get the jigsaw variety or pick up a crossword or Sudoku, right?

But your business isn’t a game – and financial errors or unknowns can be costly.

That’s where a Food and Beverage ERP (Enterprise Resource Planning) system can save your bacon.

What Does a Food and Beverage System Do?

Food and Beverage ERP software can help you determine your margin by item and day by integrating and analyzing data from numerous sources, such as sales, inventory, purchasing, and accounting. An ERP can also apply price rules and margins based on various parameters, including customer, item, quantity, and date.

Using an ERP, you can accurately picture your profitability and performance for each product and day and keep your executive team informed.

A modern ERP keeps track of all the costs of a manufactured item, including material, labor, equipment, outsourced activities, and other resources that are directly necessary to produce the item. An ERP will also contain sophisticated analysis and reporting tools to help you drill down and determine your operation's actual costs – and profit margins.

Why is Food and Beverage Production Costing Important?

Knowing exact task prices is among the most challenging things for a Food and Beverage manufacturer. When all the resources and the complexities of a manufacturing operation are considered, companies find it difficult to determine how much a task costs. However, knowing how much to charge is difficult without thoroughly understanding production expenses, which can significantly reduce your profit margins.

Inaccurate job costing causes a variety of issues, including:

• Significant discrepancies between actual and anticipated expenses
• Reduced margins and profits
• Tension between project teams and management, as well as poor customer connections
• Limited understanding of your company's profitability

Precise costing informs you how much your production costs are and whether or not you make money on them. It also helps you identify areas where you can be more efficient and save money.

Accurate costing provides senior management with accurate and timely information, allowing them to make more educated decisions about production, pricing, and process efficiency. It can help you save money, pass cost savings onto clients, and increase profit margins.

How Can You Determine Your True Production Costs?

The most straightforward approach for a Food and Beverage manufacturer to understand and control project expenses is to use industry-specific ERP software, such as DynamicsFoodERP, powered by Microsoft Dynamics 365, from Liberty Grove Software.

You've heard it before: ERPs provide custom manufacturers with complete visibility, connectivity, and real-time data that they can utilize to manage company operations better.

Getting the Numbers Right

A modern cloud ERP provides Food and Beverage manufacturers with the data and connections they need to calculate costs: ERP systems enable you to track every detail of your production facility. With a better grasp of the time and resources required for each project, you can calculate how much each job costs.

It's easy to underestimate the amount of time and work that goes into production, but a modern ERP provides precise real-time data, so you don't have to guess; you know the facts and can base your decisions on them.

A fully integrated ERP system allows you to track task costs throughout manufacturing and collect cost data, such as cost allocation per employee wage rate/work center.

A Food and Beverage ERP Removes the Guesswork

Having this information at your fingertips allows you to drill down on costs, ensuring that you always know your actual work costs — and making faster, more educated decisions about how to make your firm more effective and save money.

With an ERP, you can compare your initial estimate to actual expenses to better understand costs, boost profitability, and identify profit and loss centers.

An ERP enables you to use accurate, real-time data and analytics to establish actual task expenses, including live job costing. This allows you to optimize on the fly and better estimate your profit so you always know where you stand.

Advantages of Using a Modern ERP for Food and Beverage Production Costing

Using an ERP for job costing allows you to generate an accurate and complete job cost for each task in your shop, permitting you to make faster and more informed decisions about which jobs to take on, what pricing to charge your clients, and how to save money – all while becoming a more efficient shop.

Another significant benefit of incorporating an ERP solution into your manufacturing organization is the ability to monitor real-time progress and costs and match them with your approved project plans. You'll be able to accept jobs you know will be profitable while avoiding those that will reduce your profits.

Some further benefits of adopting an ERP system for job costing include:

Increase profitability by correctly tracking task costs and comparing them to your initial estimate to identify profit/loss centers.

• Track the standard, average, and actual product costs
• Real-time job costing allows you to improve on the fly and better estimate your profits
• Quickly determine actual and standard cost variations
• Analyze profitability by work, project, or contract
• Easily calculate profit/loss down to the item number
• Create job cost budgets based on estimations or work orders

Are You Confident of Your Profit Margins?

Liberty Grove can help you use many tools and services to derive the most from your technology investment, improve your organization's productivity, and increase your bottom line.

Contact Liberty Grove for a complimentary consultation on how a Food and Beverage ERP can give you a clear picture of your profit margins by item and by day – and watch your profits soar.

Related reading:

7 Advantages of a Food and Beverage Cloud ERP Deployment

Hungry for Profits? Or Are They Already on Your Menu for 2023?

About the author

Liberty Grove Software is an established Microsoft Partner that focuses on providing customers with sales, service, and support for Microsoft Dynamics 365 Business Central/NAV solutions and training and upgrades.

Liberty Grove Software helps manufacturing firms compete by automating tedious operations with Microsoft technologies. Our extensive manufacturing knowledge has established us as the preferred Microsoft partner for assisting mid-sized manufacturers in increasing production.

Over more than 25 years, Liberty Grove has assisted hundreds of customers with businesses ranging from small to mid-sized to Microsoft Partners in implementing, training, customization, and upgrading Microsoft Dynamics ERP solutions.

The organization is one of only a few companies worldwide that Microsoft recognizes as qualified to provide Business Central/NAV Upgrade Service Centers.