Reduce Formula Losses with Batch Manufacturing Software

We recently wrote a post, Increase profits with batch manufacturing software, identify four ways software like VicinityChem can help you get the most out of your existing operations. An important step is to review and reduce inventory shrinkage. The next step is to increase profits by reducing formula losses.

Fitting manufacturers depend on yield

If your product varies greatly from batch to batch, there will be problems. If the formula uses more stock than expected to produce the same expired batch, it may run for a short time. Shortage of one component snowballs on late shipments, late orders and unsatisfied customers. Employees have to work overtime, quality control is scrambling to make products within specifications, and profits are shrinking. In short, it is the opposite of running smoothly.

Every time the return of the equation does not align with the expected returns, it cuts into your profit margin. When you experience above-average costs for a formula, you lose out on an opportunity to make healthy profits.

Formulation manufacturers often establish a theoretical yield, or batch production, based on times when things went smoothly and production flowed well. However, once this theoretical yield is determined, it may not be reconsidered. Production continues to run, but little attention is paid to the actual yield of the formula. It is almost impossible to determine the factors that contribute to the loss of the crop if you do not follow your products accurately and consistently.

How can you reduce formula loss?

Many factors can contribute to loss of formula. You have to pay attention to components, equipment, processes, etc. Here are some steps you can take to identify problem areas and track your harvest more accurately.

The first step is to keep track of everything. Can you quantify your losses for each formula for the past three months? Compare the inputs, total outputs, finished goods, and intermediate goods for the past three months. Make sure to include only closed batches for future production.

select losers

Next, target the items that show the greatest loss. List your formulas in order of the value of the loss, from greatest to least. Those items with the greatest loss have the greatest potential to drain profits. And because they have the largest margin of loss, dealing with them successfully will bring the most change.

Focusing on items with low margin of loss, low cost or low volume will not produce such dramatic results. These high-loss, high-cost, high-volume items will make a real difference to your business.

Determine the cause of the loss

The reasons for the loss may differ from one formula to another. If you see systemic losses, you may ask yourself what is going on with employees who deal with these formulas. Have there been delays in obtaining raw materials or changes in manufacturing procedures? Have the packing materials or operating instructions changed? Can you identify any areas where employees fail to keep up?

You may wish to have your own R&D lab recalculate theoretical yields based on current conditions and currently available raw materials.

Implement policies to track your variations and notice exceptions

You’ll want to get a clear picture of what’s going on. Track and document losses for each formula for the next three months. Mark the formulas so that after three months you can review the loss for each payment. Make this part of the final quality control/packaging process. Isolate any payments that reflect significant losses and investigate the causes immediately.

Dedicated software for batch manufacturers

Knowledge is power. Software developed specifically for formula batch manufacturing can give you the knowledge and insight you need without costly customizing your Microsoft Dynamics ERP solution. with Manufacturing Solutions for Chemicals (VicenityChem), food (Neighborhood) and fermentation (Neighborhood), you can review the equation return by batch and group the results by periods such as months or years. You can immediately see if the batch results are below the expected production throughput standards. The data is kept for continuous evaluation.

Vicinity has created a unique and flexible ERP software solution that enables manufacturers to increase productivity, manage unlimited recipes or formulas, improve inventory visibility and control, enhance quality assurance, eliminate redundancy, reduce costs, increase profits, and experience smart growth.

Contact us today Learn more about Vicinity Software’s specialized manufacturing software solutions.

by Vicinity Software, Neighboring Software

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