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8 Steps to better model your food procurement costs

Posted by minteclimited on May 23, 2019 12:52:49 PM

Should Costs Models are an amazing way to track all the cost inputs that go into your finished products -  from chocolate spread to lasagna. 

They enable you to calculate all the costs of input ingredients - the beef, cheese, pasta etc. As well as the cost of the packaging, energy, labour etc.

This means you're always able to track costs against changing market prices and identify which ingredient prices where change is occurring. 

Overall, you're better able to evidence base your pricing to customer and have stronger price negotiations with suppliers. 

This means your business can improve cost control, increase efficiency and manage risk. This helps to maintain or even improve margins. 

 


Cost Model Check List

From your detailed product specification identify the ingredients and raw material inputs of your finished product. choose your ingredients step 1

 

Add the price series for each ingredient.  Choose the correct currency. choose your currency step 2

 

Add the unit weights or percentages of the total product for each of the ingredients required. Total percentage can not exceed 100%. choose your weight step 3

 

Repeat this process for other inputs such as packaging, transport, energy, labour and duty. As well as any other costs affecting the product. repeat for packaging etc step 4

 

Chart your product to track the price change over time. chart you product step 5

 

Review the price change report to see what prices are driving your product costs. Review your PCR step 6

 

Review the recipe breakdown to isolate key price changes Explore your model breakdown step 7

 

Dig deeper to inform your pricing strategy Dig deeper into your product recipe step 8

 

 


Download a sample cost modelnegotiation pack2

 

 

Topics: Mintec Analytics

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