5 Cost-Saving Tactics for Lean Food Production

Welcome to our LinkedIn newsletter, where we dive deep into the world of cost-saving tactics in Lean Food Production.

In today's competitive landscape, businesses in the food industry are constantly aspiring to reduce costs without compromising quality. Here, we'll focus on the strategies and tactics that can revolutionize food production by cutting expenses and boosting efficiency.

From adopting cost-effective production methods like automation and Just-In-Time manufacturing to optimizing supply chains and enhancing inventory management, we'll explore actionable steps that can significantly impact your bottom line.

Before we dive in, here are major milestones of the article:

• Why Production is a Complex Process?
• What is Lean food Production?
• Areas Where Cost Saving Can Be achieved
• Cost-saving Tactics for Lean Food Production
• Minimize Your Cost of Doing Business with BatchMaster ERP

Why Production is a Complex Process?

Production or manufacturing is an overly complex process. It involves material procurement, warehouse management, inventory management, machine management, labor management and logistics management.

Besides these, it involves special art or technology to make such a product out of raw materials which is viable in market, compliant as per laws and offers value addition in the life of consumer.

The combined effect of increased layers of processes, application, and usefulness make production a complex process.

When it comes to food production, the complexity goes one layer up because of the limited perishability and shelf-life of raw material as well as finished goods. Besides, material handling conditions and compulsions add one more layer of intricacy in food production.

What is Lean Production?

Lean Production simply means production with minimum wastage. Wastage means wastage of material, labor, money, time etc. So, lean production is philosophy of reducing wastage so that it can produce more customer centric product in less price.

Lean production also involves producing faster (consider time wastage).

Thus, we can say that lean manufacturing or lean production involves constant efforts to reduce wastage starting from design process to manufacturing, distribution and towards the product support and beyond.

What is Lean Food Production?

When philosophy of lean production is applied to food industry, it is lean food production. The motive of lean food production is to minimize wastage in food industry, reduce cost of the product, increase profits, and provide more satisfaction to consumers.

Lean food production also involves sorting and removing unneeded items from the workplace. These can include items that do not belong to given areas.

For example- if an area of a warehouse is designated for ready-to-eat food, removing any raw material meat from that area to avoid contamination comes under lean food production.

So, anything which reduces wastage and increases customer satisfaction comes under the umbrella of lean food production.

Areas Where Cost Saving Can Be Achieved –

There are various areas in which cost saving can be achieved. Some of these areas are:

Raw material – Raw materials hold a major share of company’s cost. Manufacturers can use various methods to reduce this cost significantly.

For example, by deploying effective inventory management strategies-

• Negotiating favourable price from suppliers,
• Enter into a contract with vendors,
• Planning material requirement beforehand and procure in off-season,
• Minimizing waste on shopfloor and elsewhere.

Labor cost – Labor cost takes a significant part in production cost. It increases the price of a commodity by many folds. Organizations must work towards minimizing labor cost by automating redundant processes, deploying robots, and utilizing AI.

Supply chain – Supply chain optimization can reduce cost up to a great extent. This can be done by reducing cost of transportation, optimizing inventory, minimizing storage expense, and improving overall supply chain.

Cost-Saving Tactics for Lean Food Production –

Food production plays a key role in world economy. The cost of food production relates directly to innovation and market demand.

Less production cost and high quality generates more demand in the market. Thus, organizations across the globe are endeavouring to minimize cost without compromising on quality.

Here are some of the cost-saving tactics for lean food production:

1. Adopting cost effective production – Companies can devise many ways to produce cost effectively. They can use:

• Automation - It involves use of machines and robots to perform various repetitive tasks. This will reduce labor cost to a great extent. Moreover, it can improve efficiency.
• Just-In-Time manufacturing – Just In Time (JIT) is a technique where food manufacturers can produce only when they have customer demand. It will reduce inventory cost, warehousing cost, and will save wastage of perishable items.
• Continuous improvement - Continuous improvement is regularly reviewing the processes and finding out ways to improve. It involves change in procedures, processes, and tactics to produce goods.

A food production software like BatchMaster ERP can help organizations to produce cost effectively. It can help to automate various redundant process and save time, plus minimize human generated errors.

With its amazing MPS/MRP capabilities, BatchMaster ERP provides accurate JIT production abilities.

Analytics and reporting ability of the software can help organizations to find out areas of improvement. These reports and their inferences can help organizations to take necessary steps to reduce cost and improve productivity.

2.?Optimize supply chain for cost reduction – Optimization of supply chain can reduce cost involved in food production up to a considerable level. It involves raw material management, machine management, production management, warehouse management, and delivery management.

• Raw material – Raw material is the backbone of not only food industry, but for all industries. If organizations can identify suppliers who can deliver quality raw material at cheap cost, organizations can reduce cost of final product up to great extent.

Food production management software, like BatchMaster, helps organizations to identify pool of suppliers who can provide quality raw materials with minimum lead time and cost. Organizations can create a bank of such suppliers to minimize dependency on a single supplier and counter their monopoly.

• Production management – A well-managed ??production can reduce cost.

When organizations deploy food production software like BatchMaster ERP, it helps organizations to plan production and manage it effectively.

BatchMaster ERP facilitates batch adjustment as per the available material, identifies critical material and allows full and partial batch closing for immediate shipment.

It even allows following SOPs and special manufacturing instructions while also applying quality checks during production. This ensures that products are produced as per the defined norms and rework is not required. This ultimately saves costs.

• Streamline logistics – By optimizing logistics, organizations can reduce warehouse movement cost, delivery cost and transportation cost. Also, with streamlined logistics, inventory holding cost goes down.

ERP for food like BatchMaster ERP help maintaining good and amiable relationship with logistics partners, negotiate a profitable deal with them and create a database of partners for quick deliveries.

To know how BatchMaster ERP can hep you with supply chain management, click here.

3.?Improving Inventory Management for Cost Reduction – Improving inventory management is a sure-shot way of reducing cost. Reducing errors in inventory, knowing the correct stock in hand, tracking each inventory (itemized or batchwise), can help to reduce spoilage, and missing out opportunities.

One way to improve inventory management is Just-In-Time (JIT) production. It is producing only against demand. JIT helps reducing stock piling, and wastage due to expiry.

By using RFIDs and barcodes, organizations can regularly match stock in the system and that in real.

BatchMaster ERP, the food ERP software, updates real-time stock, facilitates JIT and enable using RFIDs. Besides, it provides host of inventory management features like classification of inventory, dual unit of measure, managing shelf life/expiries and providing different issue methods like, FIFO, LIFO, FEFO, etc.

To know ?about inventory management ability of BatchMaster in detail, click here.

4. Employee Training for Cost Reduction -Training and development of the employees of food organization can impact the cost of the product. A skilled and trained employee is more efficient, enthusiastic, and committed for quality. He is more vigilant towards best production practices, hence helps to reduce wastage and production associated cost.

Training also improves various processes and procedures.

For example, training on food safety can help minimize food contamination and spoilage.

5.?Upgrade/Update the Production Process and Increase Machine Throughput – By identifying gaps causing production sluggishness, and bridging those gaps, organizations can increase machine throughput.

The process involves maintenance of machines also.

Modern food ERP software, like BatchMaster can help organizations to maintain production asset to optimize equipment performance.

Minimize Your Cost of Doing Business with BatchMaster ERP –

It is clear from the discussion above that there is not one straight forward tactic to ensure lean production in food industry. Organizations must utilize every opportunity to reduce cost and keep reducing it further by changing various parameters.

BatchMaster ERP can assist organizations in doing this. The software not only can manage complete inventory and supply chain management, but it can also help to increase the machine throughput.

What makes BatchMaster ERP stand apart from its competitors is substantial experience of serving food and its micro-vertical industries. It has been serving the industry for more than 3 decades and have satisfied customers across the globe.

Book a no obligation call with BatchMaster consultant now and explore the possibilities of instilling lean production culture in your food organization, or you can mail us your queries at [email protected].