Manufacturers in the Food and Beverage industry are experiencing both margin compression and leakage challenges presented by the ongoing energy crisis and the unique costs associated.
Margin compressions (procurement costs or fixed and variable manufacturing costs) driven by:
- temperature regulations,
- extreme usage of plastics, and
- the need for high food integrity
Margin leakage resulting from increasing:
- Gross Sales to Net Sales dilution(Off-invoice adjustments include rebates, trade promos, etc,) and
- Cost-to-serve customers (adjustments include freight cost, returns and payment terms)
The fight against margin compression and leakage becomes paramount…,
The key areas of cause are typically:
- Margin compression:
- Increased competition
- Internal production problems
- Macroeconomic factors (i.e. Energy Crisis as noted above)
- Rising SG&A costs without a proportional increase in price
- Margin Leakage:
- Manual processes prone to mistakes and inefficiencies
- Spreadsheets and lack of automation
- Inaccurate or outdated customer information
- Unclear or inaccessible policy information
- Underbilling
- Pricing errors brought about by bad data and unapproved deductions
- Unenforced policies, including penalty fees
What can be done?
Need an expert in Developing Solutions to Margin compression and leakage?
Contact Value Driven Solutions today:
772-722-8811
