Fr
Fr
hero_contact_us
Back to blog

Managing Food Production Costs More Effectively

Naama Aharoni  |  May 5, 2023

How to manage costs in an uncertain market environment?

An unprecedented increase in energy and raw materials commodities prices and a dramatic decrease in consumer demand with the risk of entrenched recession in many financial systems across the globe have impacted the food manufacturing industry.

These pressures affect raw material, production, energy, labor, and distribution costs throughout the entire supply chain.

Food & Beverage costs have increased 38.6% since 2019, compared to a rise of 18.3% in selling prices:

cost-management_tableau1_EN

Unfortunately, squeezing profit margins make investing in needed upgrades and technological advancements difficult. Food and beverage manufacturing gross margins fell significantly in the first half of 2022:

cost-management_tableau2_EN

As a result, food manufacturing executives must find ways to manage costs more effectively while still meeting customer demand for quality products. In addition, they must face an uncertain future as they attempt to predict how markets will change and affect their operations.

With no guarantees on pricing and fluctuating demand, it can be challenging to determine how to adjust operations accordingly—especially if there is no system in place or if spreadsheets are being used for managing operations.

SMBs must better understand their costs while meeting tightened budgets to stay competitive. In addition, they must develop strategies to manage those costs more efficiently—through automation or IT solutions—or risk losing out on potential opportunities due to insufficient resources.

To read more on the main challenges in Food Manufacturing, download our ebook:

 Download the ebook