Cost recalculation and revision of production processes

Food industry

Process analysis

When your prices are not competitive in your target markets, it's probably time to recalculate costs and revise your production processes.

The company's management assessed the situation as serious and turned to the specialists at Paul Advisory for a real challenge. As part of a comprehensive project, a manufacturing process analysis and cost pricing was carried out. The result was a refinement of the costing formula, which brought many direct and indirect benefits to the company and helped to make its products more competitive in specific target markets.

The project achieved:

  • Changes in the cost pricing system for individual products
  • Refinement of cost pricing of products
  • Reallocation of a large part of overhead costs to direct costs (personnel, technology, energy)
  • Change in the way overhead costs are allocated through indicators more in line with reality (not allocated only through material costs)
  • Determining the actual margins of individual products and customers
  • Implementation of a new costing formula in the internal information system, which allowed a very flexible response to changing input prices, recipes and customer requirements

The side benefits of the project were:

  • Revealing bottlenecks in the production process - potential for eliminating waste
  • Uncovering bottlenecks in logistics and transport
  • Obtaining a tool for managing the company's product portfolio and business strategy
  • Obtaining a tool for more effective commission remuneration of salespeople

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