In the manufacturing industry costing is crucial. The financials of every element that goes into producing a batch has to be considered. From material costs to operator hours to testing time to the finished product; each step has a price associated with it. Accurately calculating and tracking the costs associated with each of those steps is a daunting task that would typically require the use of various pieces of software and multiple records.
As the innovators of all-in-one Good Manufacturing Practices software solutions, we’ve added a new feature to our latest release of InstantGMP™ PRO that accurately calculates, in real time, the costs associated with the entire manufacturing process. This feature not only determines bulk production costs and final pricing but it also helps with budgeting and forecasting.
How does this new Costing feature work? Let’s start where the process typically begins by looking at the manufacturing materials.
The True Cost Of Materials
On your commute to work you probably passed a gas station and made a mental note of the current price. Then on your way home, you probably noticed that the price changed during your shift. Gasoline isn’t the only thing prone to shifting prices. Various supply and demand factors led to shifting prices for manufacturing materials, too.
Keeping track of your materials costs is tricky business since those prices often fluctuate. The price you paid for citric acid in the fall won’t be the same you pay in the summer. And since every batch production uses materials that are purchased from different lots, the difference in the prices you paid will affect the production cost.
InstantGMP™ PRO’s new Costing feature takes all of those pricing differences into account. Now, every time a material is added to a batch, the Costing feature calculates the price based on exact costs of that material when it was originally purchased. As the costs are calculated in real time, it helps you keep track of how much material you are using in the production process and how much it’s costing.
In addition to material costs, you’ll need to account for all of the hours your team members spent producing the batch. Our Costing update has you covered.
Tracking Time
Just like manufacturing materials, each team member has a different cost associated with their role which also impacts the pricing of each production. For example, Operator A worked on the process for five hours at a rate of $300 an hour, while Manager B spent two hours on the production at a rate of $500 per hour.
Any time a team member participates in the production process, the Costing feature tracks and calculates their hours and rates in real time and adds them to the costing summary along with the material costs to keep an accurate record of the current overall cost.
Once the final summary of materials and operators costs are calculated, it’s time for the accounting department to review and participate in the final phase of the process
Determining The Final Price & Looking Toward The Future
Figuring out how much to charge customers for each finished batch has always been a difficult part of the production process. Having to track down all of the various receipts for the materials and confirm exact labor rates is not only labor intensive, it’s also prone to inaccuracies. That was before we updated our InstantGMP™ PRO software.
Now that the Costing feature can easily produce an accurate record of how much the materials truly cost and how much labor was spent on producing each batch, the summary can be extracted and sent to the accounting department. After reviewing the summary, the accountants can then decide how much to charge for each finished batch. Taking all of the costing factors into the consideration, the batch production costs can be marked up to determine the final price.
Using the Costing feature’s summary to determine the final price isn’t the only solution to the accounting department’s production process needs. Since current and prior materials prices are included in the summary along with operator rates, the accounting department can use this information to create budgets and more accurately plan their forecasts.
Since our inception, InstantGMP™ PRO has led the way in providing software solutions that make compliance to Good Manufacturing Practices easier and more efficient. While other companies focus on particular areas of the manufacturing process, we look at the entire process – which includes the costs. Adding the new Costing feature to InstantGMP™ PRO provides you with the tools to easily and accurately track and calculate your material prices and labor rates to reflect your overall costs and determine final pricing for every batch your facility produces. And just like us, the Costing feature goes one step further and lets you plan for the future by laying the foundation for better budgeting and forecasting.
To learn more about the Costing feature that’s included in the latest release of our InstantGMP™ PRO software, contact us for a live demonstration with one of our GMP experts.