NetSuite (and many other ERPs) facilitate the costing process in production when the production run has a single output. But what do you do if you’re breaking down a side of beef? Or producing different private label products on the same line? ParityFactory’s combined solution solves this issue, and provides the ability to fine-tune the cost calculation for single and multi-output production by integrating with your ERP, making costing for multiple-output production possible.
How it works
Costing is managed dynamically by adjusting the input values after production is complete, via one of the three methods:
| Cost By Weight Ratio | |||
| Consumed | Produced | Total Value | Input Weight Assigned |
| 1000 Lbs ($2,000) | 200 Lbs Hotdogs | $100 | 200 Lbs |
| 300 Lbs Hamburger | $300 | 300 Lbs | |
| 500 Lbs Chuck | $600 | 500 Lbs | |
The first method is a cost by weight scenario. In this, produced weight determines how the input BOM, and therefore costs, are distributed across co-products. When creating Assembly Builds, the input Components will be divided will be divided based on the ratio of the Output Products weight to the total weight output by the Production Run.
Example: We produced 1,000 Lbs of Beef Total, 400 Lbs into Short Ribs, 600 into Chuck Roast. We consumed 1,400 Lbs of beef, so we assign 560 Lbs to Short Rib production and 840 to Chuck Roast.
| Cost By Value Ratio | |||
| Consumed | Produced | Total Value | Input Weight Assigned |
| 1000 Lbs ($2,000) | 200 Lbs Hotdogs | $100 | 100 Lbs |
| 300 Lbs Hamburger | $300 | 300 Lbs | |
| 500 Lbs Chuck | $600 | 600 Lbs | |
Another option is a cost by value method. In this, the value of items produced determines how the input BOM, as well as cost, are distributed across co-products. When creating Assembly Builds, the Input Components will be divided based on the relative extended value of the Output Products to the total extended value of the Production Run.
Example: We produced 1,000 Lbs of Beef Total, 400 Lbs into Short Ribs worth $1.50 per pound, 600 into Chuck Roast worth $0.75 per pound. We consumed 1,400 Lbs of Beef, so we assign 800 Lbs to Short Rib production and 600 to Chuck Roast.
| Cost By Pre-Set Ratio | |||
| Consumed | Produced | Total Value | Input Weight Assigned |
| 1000 Lbs ($2,000) | 200 Lbs Hotdogs | $100 | 300 Lbs? |
| 300 Lbs Hamburger | $300 | 300 Lbs? | |
| 500 Lbs Chuck | $600 | 600 Lbs? | |
Finally, users can also cost by a pre-set ratio. In this method, a pre-set ratio defined by the client determines how the input BOM and costs will be distributed across co-products. When the template is created, a share of input materials is set. This is then used to divide the components on creation of assembly builds.
Example: We produced 1,000 Lbs of Beef Total, 400 Lbs into Short Ribs which were assigned 50% of the input materials, 600 into Chuck Roast which were also assigned 50% of the input materials. We consumed 1,400 Lbs of Beef, so we assign 700 Lbs to Short Rib production and 700 to Chuck Roast.
When ParityFactory and NetSuite are used in conjunction, you can solve one of the biggest challenges unique to food manufacturers and make costing for multiple-output production possible. This data is captured seamlessly when tracking Inventory with ParityFactory, and is sent back to NetSuite automatically, providing you the information to make better, more informed decisions about your factory.
Interested in learning more about how ParityFactory and NetSuite can work together to empower your operation? Schedule your demo today and our team of food-processing experts will give you a comprehensive tour of ParityFactory WMS.
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