Co-products & By-Products: What they are and how to ensure accurate tracking & costing.
Co-product and by-product management is critical in food manufacturing and more specifically the meat industry. Regularly clients approach us seeking functionality to help them efficiently manage, track, and account for the costs of multiple outputs from a single production run. So a beef sub-primal would output various sizes of steaks (co-products) and various by-products: stew, trim, etc. Unfortunately, it is all too common that the ability to do this is lacking in many off the shelf ERP applications that are utilized by food manufacturers.
So what are co-product and by-products
A manufacturing process can yield several products, especially in the meat industry. These products are called co-products and by-products. But, what is what? Co-products are necessary secondary goods that are generated during the manufacturing process and can be sold or reused profitably. By-products are unavoidable residual outputs that are usually unusable and have to be disposed of at a cost. The tracking and costing of both, co-products and by-products, are critical to a food manufacturer.
Co-product and by-product recipe management
Ideally a meat processor will utilize an ERP system that offers a co-product and a by-product Bill of Material (BOM), where a single production run can have several desired or secondary outputs. Each of these outputs could be packaged into a separate finished good item or used in other production activities. Columbus’ solution, Columbus Food, offers our clients the functionality and allows them to properly costing of the co and by-product items. For a finished good item, the production BOM number field maintains the packaging BOM number and Columbus’s production grouping item field indicates the intermediate item used to produce this finished good item. Allowing for more accurate lot tracking and traceability; a critical need for meat producers.
Many ERP solutions can provide production planning and scheduling tools, however many meat processers need the ability to do supply-driven planning to reduce waste and spoilage and also avoid stock outs of desired items. Columbus works with clients to provide supply-driven planning worksheet to filter by location and define how far out they want to view supply and demand. The processor can see a list of process orders and then package orders planned. Finally, selecting create orders will create new production orders based on what has been set.
Consumption and output reporting is mandatory during and after the production process. ColumbusFood enables a full real-time consumption and output reporting. This includes integration to key equipment like scales and labelers on production lines. Columbus also offers a tool called batch reporting. This tool not only gives the processor a view of the previously posted production activity but also allows him to make additional entries.
Want to learn more about co & by-products and see it in action? Check out Columbus’s