Is your formula management system outdated and inefficient?

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Is your formula management system outdated and inefficient?

For most manufacturers, there is a high level of importance placed on the tracking of accurate inventory levels and costs through their ERP.  Many go to great lengths to maintain reliability within their system.  There is no denying this importance, but what often gets overlooked, and is just as valuable; if not more, are the formulas that are the back bone to the product development cycle.  Countless hours have been spent developing these formulas, yet, it is not uncommon to find a company maintaining their formula base in a manual log book, or more commonly, in a Microsoft Excel file.  In theory these options could work, but companies quickly become inefficient by using a combination of systems to perform other tasks driven from the formula.

One alternative is to invest in formula management software. By using formula management software, manufacturers:

  1. Gain a competitive advantage through the reduced product development cycle time-to-market and
  2. Ensure a quicker turnaround of quality product and documentation for customers.

There are several options available on the market with varying functionality that can help improve a business’s productivity. Below are some of the most important functionalities to look for that improve, even possibly shorten, the product development cycle:

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  • Linking to ERP – As new formulas are being developed, you will want to be able to access current raw material costs (RMC). By integrating to your ERP as a raw material is purchased, your formulators would have the most up-to-date information – which can ultimately be used as a gauge for determining end-item pricing. Some systems will even allow users to enter theoretical pricing based on proposed vendor pricing increases which you can use to evaluate a “what-if” scenario.
  • R&D Projects and Sample Management – New formula requests will often go through a lengthy trial and error process before becoming an active selling formula. As each trial is created, a sample will need to be created for the requesting party for their approval. Having the ability to track samples from concept to inception is a critical step for product development.
  • Physical Property Analysis – You may have the need to dynamically calculate certain overall qualities of the formula. For example, a paint company may need to do a VOC analysis with every change to the formula or a food company might want to see the effects on nutritional information after an item substitution. As the system quickly performs these complex calculations you could then easily generate a nutritional label for your product.
  • Formula Security / Tracking Changes – Having a system to store your formulas is convenient, but if everyone has access to the formulas and can easily make changes, then you’re back at square one.  At a minimum, make sure your formula management software can be configured in a way to limit formula modification rights to those who should have it. Furthermore, your formula management software should be able to track the changes that have been made and the employee who made those changes, this might help you meet a qualification for a regulatory audit.
  • Historical Versions – Over the course of time, there will be changes to formulas – whether due to obsolete materials, a modification of consumption percent or even a simple change to manufacturing instructions you need to be able to archive the prior versions.
  • Quality Control – Before anything goes out the door, it needs to pass a series of tests in order to ensure that safe and quality products go out to your customer, accompanied by a Certificate of Analysis. As this is a critical function for process manufacturers, it is imperative that the formula management system utilized has the flexible QC functionality to allow users to assign default tests for each formula, as well as the ability to perform historical analysis of these tests.
  • Mass Item Replacement – No matter how many formulae you have, you should be able to do a mass item replacement with a formula management system. This is as simple as finding all formulas using the item number 123 and replacing them with item number 456. This should be a quick and simple process that takes just minutes, – opposed to having a user manually go through all formulas and swap each item out one at a time.
  • Production Information – If you utilize a system to maintain your formula, you should also require it to integrate your production functionalities. If tied in directly, the creation of a manufacturing order would pull from the existing formulas in your system. There would be no need to enter a formula into one system and migrate to another. Production would be based on the most current formulation. In addition, users would be able to store information at the formula level that will assist with production – whether it be manufacturing instructions, formula production capacity, or lead times, or another user-defined value critical for batch ticket reporting.
  • Compliance Information – Depending on the industry, the content and agencies will vary, but having to produce regulatory documents is a commonality for all industries. The ability to quickly and easily generate the necessary data-driven documents based on existing formula and/or item information is critical. In addition, as regulations change, the ability to easily modify and mass generate for multiple formulas will be an added benefit.
  • Advanced Search Capabilities – No matter the number of formulas you have, you will have ability to quickly search your existing formulas based on specific criteria. For example, let’s say, you are looking for a formula that contains Sugar, is Kosher certified and allergen free. Your system should quickly do this for you, opposed to needing an employee to sort through every formula. In addition, most systems have no restriction on what qualities within a formula you want to search. Many systems will even allow an unlimited number of formula characteristics to assign and search upon.

[/fusion_text][fusion_text]As you can see, there are many key functions available when migrating to a formula management system that can support your organization to more effectively and efficiently manage the product development life cycle.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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