For a dairy producer, the process of milk payment is not just based on weight or volume, but also on the key components of milk.
So, what are the key components of milk? Water, fat and solids-non-fat (SNF). These components determine the value of milk for the producer.
Milk is handled based on weight or volume—be it for receipt, storage, transfer or production. So, based on the volume, how does a dairy producer determine the value of milk according to the key components?
For starters, most dairy producers track the components manually for each receipt. This tracking is done outside of their current ERP system and is a time-consuming process which can affect employee productivity. This is where component pricing model functionality comes in handy.
An efficient ERP system removes the complexity involved in component pricing by allowing your dairy business to track milk receipts in weight or volume at lot level. You're also able to identify the component quality from different milk-vendors and allow for premium or flat deduction based on bacteria count, somatic cell count, administration fee and volume credit. Then, you can price each receipt around those components.
The component pricing functionality enables your dairy business to focus more on profitability and product quality. Your dairy business can efficiently and accurately calculate the milk producer’s payment (both pre-payment and final) based on component payment calculations. Key historical data (quantity and component quality) can be communicated with the milk producer themselves.
By integrating pricing and costing by components, your dairy business can grow and achieve your operational goals.
To learn more about how ColumbusFood can modernize your dairy business, visit our ColumbusFood for Dairy page.