To properly frame the economic impact that transportation costs have in feed and milling companies, it is necessary to start with a general premise.
The premise is that in feed and grain production and trading companies, the largest items of expenditure are–in descending order–the following:
- Raw materials;
- Transportation (on purchases and on sales);
- Energy (electricity and gas).
Needless to say, raw materials account for a far greater percentage, ranging from 75 to 85 percent.
- Transportation and Logistics
Transportation and logistics is the second largest expenditure item(5 to 8 percent) and is even, to give a measure of magnitude, 3 to 4 times larger than the energy (electricity and gas) item.
- Purchases of raw materials
There are global market logics influenced by a great many factors.
The best tool we can provide you with is the FARM-X “PURCHASING CONTRACTS” module in conjunction with the POWER BI module that enables timely analysis of contract purchases and coverage of requirements.
- Energy (electricity and gas).
We are finishing the developments of a system to track, for each processing step, the energy absorption of the production plant to store this important item of the production process in a constant and timely manner.
We will keep you updated on upcoming developments.
Thus, for the two types of items shown above, there are highly evolved tools for analyzing the data but they still refer to costs that cannot be governed at the source.
The experience we have accumulated in the field of feed mills, flour mills and supplement manufacturers was immediately developed in the area of logistics, both to the company’s external customers and to the internal production department.
In the next episode we will go over the aspects and variables in detail, stay tuned!!!
Share