Food manufacturers today must contend with greater dependence on fewer (but larger) customers, rising costs of raw materials, heightened consumer awareness of food safety, stringent government regulations and the threat of bioterrorism. Pricing competition among food retailers in mature markets along with the weakened worldwide economy have lowered company profit margins and resulted in rapid food industry consolidation. Large retailers are demanding increased visibility and better results from their supply chains, and food product recalls carry enormous consequences, in costs as well as in damage to brand equity. All of these industry pressures are forcing food manufacturers to introduce better food chain traceability and quality management.
As large operators and retailers gain more power, food manufacturers have less control over prices. Raising prices is no longer an option to fix falling profit margins. Manufacturers must either accept lower profit margins or increase efficiency and decrease costs. Cost management demands accurate, detailed cost analysis. The detailed information required for regulatory compliance can serve as a foundation for improved costing procedures by food manufacturers and result in greater profitability.
By understanding the business processes required for compliance, the challenge of compliance can become an opportunity for business gains. In the highly competitive food market, competitive gain is often tied to how well the business is managed. Compliance can be used to improve the management of the business.
