How PLM Keeps Food and Beverage Makers on Top of Cost Management

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For makers of food and beverage products, managing the costs of ingredients, formulations and packaging materials are foundational needs. This is an information-intensive activity, subject to frequent changes as market conditions evolve. Companies often struggle to stay on top of this complex discipline.

A recent Centric Lunch & Learn webinar described how a Product Lifecycle Management (PLM) solution enables manufacturers to conquer the broad set of challenges they face to manage cost and sourcing decisions in a fast-changing marketplace.

“We’re seeing in the field that cost pressures are mounting significantly in food and drink, raw materials and ingredients,” said Sam Tolleson, PLM sales executive. “Across the globe this is causing chaos, as customers and brands scramble to find substitutions, or alternative vendors.”

While import tariffs on some commodities like sugar and cocoa are nothing new, recent volatility creates more cost uncertainty for key ingredients. At the same time, manufacturers face pressure to alter formulations due to costs, changing regulations and demand trends. Meanwhile, evolving state-level Extended Producer Responsibility (EPR) laws in the US are adding intricacy to the packaging development challenge, he noted.

“So, what is PLM?” Tolleson posed. “It is a centralized system to manage the entire lifecycle of a product from concept to consumer. In a heartbeat, it connects data, processes and people across departments, all the way from vendor management, specification data, through formulation to packaging, artwork, the entire commercialization process.”

He added, “Automation around all this could mean better forecasted margins and profitability to ensure your SKU margins are accurate and something you can achieve through production.”

Core costing scenarios

In his discussion, Tolleson defined three core costing scenarios commonly addressed by product developers where PLM has proven to be instrumental:

Ingredients and components sourcing
Recipes and formulations development
Packaging compliance

The first scenario, core ingredients sourcing, impacts several cost areas. He enumerated: the request-for-proposals (RFP) process; the creation of the product brief; staying abreast of materials sourcing options; and moving into production.

Tolleson explained, “Key aspects of this process are having a supplier portal, creating RFPs, collaborating with suppliers in real time and understanding what the specification data look like.”

Critical questions that Centric PLM™ can address include, “What are the claims? What are the costs associated with this? What’s the lead time? The shelf life? Instead of working through emails and one-off sheets, you can actually standardize this data.”

Through collaboration with vendors via a supplier sourcing portal and process, he said, “You can see opportunities to reduce waste, make quick decisions and find alternative sourcing partners at lower cost to onboard these materials.”

“The second business cost scenario is recipe development,” he continued. “It follows once you have these things sourced and you have an idea of how to make this product.” The module within Centric PLM optimizes the formula, taking nutritional profiles, costing profiles and claim-based profiles into account.

“You build your products faster and better, with costs in mind,” Tolleson said. “The upstream and downstream things are in place for you to do so, and your formulators can work with already approved ingredients.”

New packaging challenges

The third business cost scenario he outlined covers control over routine packaging costs as well as emerging regulatory compliance rules required by new EPR laws in certain US states.

“Compliance is arguably the most important piece, because you have to create a safe product,” he said. While cost management is essential, “It’s important to work with compliant elements from the start, instead of trying to create five different variations of a product and then figure out if they’re compliant.”

Here again, Centric PLM is designed to improve decision-making, Tolleson said, “We help create an automatic regulatory compliance process while you’re in development and in trial management, so you don’t waste time on materials that are too expensive or not compliant in the markets you are in or may be trying to enter.”

He observed, “Packaging is becoming more and more integral with PLM and recipe development, so it’s all part of one process in 2025.”

Evolution beyond spreadsheets

The Lunch & Learn session continued with a high-level live demo of Centric PLM, conducted by Felicia Falco, presales consultant.

“PLM really can bring value by digitizing your current process,” she said. “It can help you offset some of these cost impacts that we have been discussing today.”

It is common for food and beverage manufacturers to use a collection of spreadsheets to manage product development costs across the three business scenarios described earlier. Falco walked the audience through a selection of common business decisions that are more streamlined and comprehensive within Centric PLM.

“The homepage and system dashboards, are personalized and fully configurable, allowing each user to tailor the data to their specific role and responsibilities,” she said.

She shared an example around sourcing packaging materials, which covered requests for quotes, alternative materials and tracking information.

“The immediate value is the data comes right to you,” Falco said. “As you can see, there’s no need to go searching. It’s right here at your fingertips as you log into the system.”

She continued, “You’ll see that type of functionality throughout the platform. We believe in bringing the data to you, without having to dive into multiple searches or clicks. saving you time.”

The demo continued with views of how supplier data is considered within the decision process, including performance audits and response times. Raw materials and other data are accessed via several built-in “libraries” for which users may set up custom dashboards.

“Centric PLM helps you manage your products throughout your development process,” Falco said. “It begins at the concept ideation phase. It lets you run prototypes. It takes you all the way through to production and everything in between, until your product is fully ready to be manufactured.”

At the session conclusion, Tolleson responded briefly to a provocative audience question about the mechanisms the Centric platform uses to ensure best costing and run price simulations. “There are several ways we manage cost optimization today,” he said. “One method that is coming soon to the platform will be the addition of AI, to make decisions even easier for users.”

Watch the replay and product demo: “From Chaos to Control, Transforming Food and Beverage Costing. With one digital platform.”