If you rely on feelings without knowing the cost,
The more you sell, the more you lose and eventually the business collapses!

Break free from the illusion of sales
A new paradigm of cost innovation that generates profits

This book is a compilation of numerous case studies and know-how gained through hands-on experience in the field of food small and medium-sized enterprises, and contains guidelines that can be applied directly to practice.
The sustainable growth of small and medium-sized food companies begins with cost management.

The food industry is always in a state of change and challenge.
A lot of thought and effort goes into planning a new product and putting it on the market, but even when sales increase, there are often no profits.
It's simple.
This is because the ‘cost’ was not properly calculated and managed.
"A Core Guide for Food SMEs: From Cost Calculation to Management" aims to address these issues.
Starting from the basic structure of material costs, labor costs, and overhead, it introduces practical techniques such as setting units for each product, establishing standards, yield management, comparing standard costs with actual costs, and even the 52-week moving average.
We also focus on tools and approaches tailored to the realities of small and medium-sized businesses. More important than ERP or large-scale systems is establishing standards and accumulating records. We emphasize that a simple Excel template can be sufficient to launch a cost management system.
In the process, we are reminded that cost is not a simple calculation, but the basis for practical management decisions that identify profit structures, establish pricing strategies, and improve production efficiency.

As you read along, you will realize that this book is a practical guide that is essential for both food SME CEOs and practitioners.
We will become a strong partner for all those seeking to achieve sustainable growth and improved profitability through clear standards and systematic management, breaking away from the practice of relying on cost reduction.

So cost is not simply a number that indicates 'how much was spent'.
Costing should be a tool to determine 'how much was spent on what'.
Only then can we analyze the profitability of each product and properly establish pricing and promotional strategies.
--- p.11

From the perspective of small and medium-sized food companies, system introduction is not a 'goal' but a 'tool'.
Without a foundation, no system will be effective.
Only after the on-site cost management capabilities are in place can the system function properly.
--- p.42

Because the cost structure of outsourcing processing costs and consignment packaging costs can vary significantly depending on the calculation method, it is most important to establish clear management standards in practice.
If management standards are vague, even for the same product, each person in charge will reflect the cost in a different way, resulting in a distorted profitability analysis for each product.
--- p.75

Accurate labor cost calculations are based on the total man-hours, or total man-hours, invested in the production of a product.
Total man-hours include not only the time workers are actually engaged in production activities, but also non-productive time such as preparation, waiting, cleaning, and inspection.
--- p.111

In other words, even if OEM products leave only a small profit, they can have a positive effect on increasing the overall profitability of the company's products.
Conversely, if the operating rate is already saturated, OEM supply may result in reducing the company's own product production or may lead to losses when considering overtime pay, etc.
--- p.143

Material cost refers to the cost of raw materials directly used in the production of a product.
In the food manufacturing industry, it is the element that accounts for the largest proportion of the total manufacturing cost, and cost volatility is also high.
Therefore, accurate calculation of material costs is the starting point for manufacturing cost management.

--- p.176