Since the beginning of the legal cannabis industry, people launching and running cannabis-infused product brands have relied on spreadsheets and data entry to record the many steps and factors involved with crafting everything from edibles to vapes and topicals. Over the years, some brands turned to manufacturing software—an essential tool for traditional industries focused on consumer packaged goods (CPG).
But tech companies had created those legacy software solutions for mainstream businesses, rather than commercial pursuits in cannabis that must engage constantly with regulators, and obsess over things like homogenous dosing and different ratios of cannabinoids and other botanical ingredients. While legacy software solutions are an improvement over old-school approaches, they still fail to understand and address the cannabis industry’s myriad complexities and quirks.
Cannabis Manufacturing Software That Prioritizes Tracking Material Costs
One glaring omission among legacy CPG manufacturing software solutions is the absence of robust tools for tracking material costs for cannabis products. For success in edibles and other cannabis-infused products, tracking costs in real time is essential—especially in the age of aggressive inflation and fluctuating wholesale costs of ingredients, packaging and more. Brands that don’t stay on top of ongoing price hikes suffer, as they continue manufacturing products without raising their own prices or making output adjustments. Already thin margins flatten. Eventually, every sale leads to a loss.
Regardless of inflation, however, staying on top of all of the cost factors that go into manufacturing is of extreme importance. Without understanding, in real time, how much a batch of gummies or vape carts will cost, turning reliable profits is a challenge for even the best manufacturers.
It doesn’t need to be so slipshod and haphazard. Stout cannabis manufacturing software not only incorporates attention to factors like dosing, recipe security and scaling—it also makes material costs a foundation of the software.
In fact, traditional manufacturing software’s lack of attention to cannabis concerns led to the creation of Batchbud, where tracking material costs is a fundamental part of the technology.
It All Begins With the Purchase Order
Material costs go hand in hand with purchase orders: the forms companies fill out to order everything from THC distillate to compostable packaging, labels and botanical extracts for flavoring. At Batchbud, purchase orders serve as the bedrock of the entire material costs portion of the software. In addition to cannabis products, Batchbud’s innovations also yield advantages for the nutraceutical industry, where companies must craft products with equally precise dosing and a diversity of ingredients that constantly experience cost fluctuations.
Once somebody adds a purchase order to the Batchbud system, it gets tracked across manufacturing as different volumes of purchased goods, like those botanical extracts, are used to craft products.
For example, for an edibles brand manufacturing a batch of 10mg lime-flavored, sativa-dominant gummies, Batchbud—thanks to the purchase order—understands the cost of the amount of natural lime flavor used in the batch recipe. From there, the software helps track what the lime cost is for each package, and by extension, each individual serving. This same process takes place with everything involved with the manufacturing of that lime gummy, from its bag packaging material to the citric acid used to up the gummy’s sour quotient.
Sometimes, evolving prices have compelled Batchbud customers to either change formulations, or slow down production. One client, for example, was sourcing a fairly obscure botanical ingredient that experienced increased demand because it became trendy, and was also hit by supply chain pressures. The costs kept creeping up—and the customer could watch it inflate, thanks to Batchbud. The manufacturer reformulated the product, and got rid of the price-escalating botanical until prices sank back to Earth, which took about six months.
Empowering Employees With Cannabis Manufacturing Software
Batchbud delivers powerful tools for the many people involved with product manufacturing, from CEOs to employees running production lines and formulating products. A finance executive can take one look at a Batchbud report and see, for example, that a vendor spiked prices by 45 percent for packaging in recent weeks. Key information like that might persuade the exec to start looking for new vendors for child-proof plastic containers.
This empowerment matters. In traditional industries, companies write off enormous amounts of business expenses, including things like ingredients. But in cannabis, thanks to IRS Tax Code 280E, companies are not able to take advantage of such common write-offs. As labor and materials commandeer most of a company’s expenses, cannabis companies must pay especially close attention to investments in raw materials—should overhead costs need to come down, they would much rather scrutinize what they are paying for certain materials, and hunt for fresh ways to save money there, rather than turning to decreased production and layoffs.
Fully understanding material costs and how they impact the bottom line, in real time, is vital for all cannabis manufacturing companies. Failure to account for fluctuating material costs leads to poor pricing strategies and flailing brands.
Batchbud cannabis manufacturing software not only accounts for material costs—it so values this crucial data that it incorporates it across the platform. The centrality of material costs to the software empowers employees to constantly recognize material cost pressures, and to make smart, data-driven decisions that save money and increase profits.
Check out what Batchbud can do to streamline your processes: Schedule a demo today
