ERP for Food and Beverage Manufacturers: Protecting Margins from Tariffs and Rising Costs

Food and beverage manufacturers are operating in one of the most challenging margin environments. Tariffs on key inputs such as coffee, cocoa, proteins, and packaging materials have introduced unpredictable cost increases with little warning. At the same time, consumers have become increasingly price-sensitive, limiting manufacturers’ ability to pass those costs along. The traditional playbook—adjust pricing and protect margin—no longer works the way it once did.

Modern, cloud-based food and beverage ERP systems help protect margins by tracking landed costs in real time, automating bill of materials (BOM) updates, and enabling scenario planning for tariff changes. This allows food and beverage manufacturers to respond quickly to rising input costs, optimize supplier decisions, and maintain profitability despite supply chain disruptions.

Tariffs are just the tip of the iceberg

Tariffs are often the most visible source of margin pressure, but they rarely act alone. A tariff on imported ingredients does more than increase input costs. It forces manufacturers to reevaluate sourcing strategies, renegotiate supplier contracts, and adjust production plans—often with limited time to respond. These changes ripple across the organization, affecting procurement, finance, operations, and sales.

The real challenge is not just the cost increase itself, but the speed at which conditions change. Manufacturers relying on spreadsheets or periodic reporting often find themselves making decisions based on outdated data. By the time costs are updated and analyzed, margin erosion has already occurred.

This is where ERP systems show their value. By providing real-time visibility into landed costs, manufacturers can immediately understand how changes in tariffs or supplier pricing impact margins at the SKU level. Instead of reacting after the fact, they can respond in real time.

Tariff uncertainty

Even with recent court decisions limiting certain tariff actions, food and beverage manufacturers are finding that the situation has become more complicated, not less. While some tariffs have been challenged or rolled back, others remain firmly in place. As a result, the cost pressures tied to imported ingredients, packaging materials, and production equipment have not disappeared.

For food and beverage manufacturers operating on thin margins, this level of uncertainty introduces real risk. It increases the likelihood of overpaying for inputs, underpricing finished goods, or holding the wrong inventory at the wrong time. In many cases, the financial impact of delayed or misinformed decisions can outweigh the direct cost of the tariffs themselves.

This is why leading manufacturers are shifting their focus from reacting to tariff changes to building the operational agility needed to navigate them. Visibility into real-time costs, the ability to model different scenarios, and tighter coordination across procurement, finance, and operations are becoming essential.

The limits of spreadsheets in a volatile environment

Many food and beverage manufacturers still rely heavily on spreadsheets to manage costs, pricing, and inventory. While spreadsheets offer flexibility, they struggle under the weight of today’s complexity.

Tariff-driven cost changes can occur frequently. Updating spreadsheets manually introduces delays and increases the risk of errors. More importantly, spreadsheets typically operate in isolation. For instance, procurement might track supplier costs in one file while finance models margins in another and operations manages inventory in yet another. When scenarios like this happen, no single source of truth exists.

This lack of integration creates blind spots. A change in ingredient cost might not immediately flow through to product costing. A shift in suppliers might not be reflected in production planning. Pricing decisions might be made without a clear understanding of their impact on profitability.

In an environment where margins can be affected by small percentage changes, these delays and disconnects can be costly.

An integrated food and beverage manufacturing ERP can provide management with accurate, real-time data to identify where price variances originate: Tariffs, production, overhead, labor, capacity costs, and/or subcontract costs.

Supply chain complexity is increasing, not decreasing

Beyond tariffs, supply chain complexity continues to grow. Food and beverage manufacturers must manage a mix of domestic and international suppliers, each with different cost structures, lead times, and risk profiles. Diversifying suppliers to mitigate tariff exposure often introduces new challenges, including quality variations, logistics complexity, and compliance requirements.

The ability to quickly evaluate and switch suppliers has become a competitive advantage. Manufacturers need to understand not only the base cost of ingredients but also the total landed cost, including tariffs, transportation, duties, and handling. They also need to assess how these changes affect production schedules and customer commitments.

Modern ERP systems enable this level of analysis by connecting procurement, inventory, and financial data. With real-time insights, manufacturers can compare supplier options, model cost scenarios, and make informed decisions before disruptions impact the business.

Compliance requirements add another layer of pressure

Compliance requirements related to food safety, traceability, labeling, and country of origin have always been complex, but tariffs and global sourcing have added new dimensions.

Manufacturers must now track not only where ingredients come from, but also how they move through the supply chain and how they are classified for trade purposes. Errors in documentation or classification can result in fines, delays, or additional costs.

At the same time, regulatory expectations for traceability continue to increase. The ability to quickly trace ingredients from supplier to finished product is essential, not only for compliance but also for managing recalls and protecting brand reputation.

Food and beverage ERP systems help address these challenges by centralizing data and providing end-to-end visibility. They enable manufacturers to maintain accurate records, automate documentation, and ensure that compliance requirements are built into everyday processes rather than handled as separate tasks.

Inventory and shelf-life challenges complicate margin management

Unlike many other industries, food and beverage manufacturers must manage perishable, time-sensitive inventory that is often subject to strict storage conditions. This introduces a unique set of challenges that directly impact margins.

Holding excess inventory increases the risk of spoilage and write-offs. Holding too little inventory increases the risk of stockouts and lost sales. Tariffs can further complicate this balance by incentivizing bulk purchasing ahead of potential cost increases, leading to overstocking and increased waste.

Shelf-life management adds another layer of complexity. Manufacturers must ensure that products are produced, stored, and distributed in ways that maximize freshness while minimizing waste. This requires precise coordination between production planning, inventory management, and distribution.

Modern food manufacturing financial software provides the tools needed to manage these dynamics effectively. By tracking inventory in real time and incorporating shelf-life data into planning processes, manufacturers can optimize stock levels, reduce waste, and improve overall efficiency.

From reactive to proactive margin management

The common thread across tariffs, supply chain complexity, compliance, and inventory challenges is the need for better decision-making. Manufacturers can no longer afford to operate reactively. Waiting for monthly reports or relying on fragmented data is simply too slow.

Food and beverage ERP systems enable a shift from reactive to proactive margin management. With real-time data and integrated processes, manufacturers can anticipate changes, model scenarios, and take action before issues impact profitability. They can identify which products are most affected by cost changes, adjust pricing strategies more precisely, and optimize operations to maintain margins.

While this does not eliminate uncertainty, it does provide the tools needed to navigate it more effectively.

Where Microsoft Dynamics 365 Business Central fits in

While the principles of visibility and integration apply broadly, platforms like Microsoft Dynamics 365 Business Central bring these capabilities together in a practical, accessible way for food and beverage manufacturers. By connecting finance, supply chain, inventory, and operations in a single system, Business Central provides the foundation for real-time cost tracking, automated product costing, and scenario planning.

For manufacturers dealing with tariff volatility, complex sourcing, and perishable inventory, this means faster insights and more confident decision-making. It also enables better alignment across departments, ensuring that everyone is working from the same data and the same understanding of the business.

Turn uncertainty into a strategic advantage

The manufacturers that outperform in today’s environment aren’t the ones avoiding disruption; they’re the ones equipped to respond faster and more precisely.

ArcherPoint by Cherry Bekaert helps food and beverage companies build the systems and processes needed to manage cost volatility, optimize margins, and make confident real-time decisions.

Start a conversation with our team to explore what that could look like for your business.

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