SOP-004: Production Process

Standard Operating Procedure for Production Operations and Tracking

Field	Detail
SOP Number	SOP-004
Version	1.0
Effective Date	2026-07-26
Prepared By	Lofty Golden Oil Ltd — IT & Operations
System	Lofty Golden Oil ERP
URL	https://loftygoldenoil.com

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1. Purpose

To standardize production operations, tracking, and reporting within the Lofty Golden Oil ERP system. This SOP ensures accurate recording of production runs, proper cost tracking, yield optimization, and compliance with quality and safety standards.

2. Scope

This SOP applies to all production activities, including:

• Production planning and scheduling
• Production run lifecycle management
• Bill of Materials (BOM) tracking
• Yield monitoring and management
• Cost tracking and analysis
• Quality control
• Waste management
• Production reporting

3. Definitions

Term	Definition
Production Run	A discrete manufacturing event producing a batch of finished goods
BOM	Bill of Materials — the list and quantity of raw materials required to produce one unit of finished goods
Yield %	The ratio of actual output to expected output, expressed as a percentage
Input Volume	The quantity of raw materials consumed in production
Output Volume	The quantity of finished goods produced
Cost per Litre	Total production cost divided by output volume
NAFDAC	National Agency for Food and Drug Administration and Control (Nigeria)
SON	Standards Organisation of Nigeria
WIP	Work-in-Progress — partially completed goods

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4. Production Planning

4.1 Weekly Planning Meeting

Frequency: Every Monday morning Attendees: Production Manager, Sales representative, Storage/Inventory lead, Accountant

Agenda:

1. Review of previous week's production performance:
   • Total output vs. plan
   • Yield percentages
   • Cost per litre trends
   • Any quality issues
2. Review of sales forecast and customer orders for the coming week.
3. Determine production priorities based on:
   • Customer order deadlines
   • Current inventory levels (low stock items)
   • Raw material availability
   • Equipment availability
4. Assign production runs for the week.
5. Document decisions in the Weekly Production Plan.

4.2 Raw Material Availability Check

1. Before scheduling any production run, navigate to Inventory → Raw Materials.
2. Verify sufficient stock for the planned production volume:
   • Calculate required raw materials based on BOM ratios.
   • Compare against current stock levels.
   • Account for materials already committed to other production runs.
3. If materials are insufficient:
   • Check pending purchase orders for expected deliveries.
   • Create a purchase requisition for shortfall (see SOP-002).
   • Adjust the production schedule accordingly.

4.3 Production Schedule Creation

1. Navigate to Production → Production Runs → + New Run.

2. Enter the following:

   Field	Description
   Product	Select the finished good to be produced
   Planned Date	Scheduled start date for the run
   Planned Volume	Expected output quantity (in litres/units)
   Raw Materials	Auto-populated from BOM; verify quantities
   Estimated Cost	Auto-calculated based on raw material costs
   Priority	Normal, High, Urgent
   Notes	Special instructions, customer order reference

3. Save the production run. Status will be set to "Planned".

4. The run will appear in the production schedule and dashboard.

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5. Production Run Lifecycle

5.1 Plan (Status: Planned)

1. A new production run is created with status "Planned".
2. Enter the expected volumes, materials, and estimated costs.
3. Ensure all prerequisites are met:
   • Raw materials available
   • Equipment serviced and operational
   • Staff assigned
   • Quality control parameters set
4. Verify the BOM is correct for the product being produced.

5.2 Execute (Status: In Progress)

1. When production begins, update the run status to "In Progress":

   • Navigate to Production → Production Runs → [Select Run] → Edit Status.
   • Change status to "In Progress".
   • Record the actual start time.

2. During production, record:

   • Actual Input Volumes — quantity of each raw material consumed.
   • Batch tracking — if applicable, record batch numbers for traceability.
   • Any deviations from the plan (equipment issues, material quality problems).

3. Monitor production in real-time:

   • Track progress against planned volume.
   • Record any interruptions or delays.
   • Note any quality observations.

5.3 Complete (Status: Completed)

1. When production finishes, update the run status to "Completed":

   • Navigate to Production → Production Runs → [Select Run] → Edit Status.
   • Change status to "Completed".
   • Record the actual end time.

2. Enter the final data:

   Field	Action
   Actual Output Volume	Enter the total finished goods produced
   Yield %	Auto-calculated: (Actual Output ÷ Expected Output) × 100
   Input Costs	Enter actual cost of raw materials consumed
   Labour Costs	Enter actual labour costs for the run
   Overhead Costs	Enter allocated overhead costs
   Total Cost	Auto-calculated sum of all costs
   Cost per Litre	Auto-calculated: Total Cost ÷ Output Volume

3. Attach supporting documents:

   • Production log sheet
   • Quality control check results
   • Equipment usage records

4. The system will:

   • Auto-update finished goods inventory (add output volume).
   • Auto-update raw materials inventory (subtract input volumes).
   • Record the production cost in the GL.

5.4 Review

1. After completion, the Production Manager reviews the run:

   • Analyze Yield % against target benchmarks.
   • Compare actual costs to estimated costs.
   • Review any quality control issues.
   • Identify root causes for any variances.

2. Document findings in the run notes.

3. Determine corrective actions for future runs.

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6. Bill of Materials (BOM) Tracking

6.1 Input Materials per Product

Each finished product has a defined BOM specifying:

Component	Raw Material	Standard Ratio	Unit
Cooking Oil (1L)	Crude Palm Oil	1.15	Litres
Cooking Oil (1L)	Bleaching Earth	0.02	Kg
Cooking Oil (1L)	Packaging (Bottle)	1	Unit
Cooking Oil (1L)	Packaging (Label)	1	Unit
Cooking Oil (1L)	Packaging (Cap)	1	Unit

Note: Actual BOM ratios should be configured in the ERP by the Production Manager and Admin.

6.2 Standard Ratios

• BOM ratios are defined per product in the Inventory → Products → [Product] → BOM section.
• Ratios represent the standard input required per unit of output.
• Ratios should be reviewed quarterly based on production data.

6.3 Variance Tracking

1. After each production run, the system compares:
   • Actual input consumed vs. BOM-expected input
   • The difference is the variance
2. Variance is expressed as: ((Actual - Expected) ÷ Expected) × 100%
3. Positive variance = more material used than expected (inefficiency).
4. Negative variance = less material used than expected (efficiency gain or measurement error).

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7. Yield % Management

7.1 Target Yield by Product Type

Product Type	Target Yield	Acceptable Variance
Palm Oil (refined)	≥ 92%	± 3%
Vegetable Oil (blended)	≥ 90%	± 3%
Palm Kernel Oil	≥ 88%	± 4%
Specialty Oils	≥ 85%	± 5%

7.2 Investigation Triggers

The system flags production runs for investigation when:

Condition	Action
Yield < target - 3%	Automatic flag on dashboard
Yield < 80% of any target	Mandatory investigation report
Consecutive 3 runs below target	Escalation to Manager
Yield variance > 10% vs. previous run	Alert to Production Manager

7.3 Investigation Procedure

1. Navigate to the flagged production run in Production → Production Runs.
2. Review:
   • Raw material quality (supplier, batch, condition).
   • Equipment performance (maintenance records, calibration).
   • Operator technique and training records.
   • Environmental factors (temperature, humidity).
   • Measurement accuracy (scales, meters).
3. Document findings in the run notes.
4. Implement corrective actions.
5. Track resolution in subsequent runs.

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8. Cost Tracking

8.1 Input Cost Tracking

For each production run, record:

Cost Category	Source	Entry Method
Raw Materials	Purchase records	Auto-linked from inventory
Labour	Timesheet/payroll	Manual entry per run
Packaging	Purchase records	Auto-linked from inventory
Energy	Utility bills	Allocated per run
Maintenance	Expense records	Allocated per run

8.2 Output Cost Calculation

Total Production Cost = Raw Materials + Labour + Packaging + Energy + Maintenance

Cost per Litre = Total Production Cost ÷ Output Volume (litres)

8.3 Cost per Litre Analysis

1. Navigate to Production → Cost Analysis.
2. Review cost per litre trends:
   • By product type
   • By time period (weekly, monthly)
   • By production run
3. Compare against:
   • Previous period costs
   • Budgeted costs
   • Industry benchmarks

8.4 Trend Monitoring

• Generate monthly Production Cost Trend Report from Reports → Production → Cost Trends.
• Identify:
  • Rising cost trends (investigate raw material prices, efficiency).
  • Cost reduction opportunities (bulk purchasing, process improvements).
  • Cost anomalies (one-time events, errors).

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9. Quality Control

9.1 Output Quality Checks

1. After each production run, perform quality checks:

   • Appearance — colour, clarity, consistency.
   • Odour — no rancid or off-odours.
   • Taste — acceptable flavour profile.
   • Free Fatty Acid (FFA) level — within specification.
   • Moisture content — within specification.
   • Packaging integrity — no leaks, proper sealing, label accuracy.

2. Record quality check results in the production run record:

   • Navigate to Production → Production Runs → [Run] → Quality Check.
   • Enter pass/fail for each parameter.
   • Add notes for any failed tests.

9.2 Rejection Procedures

1. If a production run fails quality checks:
   • Update the run status to "Quality Hold".
   • Physically quarantine the affected batch.
   • Notify the Production Manager immediately.
2. Determine the cause and corrective action:
   • Rework the batch (if possible and safe).
   • Reject and dispose of the batch (as a waste adjustment).
   • Adjust the production plan to produce replacement volume.
3. Record the rejection and resolution in the run notes.

9.3 Quality Metrics

Track the following quality KPIs:

Metric	Target	Frequency
First-pass yield	≥ 95%	Weekly
Customer complaint rate	< 1%	Monthly
Rejection rate	< 2%	Monthly
NAFDAC compliance	100%	Continuous

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10. Production Reporting

10.1 Daily Output Reports

• Generated by: Production team
• Generated on: Daily (end of shift)
• Contents:
  • Production runs completed that day
  • Output volume per run
  • Raw materials consumed
  • Any issues or deviations
• Access via: Reports → Production → Daily Output

10.2 Weekly Efficiency Reports

• Generated by: Production Manager
• Generated on: Every Monday
• Contents:
  • Total weekly output vs. plan
  • Average yield % for the week
  • Cost per litre trend
  • Equipment downtime
  • Quality issues summary
• Access via: Reports → Production → Weekly Efficiency

10.3 Monthly Cost Analysis

• Generated by: Accountant + Production Manager
• Generated on: Last business day of each month
• Contents:
  • Total production costs by category
  • Cost per litre by product
  • Cost variance from budget
  • Cost trends (3-month, 6-month, 12-month)
  • Recommendations for cost reduction
• Access via: Reports → Production → Monthly Cost Analysis

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11. Safety and Compliance

11.1 NAFDAC Compliance

• All products must comply with NAFDAC regulations for food production.
• Maintain production records for NAFDAC inspections.
• Ensure all ingredients and additives are NAFDAC-approved.
• Keep batch records with full traceability.

11.2 SON Standards

• Products must meet relevant SON standards for quality and labelling.
• Packaging must include required SON markings where applicable.
• Maintain certificates of compliance.

11.3 Workplace Safety

• All production staff must wear appropriate PPE (Personal Protective Equipment).
• Safety data sheets (SDS) must be available for all chemicals.
• Emergency procedures must be posted and reviewed quarterly.
• Report all incidents immediately to the Production Manager.

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12. Waste Management

12.1 Tracking Waste

1. All production waste must be recorded.
2. Navigate to Inventory → Stock Adjustments → New Adjustment.
3. Select the waste product/material.
4. Enter the quantity as a negative number.
5. Select reason: Production Variance or Waste.
6. Add notes: source of waste, cause, disposal method.

12.2 Disposal Procedures

Waste Type	Disposal Method
Used cooking oil	Collected by licensed recycler
Packaging waste	Sorted for recycling or disposal
Chemical waste	Licensed hazardous waste handler
General waste	Municipal waste collection

12.3 Cost Allocation

• Waste costs are allocated to the production run that generated the waste.
• Track waste as a percentage of input materials.
• Monitor waste trends to identify reduction opportunities.

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13. Document Control

Version	Date	Author	Changes
1.0	2026-07-26	Lofty Golden Oil IT & Operations	Initial release

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End of SOP-004