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Here's a quick overview. Let me know if you have any further questions.
Materials > Formulation > Trade Relationship
All material specifications should have a regulatory breakdown defined. This is a breakdown that contains at least one component catalog item and the regulatory tag.
When these materials are used in a formulation spec in design mode, the formulation spec will roll up the breakdown based on the regulatory breakdowns on the raw materials. This "theoretical breakdown" will be pushed to the output material specification.
The output material specification should be associated to the trade specification. The breakdown is not pushed to the trade. This information is meant to be stored on the output material specification only.
LIO is executed from the output material. LIO will then use this breakdown to create an ingredient statement. This ingredient statement is pushed to the trade specification's nutrient profile.
Breakdown Control On Trade
Certain types of trades allow for a breakdown to be defined on itself. These trade types are used to represent private label and co-packing situations. In these situations a formulation specification is not used, the formula is merely represented by a breakdown.