Owning a bakery requires more than baking fantastic products to be successful. The behind-the-scenes challenges that bakers experience. Many of these challenges are often caused by having only manual and disjointed processes in place. Implementing structured systems and automation will give bakeries the ability to track their operations in real-time. Bakeries will have the ability to capture any wasted products, create efficiencies, measure their quality and use this information to drive decisions based on the use of their data. Implementing structured systems will enable bakery owners to streamline the business model, protect their margin, and build and grow their bakery with confidence.

It may appear simple to run a bakery, but behind the scenes, bakers face a level of operational pressure on a daily basis that most people are unaware of. Bakeries function with tight budgets and quick timelines compared to other retail sectors, based on their very early morning production runs, the management of their employees, suppliers, and customer demands. Additionally, many bakeries continue to operate using paper-based systems, spreadsheets, or disparate tools, resulting in a lack of visibility into the operations of their businesses, including inventory levels, employee productivity, performance costs, and customer behaviours.

Therefore, modern bakeries require a structured system that helps create clarity within their operations while adding complexity. Challenges associated with managing bakery inventory and operation management are no longer optional; they are now critical to both a bakery’s viability and to support growth. This post will discuss the top operational challenges that you, as a bakery owner, experience, while providing real-world and practical solutions to assist bakery owners in running an efficient, profitable bakery and to maintain a customer-centric focus without overwhelming their teams.

Challenge 1: Inventory Management & Waste 

The Core Problem: Inefficient Inventory Control:
Poor inventory management is one of the biggest hidden profit killers in bakeries. Ingredients are short-lived; demand varies based on day-to-day sales; overproduction results in excess waste, while underproduction decreases sales and causes dissatisfied customers. 

The Practical Solution: Real-Time Inventory Visibility:
In addition to eliminating waste, tracking your stock level in real-time will provide you with precise information on your current stock at all times. Automation can further enhance visibility by blending your point of sale and inventory movement data for an effortless and comprehensive view of your entire operation. By utilizing a fully integrated software system like VasyERP, bakeries can increase their ability to monitor and manage all inventory aspects, enabling them to decrease operational costs and optimize their stock levels without needing to conduct daily physical inventory counts.

Challenge 2: Labor Shortages & Retention 

The Core Problem: Staffing Gaps and High Turnover:
There is a lack of qualified employees to work in the bakery industry, and this continues to become more problematic as time passes. Due to the early shifts, demanding physical work and the high-pressure environment associated with the role, the rate of turnover for this role is extremely high. Because of this experience deficiency, employers are also forced into positions where they must, at times, fill and carry out operations of their business (which is the most fortunate position for those employers) as opposed to devoting that time and energy to expanding and developing the operations of their business. 

The Practical Solution: Smarter Workforce Management:
Digital tools can help align staffing requirements and production demands to lessen the chances of burnout and improve employee morale. When bakery owners consolidate operational data, they can make better decisions regarding optimal scheduling shifts, tracking productivity, and rewarding employee performance fairly, thereby creating an employee experience that makes employees feel valued and supported, not overwhelmed.

Challenge 3: Rising Ingredient Costs 

The Core Problem: Unpredictable and Increasing Input Costs:
Ingredient pricing is a moving target, thanks to inflation, supply chain challenges, and the seasonality of ingredients. For bakeries that operate with small margins, even small fluctuations in cost can drastically impact profitability. 

The Practical Solution: Data-Driven Purchasing and Cost Control:
Therefore, an effective solution to support data-driven purchasing and cost analysis for bakeries is through the use of analytics. By providing automated purchase orders, suppliers provide local/regional bakeries with the opportunity to have accurate and timely purchase orders, creating greater negotiating power. In addition to providing immediate cost-to-product visibility, bakeries can utilize cost analytics dashboards to monitor their ingredient-to-product relationships in real-time. Many bakeries utilize VasyERP bakery software to track their local supplier pricing trends, adjust their recipes/pricing based on the data collected through the use of VasyERP tools, and protect their margins while maintaining their product quality and the trust of their customers.

Challenge 4: Quality Control & Consistency 

The Core Problem: Maintaining Consistency at Scale:
Customers want the exact same flavor, consistency, and freshness whenever they come back. As production volumes go up, employee turnover or other operational changes can make it difficult to maintain that consistency. A tiny variation in either the ingredients or processes of manufacturing could cause a significant change in the quality of the product. When quality is inconsistent, it weakens the brand and ultimately results in a lack of repeat customers. It also makes it hard for an owner to troubleshoot, since there are no clear indications of what went wrong.

The Practical Solution: Batch-Level Traceability and Control:
If the bakery owner can identify which batch was used for a customer’s order, he or she can quickly take corrective action. VasyERP  provides this level of control by linking the production batches with the transaction data, allowing for high levels of consistency and accountability and enabling ongoing improvements across the entire product line.

Challenge 5: Regulatory Compliance 

The Core Problem: Managing Complex and High-Risk Compliance Requirements:
Regulatory requirements for bakeries include food safety laws, product labels, taxes, and audit compliance. If bakers manage their own compliance, they may miss paperwork, lose their licenses, or enter incorrect information into the system. These issues can result in fines or business shut-downs. Also, during a regulatory inspection, bakers must provide their records to the inspector. Being reactive to comply with regulations increases stress and negatively affects how bakeries operate every day. 

The Practical Solution: Proactive and Automated Compliance Management:
With the use of a proactive compliance system, bakers have a scalable solution that enables them to handle compliance efficiently. A fully automated and electronic record-keeping solution provides bakeries with constant access to the required information. An exportable compliance report makes the auditing process quicker and easier to navigate. 

Challenge 6: Equipment Breakdowns 

The Core Problem: Costly Downtime and Reactive Maintenance:
Ovens, mixers, and refrigeration equipment account for the majority of all bakery successes. Failure to operate results in stoppage of production; late orders, loss of ingredients and creating additional expense of emergency repairs and loss of sales revenue. Most bakeries today are dependent on reactive maintenance by only fixing machines once they fail, which results in increased downtime and decreased lifespan of their machines.

The Practical Solution: Preventive Maintenance Through Data Visibility:
This is why bakeries should use preventive maintenance programmes as a means to reduce unexpected failures. By monitoring usage of the machines and scheduling maintenance in advance of breakdowns. Bakery owners now have the ability to predict potential problems using aggregated operational data from their digital maintenance program. Digital systems keep track of maintenance history, maintaining service schedules and creating alerts to the bakery owner will protect his/her investments, provide a consistent supply of product, minimize interruptions to production and create customer and employee satisfaction.

Challenge 7: Shifting Customer Demands 

The Core Problem: Keeping Up With Rapidly Changing Customer Preferences:
Changes in customer preference occur frequently. An increase is occurring with regard to wanting healthier food, custom products, shopping through online stores, and more convenience in service. If Bakeries are unable to keep up with these changing customer demand trends, they run the risk of losing their relevance and market share. Therefore, understanding what customers want without guessing is a difficult task. Due to the lack of visibility on the change in trend of sales, Bakeries have a hard time making a plan for menu changes and the introduction of new products.

The Practical Solution: Using Customer and Sales Data to Guide Decisions:
The method recommended to Bakeries is to use sales data along with customer data. By reviewing purchasing patterns, Bakeries can determine the most popular products, the seasonal product trends, and the product developments of interest. Using both transactions and customer data together, Bakeries can proactively make decisions instead of reactively making decisions on what types of products to offer, the prices for the products, and promotions for the products, without having to overextend their resources.

Challenge 8: Marketing & Competition 

The Core Problem: Standing Out in an Increasingly Competitive Market:
Bakeries are currently competing against online retailers for customer traffic and purchases from physical stores. Therefore, to entice potential buyers through a business’s physical location or through the internet, bakeries need to employ creative approaches to attract customers beyond foot traffic and word-of-mouth advertisement. Currently, many bakeries are having challenges in developing successful marketing strategies, after their sales have been completed, to encourage repeat purchases and maintain customer loyalty.

The Practical Solution: Data-Driven Marketing and Customer Engagement:
Bakeries that wish to produce greater revenues, therefore, must implement marketing solutions using similar tactics employed by automated email transactions to keep customers informed and continually connected to the bakery without additional intervention by the owner. By using integrated CRM software tools to connect customer records with transaction data, bakeries can create long-lasting and mutually beneficial customer relationships through their use of integrated CRM tools. VasyERP assists bakeries in integrating their customers to the bakery’s transactions and provides bakeries with the essential tools to improve their marketing results.

Conclusion 

Owning and operating a successful bakery in today’s market requires so much more than great recipes. Bakery owners must constantly manage multiple competing priorities, including inventory control, staffing, operational costs, compliance requirements, equipment maintenance and customer service (i.e., customer satisfaction and brand loyalty), all at the same time. When any one of these factors are not being managed well, it creates additional stress and ultimately lowers operational efficiency and profitability. VasyERP provides bakery owners with all the necessary capabilities to successfully operate their business in one central location. Instead of just reacting to operational challenges as they come, through access to reliable data and enterprise-wide visibility, bakery owners can now make more informed business decisions, reduce wastage, improve consistency in product quality and ultimately grow their business with confidence. If you’re ready to quit fighting against the chaos and operate your bakery seamlessly, Now is the time to take action!

Schedule a free demo now!

FAQ

1. Why do bakeries struggle with inventory control?
The perishability, along with the high volume of ingredients used in a bakery, coupled with the variations in the rate of consumption on a daily basis, makes it difficult to properly manage inventory control systems. The manual management of multiple raw materials and finished goods and product lines makes it susceptible to Human Error. Consequently, the lack of a real-time inventory system means that bakery owners will tend to either overproduce(food waste) or underproduce(lost sales), which creates the most challenging of all operational issues.

2. How can bakeries manage rising costs effectively?
As the prices of various ingredients have increased, bakery owners must be able to establish, understand and monitor the specific costs associated with production and their relationship to the finished product. Tracking the amount of supply usage, auto-generating Purchase Orders and tracking Margins per Item will assist in establishing sound pricing and supply provider decisions. By utilising this data, it will assist bakery owners in maintaining reasonable levels of Profitability and Product Quality while providing their customer base with a price that is predictable and stable.

3. Is ERP software suitable for small bakeries?
ERP software is an excellent fit for small bakeries because it provides an easy-to-use interface for managing day-to-day activities rather than complicating them. With a modular system, small bakery owners can manage everything (sales, purchasing, inventory, and reporting) from one software program, thereby minimizing the need for manual labor and creating more accurate records while providing all the operational control that large bakeries have over their operations.

4. How does automation improve customer retention?
Automation allows bakeries to remain connected to their customers without putting additional demands on bakery staff. Automated transactional communications (such as order confirmations, reminders, and offers) allow bakeries to build trust and consistency with their customers, resulting in a stronger likelihood that they will return, recommend the bakery to others, and develop long-term loyalty all without increasing the workload of the bakery’s employees.

5. What’s the first operational problem bakeries should fix?
The first thing bakeries should do is gain a clear picture of the state of their inventory and production operations. When bakery owners have a clear view of the products being sold, produced, and stored, they can make more informed business decisions. By integrating inventory levels and sales figures, bakeries can reduce waste, create more efficient production processes, and build a strong foundation for addressing many other operational issues, such as staffing, pricing, and customer relationship management