Bakery – cakes

Challenges in the bakerysector

Are you managinginnovation or is innovationmanaging you?

InsIder InsIght

Contents

the market players 3

Category challenges 4–5

spot the difference – is this you? 6–11

spot the difference – conclusion 12–13

the benchmark 14–16

Chasing the benchmark? 16

Bakery sector – the top UK playersPremier Foods – CadburyCakes, Mr Kipling, Lyons,hovis etcsamworth Brothers –Blueberry Foods, BradgateBakery etcBakkavorMcVitie’s Just Love Food CompanyPerfection FoodsFinsbury Foods Park Cakesthe Cake CrewVittles dessert & CakessenoblegreencoreAryztaBakers OvenBright Blue FoodsBritish BakelsBurton’s Biscuit Company Connoisseur’s Bakery

CooplandsdelifranceFine Lady BakeriesFox’s Biscuitsgeary’s Bakerygenius Foodsgregg’shr Bradfordshuntley & PalmersIrwin’s BakeryAllied BakeriesABFBells of LazenbyChaucer FoodsCoughlans Bakery LtdCuisine de Franced Mcghee & sons Ltddavid Wood Bakingevron FoodsLeathamsMaison Blanc

Village Bakery LtdWilliam sword LtdLantmannen UnibakeKashmir Crown BakeriesKerry FoodsKingsmillKrispy Kreme Millie’s CookiesMinistry of CakeMission Foodsnew York Bagel Conorthumbrian Fine FoodsMondelezrathbonesreal good Food Companyrobertssayerstunnock’sUnited BiscuitsWalkersWarburtons

William Jackson Food groupMademoiselle desserts2 sisters Food groupBahlsenBorder BiscuitsFurniss Ltdhill Biscuits Ltdnairn’s Oatcakesrivington Biscuitsthomas J Fudgesguenther Bakerieseuphorium Bakery (tesco)Fosters Bakerygilsons Bakerygreenhalghs Craft BakeryMorning FoodsMontana Bakerysoreen Bakery Ltdsignature Flatbreads UKVandermoortele UKspeedibake

3

Category challenges

4 * Independent (2017, Jan) http://www.independent.co.uk/news/business/news

specific category challenges

Healthy trends – so what?

Nowadays more and more people are lookingfor healthier, authentic and more naturalproducts. It is completely relevant for yourbusiness to follow those trends and the marketrequirements such as reduction in sugar inthese goods. Is your business working activelyenough to be leader in this respect?

Increasing cost of raw materials – so what?

Definitely, Brexit is affecting commodity pricesin the bakery sector, it has been estimated toincrease by at least another 5%* by the end of2017. We have all seen butter price risesexacerbated by the wholesale switch to cheesemaking as producers chase the market, butthere’s no pendulum swing expected the otherway. Are you thinking ahead to this? All the

departments need to work together to facethis, from supply chain to NPD and production– this isn’t just one you can throw over thefence to purchasing.

Active innovation – so what?

To be competitive in the market, innovation is akey part of the bakery sector. But it isimportant to manage this correctly, and inharmony between NPD and the productiondepartment. Well planned new productlaunches are vital to avoid future unexpectedcost and margin loses.

New regulation – so what?

The inclusion of new regulation could createextra cost to the company, for example thenew label regulations require payment both forthe analysis of products and the revision of thelabels themselves. Brexit plays an importantrole in this matter, as new Europeanregulations could be in place: a new challengeon how to manage regulatory issues!

5

Inclusion of new ingredients – so what?

Inclusion of more trendy ingredients such asseeds or nuts increases complexity in theprocess. Is your business handling allergenscorrectly and effectively? Are all theingredients relevant? It is easy to start holdingstock of unnecessary/very low volumeingredients, which then could becomeunaccountable waste.

Process updates – so what?

It is important to keep reviewing the processnot only to match new environmentalregulations such as the latest water usereduction agreement, but in terms ofknowledge and control of the process, forexample clear understanding of bake lossesand maximum machine speeds. Advances inmachinery and automation is also presentingnew opportunities to control weights, reducemicro-stops and eliminate downtime.

Control of raw materials from season toseason – so what?

Changes in the weather could affect thetemperature and the storage conditions of theingredients. So it is vital that the businessreacts accordingly to those changes in order tomaintain the consistency in the process andthe quality of the products.

Machinery innovation – so what?

Innovation in products is clearly linked toinclusion of new equipment in the productionlines, but is your business ready to use themeffectively? They need to be implemented inan optimum way, with efficient trials,minimum downtime and zero waste. It isgenerally acknowledged that new largeinstallations need a good six monthscommissioning time, yet very few companiesallot sufficient time and pay the consequencesin lower performance forever afterward.

spot the difference - is this you?

6

these are the 11 most common traits impacting upon the sector challenges

Logistics andtransport

Forecast andplanning Innovation

supply to line

downtime

WIP

Processcontrol

data capture andreporting

CI culture

Labour

12 3

4

5

6

89

11

10

rejects7

7

spot the difference - is this you?

1 Logistics and transportHuge cost of own fleet, third party or both•

Cut-off times impacting on operations•

Delays affecting quality of the products or•production downtime

Vehicle and driver utilisation less than 90%•

Takes longer than 15 minutes to produce a•schedulePlan is out of date almost immediately as•it’s printed Lack of communication: plan changes or•production updatesPlanning following production rather than•production following planBakery/packing not following the plan•Schedule without labour clearly allocated •More change overs than are actually•requiredNot completed 100% as planned•Not followed due to supply issues or•mechanical failureStandards have not been reviewed or•agreed with production Standards of new products are copy of•existing products, which is normallyinaccurateBest sequence not followed•

2 Forecast and planningInaccurate or unreliable forecast•Plan done on spreadsheets, or transferred•to spreadsheetsPlan not aligned between areas (bakery –•packing – dispatch)

Impact: Higher costs, inefficient process,downtime, waste material.

Impact: Higher logistics costs,deterioration in quality of finishedproducts, downtime in production.

3 InnovationNew products with excessive complexity•Inclusion of allergens in new products that•generate complications for productionlater Trials do not replicate reality of day to day•productionWaste of time during trials affecting•production performanceReally low volumes in new product•creating inefficient short runs Costing mistakes create wrong margins•

Excessive waste generated•Uncontrolled bake losses •Production rates not reviewed or not•challengedDowntime•Baked products out of specification,•creating issues later for packingLong or unnecessary changeovers•

4 supply to lineLack of control / knowledge in the baking•processShortages or over production•Processes out of date incurring in over•processing

Impact: Margin and material losses,downtime, lack of flexibility

Impact: Margin losses, productivity losses,increment of complexity without needed.

5 downtimeThere are a large amount of unrecorded•minor stopsDelays at the start of the shift – Lines not•starting on timeThere is a ‘black hole’ of lost time which is•unaccounted forActual line capacity and bottlenecks isn’t•well definedUnaccountable slow running losses•

8

Impact: Loss of life, downtime, waste andmore changeovers

Throughput standards have not been•independently challengedPPM gaps•Increase of changeovers due to complexity•of new products

7 rejectsProduct damaged during process•Products not conformed with visual•standardsExcess waste generated•Product disposed rather than reworked•Uncontrolled and too high giveaway•Unidentified machinery issues•

Impact: Labour cost, material wasted andlower throughput.

8 Process controlNo Sho rt Interval Control tools in place•No briefs or progress review – Poor•meetingsNo useful shift handovers•No Management Report Control Systems•in placeIt is difficult to tell if it is a good or bad day•Settings of the machines out of date or not•accessible to the staff

9

6 WIP Excess WIP produced•Unplanned material variance•Run out of storage space forcing the lines•to stop Poor stock counting and accuracy making•difficult for planning to react accordingly

Impact: Material loss, downtime

Profile swings creating process variability•and lower OEE.Poor or unchallenged process standards•Performance measurement systems not•covering real issues

Impact: Poor decisions, complacency andlack of visibility of the real issues. Lack ofinformation make difficult take correctdecisions.

Key indicators are not available in time to•actually do anything about theperformance.Difficult to identify the areas where actions•need to be takenImbalance between review of historical•trends to drive performance vs. every dayissues to be solved.

10

Impact: Productivity losses, production notachieving targets, production not completing plan and reason unknown.

9 data capture and reportingIt is difficult to tell if the production is ‘on•plan’ or notProduction counts are inaccurate and its•difficult to know the number produced Profitability of each run versus plan is not•knownTop losses are not reviewed at least weekly•Unable to see and analyse historical data•or trends

10 CI cultureNo clear Area Result Plans though the•businessNo ownership to generate specific•improvements in every areaLack of credibility of the numbers•No proactive culture to fix well known•issues

No sustainable improvements•Culture of “living with the problem” rather•that fixing it

Impact: Static business, no profit increase,degradation of business

11 Labour No roles & responsibilities clear assigned to•both managers and operators in the shopfloorTargets not known by staff•Lack of skills to operate key equipment•No enough skilled operators to cover•holiday or sicknessNo existing or out of date training / skills•matrix

Impact: Productivity losses, downtime,extra labour cost, unpleasant place towork

11

spot the difference – conclusion

12

Logistics and transportForecast and planningInnovationsupply to linedowntimeWIP rejectsProcess controlCI culture data capture and reportingLabour

Whether you recognise these 11 points in your own operation or not, how theyimpact upon the sector challenges is worth revisiting.

The key driver to highlight in the bakery industry is definitelyinnovation. It clearly affects all areas of your business and could leadinto loss of control really easily.

Starting from the sales department, it is necessary to ensure theoptimum volume of new products in order for the process to beefficient. Low volumes could cause many problems from holding lots ofsmall quantities in stock and space issues, to inefficient runs andconsiderable increase in changeovers.

Hence, in this fast-paced industry the planning department plays animportant role. They need to be able to move at the speed of thebusiness, adjusting standards, defining the perfect production sequenceand reducing changeovers, always looking forward to challengeproduction in a realistic way. That is why planning cannot be inisolation, but needs to work in conjunction with production. It is vitalthat production agrees with the standards of the new products, feelingconfident on producing them at maximum efficiency and high quality.

13

Production has another big challenge: process control and reporting. Inthe bakery sector, the detail for every product is key and for that reasonevery single part of the process and every single step along the way isimportant. There is a high probability for something to go wrong ateach step. By reviewing progress frequently enough and efficiently, it ispossible to react on time to those issues thus preventing or reducinglosses that would otherwise be difficult to trace. Hourly controlsystems, effective meetings, appropriate escalation processes and dailyreviews are some of the necessary tools to ensure the process is undercontrol.

Once production is reporting accurate performance data, it is absolutelykey to have in place effective mechanisms to review, analyse and takeactions to solve recurrent issues. As important as it is to react quickly tothe day to day issues is to be able to see the big picture in order to takemedium – long term decisions. This process is not only the responsibilityof managers or senior level staff! Performance reviews are down to alllevels in the business, a robust CI culture is vital in a life business.

Finally and probably the most important aspect is your people. Ensureeverybody knows what to do, when to do it and where to do it. Soundsbasic and for that reason many times ignored. It has to be a priority forthe business to ensure the appropriate communication to the staff,including future innovation, new products to be launched and processupdates.

the benchmark

14

Is there a company outthere that is thinkingdifferently?

the followingdescription is of onemajor sector player whosix months previouslyexhibited the 11 averagesector traits.

the sector benchmarkA proactive supply chain that supports the planning department,achieving a perfect alignment between orders placed – baking –packing and dispatch. Avoiding losses due to waiting for materials orproducts. All the lines know in advance what has to be produced, andare able to ensure the right materials are ready when needed.

Good engagement, ownership and full involvement from theproduction team. That is reflected in excellentcommunication with other departments and active challengeon performance. Areas of responsibility and accountabilityclearly agreed and implemented at all levels in the business.More realistic and challenging targets and KPIs to driveperformance improvements. With the proper trainingprogram, team leaders are more accountable for theperformance of the lines, understanding better their targetsand responsibilities.

Management controls and effective reporting systems in placeand used efficiently, from hourly reviews to weekly analysis of the toplosses. It is not only about the numbers but a full understanding ofwhat they mean, the implication of them but more important theaccompanying behaviours. Appropriate short interval control tools inplace to allow Team Leaders and Managers to obtain live performanceinformation for each line in each area, always assessing actual versusplan in terms of running rates, giveaway, crew and throughput.Process variance is faced immediately. Hourly control of the main KPIsin every line helps to understand not only issues but opportunities toimprove and drive savings.

15

A complete process review and analysis of the newchallenges of the business for all of the lines and all of thesteps, allow reduction of bottlenecks, better understandingof maximum speed achievable and to put a contingencyplan for the limiting factors.

As the level of complexity increases in theprocess, changeovers become more importantand for that reason are included accurately in theproduction schedule. The team look forward toreduce them not only in duration but infrequency. Best sequence and weekly productionfrequency clearly defined, and changeovers areno longer seen to be the enemy of the ongoinglean initiatives.

Active CI culture through the business witha team of people from the shop floor workingon improvement projects. Following a robustDMAIC approach and using different CI toolssuch as line studies, line balancing, waste walksand SMED.

Solid relationships between maintenance andproduction teams. There are routine machine checks andbasic problem solving training to decrease the reliance onEngineers only. All that helps to reduce downtime, improvemachine set up and standardise operation procedures.

Machinery working better and staff fullytrained provides better control of the processallowing reduction of giveaway andrejects. Reduction on waste is clearlyreflected in better material variance.

Speeds of the lines has been increased withoutdetriment to quality, reducing downtime and achievingrecord levels of technical performance and compliance.OEE is realigned with a new challenging andachievable target.

Now not so reliant upon managers to ‘keep thewheels spinning’. Shopfloor operators and lineleaders are trusted and capable both of sustainingimproved performance and of identifying opportunityfor improvement and solving problems withoutrecourse to leadership.

Leadership freed up to concentrate onmore strategic change, such asbecoming more involved in commercialactivity, managing and showcasingcustomers, evaluating investmentopportunities and allocating more timeto developing those reporting to them.

This was (therefore can be) achieved within asix month timeframe:

Planning department engaged with all•levels of the businessInnovation well deployed and•managedFully engaged production team•Outstanding progress reporting system•Industry leading Management Control•SystemProcess fully updated and up to the•business needsBest in class material and waste•performance

Becoming the benchmark must be the rationalambition of all players in the sector.

However, it is not uncommon to find some orindeed all of the 11 sector traits in an averageprocessor. Why?

People?We haven’t enough resource/the skills/the rightpeople in place.

Kit?Our machines are old (or new)/we needengineers/we’ve got a big Capex project/we’reinstalling a new planning system.

Complexity?We’re too basic an operation/our data isn’tgood enough/forecasts are rubbish/ inboundsupply too variable.

the sector benchmark

“the heart and soul of a companyis creativity and innovation”robert Iger

Chasing the benchmark

16

this is exactly what thebenchmark company said to us– but with one importantdistinction.

they also said...“We’d like

yoursupport”

17

Already doing something?Customer driven lean audit/we have a CIteam/new manager coming in/there’snothing you can teach us about eggs.

Applied Acumen Limited.

experts in bakery.

Food for thought.

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