Matching Production Capacity to Sales

Kirk ODonnell, VP Education

AIB International
IBIE 2013

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Customer Interests = Sales

Healthier products
More convenient products
Good tasting products
Premium products
Economical products
Fresher products
Help the environment

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Healthy products

Whole grains
Gluten-free
Sugar-free
No trans fats/ low fat/ low calories
All natural
Organic
Low sodium
Omega-3 and Omega-6 fatty acids
Zinc and/or calcium enriched
Other vitamins and minerals

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Increasing sales can cause problems

Higher costs- overtime, safety risks
Customer service problems- lack of capacity,
product quality and consistency issues
Possible reduction of sales as a result of brand
value reduction

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Marketing vs. Production

Innovation
Promises
Price points
Customer service

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Efficiency
Consistency
Cost control
Quality control

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How to be innovative AND efficient?

Design production line based upon sales
projections (pessimistic, realistic, optimistic)
Build in flexibility (to make several different
products with the same equipment and staff)
Apply lean manufacturing concepts of value
streams and avoidance of non-value-add costs
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Example- Cake muffins

1 to 30 muffins per minute: Deposit batter with
ice cream scoop.
30 to 120 muffins per minute: Deposit batter with
depositor OR 2 to 4 persons with ice cream scoop.
120 to 600 muffins per minute: Use automatic
batter depositor.
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Example- hard rolls

Up to 36 units per minute- Use press
divider/rounder
36 to 72 units per minute- Automatic divider or
press divider with two persons
Over 72 units per minute- Use automatic
divider/rounder.
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Production line concepts

What are the product lines and varieties?
Straight line or horse-shoe layout?
Find limiting piece of equipment (could be equipment
or personnel) to determine your production capacity.
What is the speed of production now, and what is
needed in the future?
How to handle building limitations and expansion
plans?
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Other production line concepts

How is the traffic flow? (Materials, supplies,
employees, customers, etc.)
How do you accomplish deep cleaning?
How do you accomplish preventive maintenance?
How do you handle changeovers?
Can you utilize freezing technology?
Is the bakery energy efficient?
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Areas of cost influenced by Production

Materials costs- waste and volume

Storage costs- managing peaks and valleys
Labor costs- efficiencies
Transportation/delivery costs
Overhead costs- Drive lower O/H cost per unit
Costs of lost sales- avoid if production is
properly matched to sales projections

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Areas of planning
Production process/product mix
Seasonality/peaks and valleys
Communication with suppliers/shopping for best
prices
Feedback loops

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Production process options

Scratch/mix
Frozen dough or batter
Pre-proof frozen
Par-baked
Frozen baked or fried product, but not finished.
Thaw and sell

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+++

Scratch/Mix

Most flexibility
Signature products
Lowest ingredient
costs?
Cleaner label?
More
pride/ownership in
product

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---

Higher training costs

Higher risksproduct less bulletproof
More storage area
needed
More cleaning
needed
More equipment
needed

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+++

Frozen dough/batter

Dont need
mixing/makeup
equipment
Less skill level needed
Less storage space
Less mess and
cleaning needed

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---

Higher ingredient
costs
Limited shelf life/need
to control stock
rotation
Must plan ahead
Need controlled
thawing, proofing, and
baking procedures
Need consistent
storage temperatures

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+++

Pre-proof frozen dough

Dont need
mixing/makeup
equipment
Less skill level needed
Less storage space
Less mess and
cleaning needed
No need for proofing

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---

Higher ingredient
costs
Limited shelf life/need
to control stock
rotation
Must plan ahead
Need controlled
thawing and baking
procedures
Need consistent
storage temperatures

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+++

Par-baking

No freezing needed
Product is freshbaked
Low skills needed
Very short production
time
Less space neededno ingredient storage

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---

Twice-baked= dryer
product
After the final bake,
the product stales
very rapidly.
Need good control
of baking at store
level.

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+++

Frozen baked/fried/unfinished

Can keep sexy part

of production process
Product can be served
warm
Only finishing skills
needed
Very short production
time
Less space neededno ingredient storage

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---

Product could be
dryer
Need more space
than frozen raw
product
Less shelf life than
frozen raw product
Some risk of
inconsistency in
finishing at store
level.

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+++

Thaw and Sell

Zero production
costs
Consistent product
appearance
No skills needed
Zero production time
Less space neededno ingredient storage

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---

Product could be
improperly thawed
Need more space
than frozen raw
product
Less shelf life than
frozen raw product
Not served warm

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Creating theater via production method mix

Artisan breads- slashing and baking

Pizzas- topping, baking, and slicing
Donuts- Icing/glazing
Cakes-Decorating
Muffins, brownies, cookies, cinnamon rolls, puff
pastries- Theater or not??

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Scheduling to maximize theater

When is the customer count highest?

How do you feature impulse items?
When can you schedule the non-theater?
Remember the five senses and suggestive selling!

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Seasonality in product sales

Holidays
Special events
First of the month vs. end of the month
Impact of weather/weather forecast
Special sales/price reductions
Customer trends

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Example of seasonality planning

Step 1: Measure history/know benchmarks
Step 2: Update with current factors different than
the history that would impact sales projections
(competitive activity, weather, etc.)
Step 3: Estimate sales (pessimistic, likely,
optimistic)
Step 4: Make production plan to handle the range
outlined in step 3.
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Example of seasonality planning, p.2

Step 1: Measure history/know benchmarks
Thanksgiving week- last year sold 800,000
packages of brown&serve rolls in 5 days.
Step 2: Update with current factors
This year the holiday is later in the month (11/28),
so sales might be higher, and population in the
market area has increased by 2%.
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Example of seasonality planning, p. 3

Step 3: Estimate sales (pessimistic, likely, optimistic)
Pessimistic- 3% decrease, Optimistic- 10% increase,
range of 776,000 to 880,000 packages
Step 4: Make production plan to handle the range
outlined in step 3.
10 day shelf life, have 15 production days to produce
fresh, capacity of 35,000 packages per day, can
produce 525,000 packages fresh.
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Example of seasonality planning, p. 4

Step 4: Make production plan to handle the range
outlined in step 3.
Need to produce ahead a total of 251,000 to
355,000 packages and freeze. (720,000 to 880,000525,000 packages made fresh).
Step 5: Contingency plans for inaccurate
forecasting.
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Communication with suppliers

Know the big picture- What is your outlook for
sales?
Know your company strategy and select the best
mix of production methods for you.
Leverage your purchasing power

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Feedback loops
Scout out your competition
Take calculated risks
Always de-brief/capture best ideas after holidays
and special events.
Involve your employees
Involve your customers
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Questions to ask on the Show Floor

What products does the machine make?
How many units per minute can it make (slowest
to fastest)?
How does the machine fit into a production line?
What are the size ranges? How flexible is it?
How can I clean it?
How can I maintain it?
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AIB International School of Baking

Enroll your best employees in AIB classes that equip graduates
with skills and confidence to innovate, to develop new
products, and to troubleshoot production problems based on a
curriculum that synthesizes science and baking tradition.

AIB offers nearly 200 seminars each year on a wide variety of topics.
A complete list can be found on our website.
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Kirk ODonnell
VP Education
AIB International
Contact:
1-800-633-5137
kodonnell@aibonline.org

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