Balancing Price of Goods Vs. Volume Produced
There are three types of bakeries – those that specialise in artisan creations, those that exist on a local scale, and those that operate on a national level. Often you’ll find that bakeries produce goods at the volume proportional to their size. For example, artisan bakeries will take longer to create a single cake. This is because the trade requires time and care, usually done at the request of an individual client. Bakeries that operate on a national scale will mass-produce goods, have thousands of employees and usually operate on assembly lines to meet massive distribution needs.
Use a Just-in-Time Inventory Approach to Baking
Rather than projecting how much manufacturers may need for a general time frame, a just-in-time production process means these businesses purchase ingredients in the quantities they know they’ll need in the immediate future, based on orders they’ve already received from customers. This can help bakeries control inventory costs and the availability of ingredients and supplies.
Labour Costs
Typical labour costs for bakeries can range between 20% and 30% of total operations. This can be a huge cost sink if mismanaged, so it is hugely important to ensure that the right people are working in the right places at the right time. Make sure that people are taking breaks when they need to, for the correct amount of time. Know whether your staff are arriving early or late and therefore fulfilling scheduled labour hours without going over what is assigned.
Cut Bakery Energy Costs
Because bakeries’ energy use is typically significant, some manufacturers focus on incorporating sustainable elements and initiatives into their operations.
Controlling Cost/Number of Ingredients
It is paramount that you control your ingredient use to a sustainable and measurable level. One advantage of keeping track of your ingredients can lead to more efficient inventory management, and prevents last-minute restocking or excess volume that ultimately goes unused!
Labour Costs
Typical labour costs for bakeries can range between 20% and 30% of total operations. This can be a huge cost sink if mismanaged, so it is hugely important to ensure that the right people are working in the right places at the right time. Make sure that people are taking breaks when they need to, for the correct amount of time. Know whether your staff are arriving early or late and therefore fulfilling scheduled labour hours without going over what is assigned.
Artificially reducing labour cost percentage by increasing the price of goods is not ideal either – but everyone has a limit on what they will pay for your baked produce.
Overhead Costs
No matter what, always keep track of your business’s utility bills. You might find that you are excessively using electricity or water in some of your operations. While they are obviously essential to the running of your business – just make sure that it is going only to where it needs. Conduct a review of power/water usage and what is causing that demand – you never know what you might find! More importantly, you might discover ways to streamline your operations by repairing or replacing inefficient equipment.