MINNEAPOLIS -- Bakeries can better manage their operations and increase profits with the help of computer-assisted programs, according to two retailers who spoke at the annual convention of the International Dairy-Deli-Bakery Association.
"Our bakery sales increased 38% in the last two years, after three years of flat sales," said Roger Montague, corporate bakery and deli director of Associated Food Stores, Salt Lake City, referring to the contribution that their computer-assisted bakery management program has made to an upsurge in revenue. Associated owns a total of 21 Dan's, Macy's, Lin's and Madison Food Stores in Utah, Nevada and Montana; the company is also an independent co-op that distributes to about 400 independently owned retail stores -- 65% of which have in-store bakeries -- in seven states.
Montague and Bryan Simonson, president of Lin's Supermarkets, Saint George, Utah, said the software enables them to execute tasks regarding scheduling, inventory, sales, reordering and recipe consistency, all on a store-by-store basis. Unfortunately, retailers are still often reluctant to embark on the computer-paved path of the future, they added.
Montague told SN Associated's pursuit of technology as a management tool began a little over two years ago.
"We'd have store owners calling us, saying 'my bakery's in trouble,"' Montague said. But when a team of bakery merchandisers arrived to help investigate the problem, the outcome was always the same. The team would return and report an absence of information that would help get to the source of the problem.
"There was no data," Montague said. "No record of shrink, no record of a mix of product to determine what sold. There was only a sales figure, but what went into that sales figure was an unknown."
Montague's team members did the best they could with the information at hand, but weren't happy with the results.
"I knew we could do more, if we had the tools, the data," he said. "And most of the bakeries weren't even close to being in the computer generation."
Montague attributes the ISB's downward spiral in general to the fact many owners consider the bakery to be a supermarket "stepchild" -- a necessary department but one that gets little attention. In most cases, according to Montague, store managers didn't know much about bakery operations and, unwilling to intrude, relied solely on their baking managers to helm the category.
The results of this philosophy manifested in what both speakers referred to as "pile it high and let it fly" merchandising, the attitude that full shelves mean all is well. Other myths included the notions that more variety is always better and that a good baker makes a good manager.
Montague moved ahead when he realized that a bakery manager was not the same thing as a bakery program. He chose the retail software designer Park City Group, who customized its proprietary software system for Associated at a Lin's test store over a one-year period. During that time, Associated created a huge data bank.
The most daunting tasks were creating the baking formulas, time lines indicating work activities and stockkeeping unit numbers for every item in the bakery.
Other data included code numbers and wholesale replacement order numbers. Since the beginning of the software testing at Lin's, that store has cut shrinkage by 5%, including labor and packaging.
Last year, Associated set up the program at a second Lin's store. A Dan's store received the program this year. In August, Associated plans to roll out the program in other stores.
Montague believes the biggest challenge in implementing a computer-assisted bakery management program is getting the trust of the one person most likely to sabotage proceedings -- the bakery manager, who "often fears being told what to do and tells you the transition will take too much time."
Computer training -- ideally one-on-one -- for older or non-technologically inclined employees is also key to a program's success. Montague encourages management to empower employee mentors and involve employees through the entire transition period.
Because of the time and energy commitment necessary to launch this type of endeavor, both Montague and Simonson emphasized the importance of strong corporate sponsorship, with a lot of additional support from officials in operations, information systems, and local and departmental management.
"It's given us direction," Montague said. "We now know what the consumer wants because we can see what the consumer is buying."
And, with the bakery industry rapidly losing skilled labor, as well as an increasing need for new employees to take over working with frozen and parbaked products, Montague sees computer-assisted systems as a fundamental part of the ISB within 10 years.