More wholesale bakers are taking a page from the manufacturing industry by bringing enterprise resource planning (ERP) systems into their baking operations.

These systems return a range of benefits, including inventory tracking and the capability to analyze business transactions in detail to find cost savings potential, says Kerry Glynn, president of GlobalBake USA, Richmond, Va., which makes ERP software.

ERP systems link production with business processes-new orders, purchasing, credit, accounting, supply chain management and planning. They connect business headquarters to multiple production facilities, warehouses and sales offices. By linking these operations, ERP helps executives understand and forecast all the factors-from sales and purchases to asset use and hiring-that might affect profits, says Jay Deakins, president of ERP system provider Deacom Inc., Wayne, Pa.

ERP systems can help bakers adjust business strategies to meet changing customer needs, Glynn says. In fact, Red Hen Baking Co., Middlesex, Vt., which uses the GlobalBake system, has cut product returns and boosted its profit margin by 3 percent after implementing ERP.

“There are real opportunities amidst the gloom and doom for those willing to find and exploit them,” Glynn adds. “But bakers' ability to plan ahead clearly and carefully is more important than ever before.”

ERP implementation less costly

As recently as a decade ago, ERP implementation could be costly with lengthy installation. Once the system was in place, management had to get up to speed on how to effectively crunch the numbers their systems churned out. Once established, most companies did see their bottom-line financials nudge up, thanks to the broad view into operating numbers and the zoom-in and cross-section focus the system provides, says Frank Scavo, president of the information technology research firm Computer Economics, Irvine, Calif.

Now, more than 20 years after the ERP buzz began, nearly every manufacturer-no matter its size-has a system of some sort in place, Scavo adds.

Small manufacturers, including food manufacturers, such as bakeries, usually have some sort of overarching system that operates similarly to an ERP system, he says. “Maybe they're running QuickBooks or an accounting system. So, even though they don't have anything that could properly be called ERP, those systems function in ways like ERP.”

But within the last several years, wholesale bakeries are casting aside homegrown, cobbled-together systems in favor of actual ERP systems, Deakins adds. Lower costs, easier implementation and systems targeted to smaller businesses are helping ease the transition to ERP.

Predicting need

In fact, the baking industry is perfectly suited to benefit from ERP installation, Glynn adds. About 200 bakeries across the nation use GlobalBake's software.

“Bakers do the same series of things over and over again every day, but a disjointed system of QuickBooks and spreadsheets and Excel files makes it hard to get an overall picture of the business,” he says. “That's one of the areas of benefit-control over all areas of the business in one centralized place.”

“Baking might not fluctuate as much as other manufacturing markets, but bakers still need to get a handle on their ups and downs,” Glynn adds. “They need to know what things cost and their margins. They need to keep an up-to-the-moment eye on them.”

The financial boost ERP can bring comes about in part because of its prediction capabilities. The system operates with up-to-the-minute information and links accounting, inventory and production in a way that allows management a bird's eye view into overall operations and allows managers to predict monthly orders in order to maintain adequate inventory levels and ease stockpiled inventory.

Also, by tracking and analyzing current manufacturing processes, improvements can be found and made, says Jim Shepherd, senior vice president of research at AMR Research, Boston, which tracks the ERP industry.

Help in recall

“The beauty of ERP,” Deakins says, “is it brings in sales and purchasing. Controlling all that in one spot allows you to better control business processes.”

ERP allows bakeries to track ingredients from the vendor to specific batches in production. “Let's say you bought flour from this vendor and found out later it might be contaminated,” Deakins says. “Because the flour would be specified by batch within the system, you could immediately pinpoint when the bad batch arrived because everything you received for the past three weeks would be specified. One of the goals is isolation. If only one batch is bad, you can find it and eliminate it; you don't have to empty out the entire warehouse.”

The batches can be isolated with such precision because the ERP system allows users to barcode by batch and track them through the arrival and baking process. Bakers who make use of an ERP system could tie bar codes to incoming shipments of flour, Deakins says. Finished products can be tracked before and during shipping in a similar manner.