Cost Reduction Strategies for Bakeries

With economic slow down and low spending by consumer has forced big bakery manufacturer to implement cost reduction strategies in their plants and operations . Cost reduction programs should be ongoing program rather than Knee jerk program. One should continuous strive for innovation , modification or automation for savings in factory operations .


We can get substantial cost savings in following areas .

Procurement or purchase

Around 60 - 65% cost of product is raw material . Hence savings in raw material purchase can add on to profits.Main raw material s are flour , fat , sugar,Additives .Apart from raw material other materials are engineering items and packaging. Few of the ideas are

Bulk purchasing

Forward buying

Buying from sales tax,excise duty free area

E procurement

Reverse Auctions

Imports or sourcing from across the globe eg Palm oil ,Sugar ,flour etc



Logistics

Cost of transportation inbound and outbound are very high to have efficient logistics management definitely helps reducing cost. Few are listed below


Freight or transport management
Inventory management
Warehouse design and location
Type of transportation



Energy

Energy also contributes to cost of manufacturing hence to reduce cost of energy should be a priority for manufacturers . Few Ideas are mentioned below.

Get an Energy Audit done . Implement their suggestions
Fuel savings through energy efficient burners
Power energy savings through energy efficient motors
Install screw compressors
Alternate fuels -Sourcing cheaper fuel like CNG , LPG , RFO ,LDO etc
Heat recovery from ovens
FRP fans for cooling tower



Packaging
Packaging material also a major factor in cost of manufacturing hence selection of packaging material should be done with care . Few ideas are

Reducing or Modifying shape and size of product.
Reducing Packaging waste through thickness or gauge reduction .


Automation to increase productivity and reduce manpower
Automating bakery processes can result in substantial savings in cost .Areas where we can go autoamtion are
Raw material and finished product handling and storage.
Add Radio frequency dryer to increase the oven productivity .
Packaging processes can be automated from feeding to cartoning and palletizing .

Outsourcing
Few of the processes can be outsourced like
Biscuit Grinding
Sugar Grinding
Promotion packing

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