Warehouse and expansion
As a contract manufacturer for some of the biggest brands in the US, Oak State often has to contend with growth. Because of this, the bakery’s recent warehouse expansion was about more than storing current products and ingredients; it was also about positioning itself for the next wave of opportunity.
The concept of using storage space as a bridge for further expansion isn’t a new one for the company. “We strategically added space — and we’ve done so several times — that starts out as warehouse and ends up being packaging later,” Byron said. “We plan to grow, and as we grow and build, we’ll leverage investment in taking over warehouse with packaging, and then it eventually goes into a line.”
Four years ago, the then-existing warehouse was converted into the Line B packaging area when the line was extended, and a new leg and custom innovation system was added a year later.
As a result, they had to use trucks for the warehouse and storage until the expansion this year, which was sequenced in two phases and added into two separate areas of the bakery. The first, also off Line B and completed in April, consisted of 10,000 sq ft and included a 2,500-sq-ft drive-in cooler to house fresh ingredients such as butter and nuts. The second 10,000-sq-ft warehouse, which was completed in July, sits off Line D and currently houses packaging materials. As business continues to grow, this space will be converted to house more packaging.
“We also have several new projects starting, and we really couldn’t support them over the next year without additional warehouse space,” Steve said. In addition, on Line B, the space is available should Oak State decide to invest in new equipment such as another oven.
As far as growth and storage are concerned, it’s all cyclical, according to the Gouldings. “Over the years, we’ve added capability in packaging that’s taken away from warehouse. Then we’ve added more warehouse. And so on and so on,” Byron said. “In the past six months, we added warehouse. And in the next six months, we’ll be launching new products and filling up that warehouse with all the raw materials and packaging to support those products.”
“That’s what saves you as you get bigger,” Steve added. “Adding the warehouse saves you having to do things like use trucks for storage and then have to pull a truck in to get something off it and pull it out again.”
From warehouse to packaging to shifting consumer demands, Oak State stands ready to break up the next bottleneck and increase production and efficiency. The trick is “to predict where the next bottleneck will be,” Byron advised.
By investing strategically in the right areas of the bakery, Oak State can continue to serve these large branded companies, which have a tendency to be risk-averse. “We minimize risk for them,” Byron said. “We offer a low-risk solution to launch a cookie nationwide. In order to do that, you have to have capacity to support three SKUs in every supermarket across the country, while having all your other resources available to innovate a new product for someone else.”
Are the strategic investments and growth plans worth it, especially when landing one account can take years? Byron sums up that answer quite clearly: “Once you have a customer, it’s rare to lose it. Once they have you qualified and you prove yourself, they just keep coming back.”