In thinking about the challenges confronting wholesale baking in 2015, it’s tough to imagine a better encapsulation than in recent remarks by Ramon Rivera, senior vice-president of operations for Bimbo Bakeries USA. Newly installed as chairman of the American Society of Baking, this highly-regarded operations executive said innovation is crucial to growth for baking. Then he added, “There is a thin line between innovation and added complexity.”
One need look no further than recent experiences of B.B.U. to understand the challenge Mr. Rivera referenced. In a Feb. 27 conference call with investment analysts, Fred Penny, president of B.B.U., discussed the “complexity of the portfolio” Bimbo has inherited through acquisitions and said the company is “very, very focused on trying to streamline” this aggregation. The problem Mr. Penny cited is familiar to industry observers. Many years ago, Richard Noll, who at the time headed the Sara Lee business Bimbo has since acquired, said “a 30% stock-keeping unit reduction would sharply improve productivity.” He said the company had “thousands of product SKUs.”
A bit like federal government programs, cutting baked foods S.K.U.s is widely recognized as necessary in principle but often is infuriatingly difficult. Local interests frequently interfere. Consumer demand pulls bakers in more directions than ever, and with competition intensifying from both within the industry and outside, the need for eliminating complexity and embracing genuine innovation is greater than ever.