The Basics of a Baked Goods Supply Chain

Supply chains vary in size and complexity, but they all have the same goal: putting a product in a consumer’s hands. A baked goods supply chain, for example, starts with raw ingredients and ends with the delivery of the product to the end consumer. Orchestrating the various activities at each stage requires careful planning, as well as continual optimization to increase efficiency while maintaining quality.

Baked goods manufacturers buy the various ingredients they need from suppliers, which are often farmers or agricultural cooperatives. Flour, sugar, corn and other commodities generally are interchangeable, so a baked goods manufacturer might buy from whichever supplier offers the lowest prices. But some ingredients, such as flavorings or special types of flour, might not be widely available, meaning the baked goods manufacturer must hunt down affordable suppliers.

At the manufacturing stage of the supply chain, a baked goods company converts raw ingredients into a product. A baked goods company might produce cookies, cakes, muffins and many other items. The specific manufacturing processes depend on the company's plans for the following stages. If the company plans to ship baked goods worldwide, for instance, it must include preservatives during the manufacturing process. Or perhaps products will be packaged for home preparation, which calls for an entirely different manufacturing process.

The distribution stage involves moving the products from the production facility to wherever consumers are. Distribution can be simple, or it can involve many distinct channels. For example, a baked goods company might sell its wares directly to consumers through both a factory store and its website, as well as sellling baked goods to wholesalers. Wholesalers are businesses that buy products from manufacturers and use their expertise in shipping and distribution to re-sell the products to retail stores. Baked goods manufacturers also might sell their products directly to retail stores.

Delivery of the products to consumers is the final stage of the supply chain. Most consumers buy baked goods from a retail store, such as a supermarket. The retail store can promote the baked product in a variety of ways, such as choosing a visible position on its shelves or by offering samples to its customers. The customer’s purchase is the final step of the supply chain.

Supply chain management refers to the orchestration of all the various processes to maximize efficiency and minimize delays. Supply chain management might include a central office that negotiates prices with suppliers, sales departments that promote the products to wholesale distributors and retail stores, and a marketing department that handles advertising and consumer research.