Sweet Treats Gets Sweeter and Leaner: A Case Study in Small Business Lean Management

Executive Summary: A local bakery successfully used lean management principles to handle rapid growth by reimagining its systems to focus on efficiency. This proves that lean management principles are not just for large businesses, but can be successfully and efficiently applied to small businesses and startups as well.

To learn about lean methodology and how small and midsized businesses (SMBs) can adopt lean management practices, check out our article on the topic here.

Background:

Sweet Treats Bakery* (*business and employee names changed for privacy reasons), a small, family-owned self-described "street corner bakery" in South Florida, built a loyal customer base through a deep understanding of the local market's intricacies (i.e. offering both Latin-style and European-style baked goods to cater to local tastes), strong local engagement, and successful social media marketing. During the pandemic, the bakery expanded its custom baking business and also picked up contracts with local restaurants, coffee houses, and boutique hotels to outsource some of their baking, providing a lifeline that sustained the bakery through tough times.

As the bakery's customer base began to return in the wake of the pandemic, Sweet Treats' owners, the Garcia family, were faced with a uniquely modern problem- and not a bad "problem" to have, at that- the bakery became a popular destination for the newest wave of social media influencers. The crush of new customers and the struggle to cater to them- in addition to rising cost of goods and overhead costs after the pandemic- combined to create a "perfect storm" that resulted in an elastic rise in operational costs.

Rising costs across the board came together to create issues for Sweet Treats.

Additionally, as both the front and back of house "became a madhouse" in the words of Alicia "Lisa" Garcia, head proprietor of Sweet Treats, issues of inconsistent product quality and long customer wait times began to arise. The inconsistent product quality was a result of, in Lisa's words, "overworked experienced staff and undertrained inexperienced staff". The long wait times were not only created by the press of new customers, but also from inefficient and sometimes overlapping processes in both front and back of house.

These issues began to impact Sweet Treats' profitability and customer satisfaction, and Lisa and family became worried about losing the business' positive momentum. Sweet Treats finally decided on adapting lean management processes, thanks to advice from consultants and Lisa's knowledge of Kaizen principles, drawn from working in an innovative large industrial bakery in Los Angeles a decade and a half before.

Applying Lean Management Principles:

As we explained in our article on the topic, lean management is a methodology for creating efficient production or manufacturing systems without sacrificing productivity. This is typically handled by observing the 6 core principles of lean management: value definition, value stream mapping, waste elimination, creating flow, implementing pull systems, and continuous improvement.

1. Value Definition:
The leadership team of Sweet Treats Bakery surveyed their customers and understood that despite the aesthetics that many "social media famous" products thrive on and the fact that people don't tend to mind waiting for viral products, their most valuable group of clients clients valued fresh, high-quality baked goods and a pleasant, quick service experience above everything else. Understanding this helped the bakery prioritize improvements that directly impacted customer satisfaction.

2. Value Stream Mapping:
Sweet Treats mapped out its entire business process from ingredient sourcing to the sale of their finished products. This involved documenting each step, such as inventory management, baking, packaging, and customer service. The value stream map revealed several areas of waste, including:

  • Overproduction: Baking more products than needed, leading to waste.
  • Waiting: Downtime between baking and packaging.
  • Excess Inventory: Overstocking ingredients that sometimes went unused.

3. Waste Elimination:
The bakery identified and addressed various types of waste:

  • Defects: Implementing stricter quality control measures reduced the number of defective products.
  • Overproduction: Introducing a made-to-order system for certain items minimized overproduction and waste.
  • Waiting: Streamlining the baking schedule reduced downtime, ensuring a more continuous workflow.
  • Non-Utilized Talent: Engaging staff in decision-making and problem-solving utilized their skills more effectively.
  • Transportation: Reducing unnecessary movement by reorganizing the workspace for better accessibility.
  • Inventory: Switching to a just-in-time inventory system to keep only the necessary amount of ingredients on hand, with extra allowances for hard-to-source ingredients
  • Motion: Redesigning the kitchen layout to minimize excessive movement and improve efficiency.
  • Extra Processing: Simplifying packaging processes to reduce time and effort.

4. Creating Flow:
To ensure a smooth flow of operations, the bakery restructured its kitchen layout. They introduced a Kanban system to manage baking schedules, ensuring that each product moved seamlessly from one stage to the next without delays. All contract baking was now reorganized to 2 evenings per week, which kept contract baking from inhibiting other processes. This reorganization also improved communication among staff, leading to a more cohesive workflow.

5. Implementing Pull Systems:
Sweet Treats Bakery adopted a pull system for certain products by baking goods based on actual customer demand rather than forecasts. This reduced the amount of excess inventory and ensured that products were always fresh. They also introduced customer pre-orders for popular items, aligning production more closely with demand.

6. Continuous Improvement:
The bakery fostered a culture of continuous improvement by regularly holding team meetings to discuss potential enhancements. Employees were encouraged to share their insights and suggest improvements. This led to several small but impactful changes, such as adjusting baking times for specific products and refining the order-taking process.

Results:

By implementing lean management principles, Sweet Treats Bakery experienced significant improvements:

  • Reduced Waste: The bakery cut down on waste by 30%, leading to substantial cost savings.
  • Improved Quality: Stricter quality controls and better process management resulted in more consistent, high-quality products.
  • Enhanced Efficiency: Streamlined workflows and a more organized kitchen layout reduced production time by 20%.
  • Higher Customer Satisfaction: Quicker service and fresher products improved the overall customer experience, leading to increased repeat business.
  • Employee Engagement: Involving staff in the improvement process boosted morale and productivity.

Sweet Treats used lean management principles to create sweeping efficiency changes; a sweet deal for clients and employees alike.

Conclusion:

Lisa says that the process of adaptation was helped along by the presence of her consulting team and a lot of patience from the family members working for the business who were the core group of "believers" that helped push the process forward. The adaptation of Kaizen principles initially took some time and arm-wrenching of other frustrated staff who had accepted the status quo, but once staff began to feel a sense of ownership from their new involvement in decisionmaking and see drastic efficiency improvements, team members became believers.

The case of Sweet Treats Bakery illustrates how even small businesses can benefit from lean management principles. By focusing on value, mapping processes, eliminating waste, ensuring smooth flow, implementing pull systems, and fostering a culture of continuous improvement, small businesses can reduce costs, enhance efficiency, and improve customer satisfaction. This approach not only helps in overcoming operational challenges but also positions the business for long-term success, a sweet deal for everyone.

Our team at MiamiBusinessConsulting.com helps businesses of all sizes scale by becoming more efficient and reaching their potential. No matter the size or age of your business, take the first step and reach out to us and we'll be more than happy to help you.

photo credits: Danik Prihodko, Klaus Nielsen, ROMAN ODINTSOV.