13 Jul BEMA Convention 2022: Industry Leadership Conversation

Industry Leadership Conversation – Convention 2022

There are few in the industry not wondering about what the future might hold. With a perspective looking forward, industry leaders Kerwin Brown, President and CEO of BEMA; Cordia Harrington, CEO of Crown Bakeries and ABA Chair; and Tim Cook, President and CEO of Linxis Group, 2021-2022 BEMA Board Chairman shared their thoughts and insights.

Strength Remains

After a whirlwind 2020 and 2021, the baking industry remains strong. For some, this translates to continuing high unit consumption while other regional bakers are seeing the opposite effect. Previously over-indexing sales in center store are giving way to higher in-store numbers as consumers return to brick-and-mortar and reacquaint themselves with fresh in-store products and the pleasure of a fresh-baked indulgent treat.

Considering the Variables

Keeping positive momentum is dependent on two very big considerations: supply chain and workforce. Supply chain disruptions continue to be one of the biggest challenges faced by bakers and suppliers alike. Described as a gigantic jigsaw puzzle, Cook shared how companies are putting flexibility to the test when missing parts take down an entire production line and/or being stymied by the inability to procure something as simple as an air filter. The ingredient side is also not currently receiving the support it needs with price increases higher than the margin of the finished product at times, according to Harrington.

A just-in-case mindset is leading suppliers and bakers to build up inventory and qualify new suppliers. Brown stated the last couple of years have demonstrated why a high level of cooperation between bakers and suppliers continues to be a necessary and formidable weapon against change and challenges. These important relationships are critical to weathering the ever-changing and volatile storm of challenges and disruptions every baker and supplier face. Brown shared BEMA Connect provides an example of the coordination possible when suppliers and bakers work together to find solutions.

Tackling the Unexpected

• Build inventory whenever and wherever possible
• Shorten the length of time quotes are good
• Discuss price escalation clauses
• Commit to inventory or raw materials as soon as a customer pledges to a project

Upping the Communication

But despite looking at a range of contingencies, many companies are discovering traditional communication methods no longer work. A lack of consistent communication with senior leaders and owners is revealing the importance of communication across every level of the organization to ensure awareness is comprehensive, according to Harrington.

Looking Forward

While the crystal ball remains foggy, data from BEMA Intel points toward continuing optimism over the next three to six months, albeit at lower confidence levels than previously seen. This includes positivity around bookings coming in over the next quarter. Cook also shared anecdotal observations indicating a leveling of inflation in North America and possibly in Europe, too.

Workforce Woes

Yet none of this will remain relevant without a strong workforce. Among bakers and suppliers, concerns about workforce top supply chain and inflation concerns. This is evident as labor shortages force some companies to turn away business because of workforce issues.

• Inflation, cost of goods: 84%
• Transportation: 75%
• Labor: 75%

Find Solutions at IBIE

With these things in mind, many are looking forward to IBIE as an opportunity to explore what’s new and innovative. In Vegas, the industry can look forward to seeing new equipment and formulations, learn about AI and automation solutions and gather alongside like-minded peers. Many are also planning to use IBIE as a place to renew existing relationships and to establish new ways to diversify the supply chain.