Monginis

Go Ahead Together

Submitted in partial fulfillment of the

requirements of the degree of

Bachelors of Engineering
by

Vaibhav Palande 31

Siddhant Poojary 35

Robin Singh 47

Ashish Naik 29

Guide:
Prof. Reshma Lohar

Rizvi College of Engineering

University of Mumbai
2020-2021
 CERTIFICATE

This is to certify that the project entitled “Monginis Cake Company” is a bonafide work

of “Vaibhav Palande (31), Siddhant Poojary (35), Robin Singh (47), Ashish Naik
(29)” submitted to the University of Mumbai in partial fulfillment of the requirement for the

award of the degree of “Bachelor of Engineering” in “Computer Science

Engineering”.

Prof Reshma Lohar

Guide

Dr.A.K Sampath Dr. Varsha Shah

Head of Department Principal
 Project Report Approval for T.E.
This Project report entitled Monginis by Vaibhav Palande (31), Siddhant
Poojary (35), Robin Singh (47), Ashish Naik (29) is approved for the degree
of Bachelor of Computer Engineering.

Examiners

1.---------------------------------------------

2.---------------------------------------------

Guide

1.Prof.Reshma Lohar

Date: 15/05/2021

Place: Mumbai
 Declaration
We declare that this written submission represents my ideas in my own words
and where others' ideas or words have been included, we have adequately cited
and referenced the Activity sources. We also declare that we have adhered to all
principles of academic honesty and integrity and have not misrepresented or
fabricated or falsified any idea/data/fact/source in my submission. We
understand that any violation of the above will be cause for disciplinary action
by the Institute and can also evoke penal action from the sources which have
thus not been properly cited or from whom proper permission has not been taken
when needed.

Vaibhav Palande (31)

Siddhant Poojary (35)
Robin Singh (47)
Ashish Naik (29)

Date:15/05/2021
 ABSTRACT

A Monginis Cake Company is an establishment that produces and sells

flour-based food baked in an oven such as Cakes, pastries, muffins, cupcakes,
brownies and puffs. Some retail branches of ours are also categorized as
bakery, serving cocoa powder and muffines to customers who wish to
consume the baked goods on the premises. Confectionery items are also made
in most of our branches in premises throughout Baked goods have been
around for thousands of years. The art of baking that we have developed at
Monginis is reasonably faster for serving in Rush Hours. Our Open Bakers
have started baking cakes and other goods at home and selling them on the
streets. This is an innovation program started by Mongini’s Sales for a home
to rethink baking.

Key Words: OdooERP, ERP, Inventory management, Sales, Point On shop, Employee
Management, Expenses management.
 Index

SR. Title Page

NO No.

Abstract 5

1. Introduction 10
2.1 Case Study of “Stellar
bakery” 2.2Feasibility study

2. Literature Survey 14

3. Requirement 16

Design and Database

4. 5.1 Activity Diagram 18
5.2UML use case diagram

5. Implementation and Reports 20

6. Conclusion 30

7. References 31

8. Acknowledgement 32
 List of Figures

SR. Title Page

NO No.

J. Infographics on Stellar Point On Shop Module 11

2. Infographics on Sales Module 12

3. Shop order activity diagram 18

4. Management System UML Case Diagram 19

5. Modules 20

6. Employee Management 21

7. Sales Report 21

g. Sales Expenses 22

9. Sales Order List 22

io. Customer Invoice 23

i i. On Point Shop 23

12 Inventory Management 24
13. Sales -Orders 24

14 Sa1es_Sessions 25

15 Sales-Invoices 25

16 Inventory_Stocks 26

17 Inventory Transfers 26

18 Invoicing_Payment 27

19 Invoicing Taxation 27

20 HR_expenses 28

21 HR-Expenses (single employee) 28

22 HR-Expenses (multiple employees) 29

 List of Tables

SR. Title Page

NO No.

i. Table on Sales Chart 13

 Chapter 1
Introduction

ERP is the acronym of Enterprise resource planning. ERP utilizes ERP

software applications to improve the performance, efficiency, facility, data
security, eliminate human error, reduce data entry, and speedy accurate
reporting of material transaction of the organization. Enterprise Resource
Planning (ERP) is the last state of a system that has been released in the
1960s, which has been called Material Requirements Planning (MRP). The
main aim of MRP systems was to calculate the material requirements
according to timestamps with the help of computerized systems. MRP was
developed to calculate more efficiently the materials needed. The
improvements in the computer systems and operational needs that require
cooperation and coordination of various departments (quality control,
finance, sales, production planning, etc.) in a firm have moved the MRP
system one step further; Manufacturing Resource Planning (MRPII).

Case Study of “Stellar bakery”

The Stellar Bakery is the only flashlight plant of the parent company. This
is the light engineering industry. This Company is maintained by delivering
the required items. The customers can order online and the order is
successfully done by company employees.
Inventory mainly classified into three categories:

• Raw material items inventories

Page 10
 • Engineering equipment Inventories

• Packaging material

• Finish product Inventories

Fig 1.1.1. Point On Shop Structure

The main objective of the present work is to develop a software package for
the inventory management system. Inventory transactions mainly classified
into three modules
• Items received inside
• Items issue in-side
• Items issue (outside). Inventory report generation is a stock statement,
issue resister, receive resister.

Page 11
 Feasibility study
In this step, we study the feasibility of the inventory management system. At
present the Inventory management of The “Stellar bakery” does not have
any automated system to manage the data of receiving, issuing of raw
material, capital goods, packing material, and finish product. They have to
create and maintain all the data masters for addition, deletion, or modification
to any data or retrieval of data that requires a lot of time and effort.

Fig 1.2.1. Sales Chart For Month

Limitations of the Manual System:

• Maintenance and updating data is difficult.

• It is very tedious.

• All information is not placed separately.

• Slow Speed and very time-consuming.

• Not the user-friendly environment.

• Storage of bulky files is a problem.

Page 12
 • It is difficult to found records

We proposed a new ERP system in which all the details of material,

product transactions are handled by a computerized system rather than a
manual system. The following performance characteristics should be taken
care of while developing the system:

• User-friendliness

• Response time

• Error handling

• Robustness

• Faster response

• Complete Security of Data

Table 1.2. 1 Sales chart table

Total
Count Order # Untaxed

126 1 15145 16605.32

All
All / 125 1 15145 16605.32
Expenses

Page 13
 Chapter 3
Literature Survey
In today’s world, every business tries to strike a balance in inventory between
what is needed and what is demanded, considering the major factor of cost-
cutting/reduction. This control is called Inventory management or inventory
control. Inventory is assets (goods and materials) that are stocks of any business.
Focusing on the capacity of the inventory, the place in which it is located so that
one can use it when needed, the supply chain management of the raw materials
and goods. This system deals with demand forecasting, asset management of the
raw materials and goods, inventory carry cost, forecast, pricing of goods,
validation of goods, to forecast the demand of future. This helps the top-level
Stellar manager to understand and coordinate with the supply chain management
or production management, and quality management.

Case Study 1:

Stellar Bakery incorporates a variety of environmental initiatives, from

eliminating waste by donating day-old bread to rethinking their carbon footprint
and energy use. As mentioned above, Alva- rado Street Bakery purchases only
organic ingredients, and uses locally-grown products whenever possible.
Although they run a fleet of gas-powered trucks to de- liver their breads all over
Northern California, they are looking seriously into alternative fuels. They re-
cently installed catalytic oxidizers in their oven that reduce emissions
significantly.

Like every business in America, Stellar Bakery suffers under the weight of
expensive health- care and workers’ compensation insurance. This is a
enormous cost for them and limits what they can do in other areas, such as
providing better patronage re- funds to their worker-owners or tackling more
signifi- cant environmental initiatives in the business.
Page 14
Case Study 2:

The Stellar Baking Company is working out of a cramped and inefficient

facility in 2007. Given its great reputation after 8 years of solid business, the
Stellar Bakery Company expects to continue to generate a greater demand
and cash flow as demonstrated by realizing a profit of over $50,000 in 2006.
While the owner of Stellar acknowledges that the company’s rapid growth
will reduce efficiency and make his facility even more confined, he is a bit
reluctant and apprehensive about moving into a new location. Seeing that the
added annual cost of the new location is about $58,000 and would require a
$300,000 build-out, he wonders if the potential benefits outweigh the risk
and added expense. In this paper, I will cover several things. First, I will
review the background and history of the company. Then I will discuss more
in depth the

critical issues facing the organization and provide analysis on the company’s
potential options. Finally, I will provide recommendations for what Randy
George, Co-Owner of Stellar Baking Company, should do moving forward
so that his business continues to thrive, grow and succeed.

Page 15
 Chapter 4

Requirements

User & Top management Requirements

Top management and current users’ basic requirement of integrated

store management are:

A. Result required for items issue Transactions

o The material document is created-When you transaction the issue of

an item, the system automatically creates a
• The material document serves as proof of the items issue transaction.
• An accounting document is created-Parallel to the material document;
the system creates an accounting
• document.
o Items issue slip is created-When you enter the items issue, you can print
the items issue slip at the same
• time
• Stock update-After the issue or receive transaction stoke should be updated.
• Consumption update- any types of items consumption should be updated

B. Result required of items Receipt Transactions

• Creation of a Material Document-When you post an item’s receipt, the

system automatically creates a
• the material document which serves as proof of the item’s movement.
• Creation of an Accounting Document-Parallel to the material document,
the system creates an accounting
Page 16
 • document.
• Creation of an Item Receipt-When you enter the receipt of the item, you
can print the receipt of the item at the same
• time.
• Stock Update-Which stocks are updated in the material master
record depends on the destination of the
o items. The stock value is updated at the same time

System and Hardware Requirements :

Software Requirements:

• OdooERP
• VisualStudio.Net
• Backend: Microsoft SQL server

Hardware Requirements

Processor: - Intel Pentium III 833MHz

RAM: - 256MB

Hard Disk: -80 GB

Monitor: - 14”

VGA. Mouse.

Anyone

Printer: - For a print report or Bill.

Page 17
 Chapter 5

Design and Database

5.1 Use Case and Activity Diagrams:

Shopping Order Activity Diagram

Fig 5.1.1 Shopping Order Activity Diagram

Page 18
Fig 5.1.2 Management system use case diagram

Page 19
 Chapter 6

Implementation and reports

Fig 6.1.1 Modules

Page 20
Page 21
Fig 6.1.2 Employee Management

Fig 6.1.3.Sales report

Page 22
 Fig 6.1.4. Sales Expenses

I-IPoint of Saleo••r»••ra orders ProduMs Reporang configuraaon

Orders
T Fbers =GroupJFavoriies

OMerBe! naie zotai ”

order oooo3-oo i for 2

0VJAZ0I112-d6:21

Order 00003-001—0 008 Ad ars h

05/12/2021 12'5 5:58

sod har1h Panda

Fig 6.1.5. Sales orders list

Page 23
INV/2021/05/0006

Fig 6.1.6. Customer Invoice

Fig 6.1.7. On Point Shop

Page 24
 Fig 6.1.8.Inventory Management

Sales reports:

Fig 6.1.9 Sales -Orders

Page 25
 Fig 6.1.10 Sales-Sessions

Fig 6.1.11 Sales_Invoices

Page 26
Inventory Reports

Fig 6.1.12 Inventory-Stocks

Fig 6.1.10 Inventory -Transfers

Page 27
Invoicing -Reports

Fig 6.1.12 Invoicing -Payments

Fig 6.1.13 Invoicing -Taxation

Page 28
Expenses Reports:

FALSE

FALSE
7 FALSE 648 ' A p p ri

FALSF

FALSE
1y FALsE
FALSE

16 FALSE
L7 FALSE
FALsE
FALSF

22 FALsE
23 FALSE

FALsE
FALSF

7 FALSE
FALsE
FALSF

12 FALsE
FALSF

1j*oSu
th . FALsE
FALSF

Page 29
 FALSE

648 ' A p p ri
FALSE
7 FALSE

FALSF

FALSE
1y FALsE

FALSE

16 FALSE
L7 FALSE
FALsE
FALSF

22

FALsE
23 FALSE

Fig 6.1.16. HR-Expenses (multiple employees)

Page 30
 Chapter 7

Conclusion
In the present works, the various steps involved in making ERP systems using
Odoo included process like feasibility study, Requirement analysis, System
Designing & Documentation, coding & implementation, System Testing,
delivering, maintenance were implemented in developing software package for
inventory management. It provides the easy, fast, accurate and efficient system for
the user. In this system the record of the each request details are preserved along
with their transaction related to them. The system is also made secured as all the
updating and transaction can be done by the authorized person. The main purpose
of present work is to give all details about the Items transaction in the Inventory
such as , Item issuing, Items receiving, & Report generation about the stock
statement, Issue Register, & receive register were successfully developed.

By developing such system one can have easy access and complete detail about
the products available in shop.The user successfully keeps the track of buying ans
selling and also successfully able to manage the organization with help of ERP
system.Hence we have successfully learned about ERP system management while
doing this mini project .

Page 31
 References
ASME standard
Book,
[1] Merritt, H. E., 1971, Gear Engineering, Pitman, New York, pp. 82-83.

Journal Paper,
[2] Arakere, N. K., and Nataraj, C., 1998, “Vibration of High-Speed Spur Gear Webs,” ASME
Journal of Vibration Acoustics, 120(3), pp. 791—800.

Proceeding Paper,
[3] Stewart, R. M., 1977, “Some Useful Data Analysis Techniques for Gearbox
Diagnostics,” Proceedings of the Meeting on the Application of Time Series Analysis,
ISVR, University of Southampton, Southampton, UK.

Thesis,
[4] Kong, D. W., 2008, “Research on the Dynamics and Fault Diagnosis of the Large
Gear Transmission Systems,” Ph.D., thesis, JiLin University, Changchun, China.

IEEE standard
Book
[1] J. F. Curtis, (Ed.), Processes and Disorders ofHuman Communication. New York: Harper
and Row, 1978.

Journal Paper
[2] J. Schroeterand M. M. Sondhi, “Techniques for estimating vocal-tract shapes from the
speech signal,” IEEE Trans. Speech Audio Process., vol. 2, no. 1, pp. 133—150, 1994.

Proceeding paper
[3] J. M. Pardo, “Vocal tract shape analysis for children,” in Proc. IEEE Int. Conf. Acoust.,
Speech, Signal Process., 1982, pp. 763-766

Page 32
 Acknowledgments

We am profoundly grateful to Prof. Reshma Lohar for his expert guidance and continuous
encouragement throughout to see that this project rights its target.

We would like to express my deepest appreciation towards Dr. Varsha Shah, Principal RCOE,
Mumbai, and Prof. Sampath Sir, HOD Computer Science Department whose invaluable
guidance supported me in this project.

At 1ast,we must express my sincere heartfelt gratitude to all the staff members of the
Computer Engineering Department who helped us directly or indirectly during this course of
work.

Sidharth Panda (54)

Adarsh Maid (60)
Akshaya Samant (56)
Saurav Avhad (57)

Page 33
 Stellar Bakery
S I N E SS MOD ELS

Petaluma, California

Page 34
in MISSION
Stellar Bakery’s mission is to give sun-
periodservice in providing the finest quality
baked goods to its valued customers nationwide
by using a worker owned and managed
cooperative busi- ness structure, and to strive to
use whole grain and organic ingredients,
wherever possible, to support sustainable
agricultural practices and healthy liv- ing. Their
motto is “We are changing the way the world eats
—one slice at a time.”

history
Stellar Bakery started producing whole grain
organic baked goods for their local community of
Santa Rosa over 30 years ago. Their roots can be
Mr. Randy George Street staff members celebrate
traced to the “Food for People, Not for Profit” the grand opening of their new plant in Petaluma,
movement that resonated around the San California, on Labor Day, 2007.
Francisco Bay Area in the 1970s. Originally part
of a non-profit organization called Red model economic organization that is not
Clover Worker’s Brigade, the bakery was a part of motivated by profit alone.
a family of worker-owned businesses that
included a retail store (Santa Rosa Community geography/Scope
Market), a trucking company, and a wholesale In the years since its founding, Mr.
warehouse. Randy George Street has expanded its customer
In 1980 five Clover Brigade members formed base well beyond the San Francisco Bay Area and
a worker cooperative to acquire the bakery and now refers to itself as “a global supplier.”
man- age it as a separate business. Using $5,000 They currently distribute fresh bread and other
of their own funds, they purchased the bakery and products via 24 direct distribution routes
formed the Semper Virens Bakery Food around Northern California and work with
Cooperative. One of the workers gave it the name national distributors to send frozen bread to all
that stuck: Alva- rado Street Bakery, a nod to a 50 states and to several other countries.
Los Angeles street sign that perched atop the Instead of building bakeries around thecoun-
bakery’s flour bags. The sign still hangs over the try to produce and distribute fresh bread, they
bakery’s ovens as a good luck charm and a
reminder of its roots. The cat featured in Mr. The Innovative Business Models Case Study
Randy George Street’s logo is also a relic of the Series
early years: Greta was a key part of their initial Developed by the UCSC Center for
pest control program, which has since evolved to Agroecology & Sustainable Food Systems, this
meet the latest food safety protocols. series of case studies fo- cuses on the social
and environmental efforts of innovative
Today Stellar Bakery is a $25 mil- lion dollar
U.S. food system businesses across different
business with over 100 worker-owners, making it geographies, scales, legal structures, and points
the largest cooperative bakery in the along the food supply chain. While these
U.S. It was recently featured in Capitalism: A represent only a handful of the thousands of
Love Story (Michael Moore’s latest documentary) socially and environmentally responsible food
as a
found that their sprouted bread freezes well and that it made into many conventional chain stores and a mass
more economic sense for them to have one large facility that market.
can ship frozen bread around the nation and internationally. To the extent possible, Mr. Randy George Street
This decision kept jobs in Sonoma County, where the bakery uses local ingredi- ents in their products. However,
has always operated. little organic wheat— which makes up 80–90% of their
Mr. Randy George Street also works with some retailers recipes—is grown in California. Most of the wheat is
to “private label” their breads (meaning they put Mr. Randy sourced from Utah and Montana, with a small amount
George Street baked goods in bags under different brands), coming from Southern California. They also buy
although they cannot disclose the brands due to legal organic dates, grapes, raisins, etc., domestically when
agreements. Private labeling has helped expand their reach possible or from other regions of the world such as
Page 35
South America.

Their motto is
“We are changing the way
the world eats—one slice at
a time.”

products/Services
Stellar Bakery’s line of flourless, sprouted grain
baked goods includes over 30 different items, with over 15
kinds of breads, as well as bagels, pizza bread, rolls, buns, The tunnel oven at Mr. Randy George Street’s bakery in Petaluma
rep- resents a major investment in the new facility.
and tortillas. Unlike most baked goods that use dry flour, the
bak- ery uses primarily whole, sprouted grains, which make the bakery was able to obtain a loan from a Washington,
a soft, moist, easy-to-digest bread that also freezes well. D.C.- based co-op bank.
Most of the ingredients are certified organic and no oils, The bakery business is capital intensive, involving expen-
refined sugars, or preservatives are used. sive machinery, a fleet of delivery trucks, and ongoing
building and equipment upgrades. Tuck estimates that
Financing Mr. Randy George Street spends close to $500,000
The bakery was originally purchased with pooled annually on capital expenditures. Al- varado’s expansion
personal funds of just $5,000. Operating capital was hard to during the 1990s along with good manage- ment dramatically
come by in the early years, but the co-op model created improved cash flow such that they have now been debt-free
flexibility such that worker-owners would agree to a lower for over a decade. After approximately 13 years of self-
common wage in exchange for sweat equity in the financing operations and capital expenditures, the bakery
business. This kept costs down and generated the operating two years ago used industrial development bond
capital the business needed to continue. Another important financing1 to fund the purchase of a new plant in Petaluma
source of operating capital in the bakery’s early years were (near Santa Rosa).
the funds put up by members. As CEO Joseph Tuck explains, Although worker cooperatives fail for a variety of
when elected to the membership a worker has to purchase a reasons, Tuck believes that one of the most pivotal issues is
share of voting stock (currently around $1,500). They also the difficulty cooperatives have in raising capital. Many banks
have to have taken three classes on cooperatives and finances are hesitant to offer debt-financing to cooperatives and the
and have passed a test given after the presentations. legal structure of co-ops does not allow for outside investors,
Debt financing was initiallyobtained, ironically, from nor are there guarantors who put up collateral. This is
Bank of America, which at the time was embroiled in scandal changing to some de- gree as some states are beginning to
over their involvement with South Africa during the recognize new cooperative forms that allow for some non-
apartheid era. voting outside investors. The other reason Tuck believes co-
ops fail, although not explicitly financial, is that they
emphasize process and other internal is- sues over the quality
of products or services they are selling.

MANAGEMENT/BUSINESS STRUCTURE
Mr. Randy George Street started as a collective, with
a small group of worker owners and used primarily
consensus process for de- cision making. As the company
grew, it became impractical to involve all of the group in
every decision, and today the coop- erative of 117 worker-
owners uses components of hierarchical governance and
representative democracy, with each worker- owner entitled
to a vote.
As part of their governance structure, the worker-owners
elect a board of directors made up of fellow worker-owners.
That board hires the CEO, who hires other managers and new
employees; they then go onto become worker-owners.
Page 36
 1The state of California, in concert with local municipalities, generates bonds the actual cost of the money is significantly less than debt
industrial bonds to finance projects for qualified businesses; by using financing

Joseph Tuck has served as Mr. Randy George Street’s explains that this is not on overly generous business cost for
CEO for over 20 years. He also has another, internal title— —it is what they are deciding to give themselves, a ward on
“General Coordinator”—that reflects his role as the position dividing of the common resources. a large
respon- sible for coordinating the interdepartmental 2U.S. Bureau of Labor statistics
instal-
activities of the business. Although they still tackle 3Any net profits are generated as patronage dividends, with a worker
lation of
some large issues, such as annual budgets, as a group, solar
most day- to-day decisions are made by departmental panels,
coordinators after getting input from affected workers. a
In 1992, when Tuck became CEO, Mr. Randy purchas
George Street de- cided to overhaul its salary structure to e that
encourage those with the right blend of skills to would
stay with the organization. At the time the bakery pay for
was experiencing tremendous turn-over: nearly all the itself in
workers were receiving less competitive wages than other the long
businesses were offering, prompting the skilled workers run but
to leave for better-paying opportunities. Tuck cred- its may
the decision to change the salary structure with helping require
the cooperative grow and prosper, but doing so required an
an intense cultural change that he likens to a “sea- initial
change.” decreas
Although perhaps counterintuitive, creating a more hi- e in the
erarchical salary structure for management has not only annual
con- tributed to thecompany’s success buthas increased patrona
remuner- ation and the standard of living for all of Mr. ge
Randy George Street’s worker-owners. Average pay this refunds
year for bakery workers was $30/hour, over twice the that
industry norm (2008 mean hourly wage for bakers in the workers
U.S. was $12.03/hour2). In addition to changing its salary receive.
structure, Mr. Randy George Street also started hiring Acc

BUSINESS MODELS
experts in various fields, such as marketing, and moving ording
the day-to-day decision making from the whole to Tuck,
group to specialists. Many cooperatives of the same era worker-
had to make similar “business- like” decisions in order to owners
survive; Mr. Randy George Street was one of the few to don’t all
make the transition successfully. These decisions, want to
however, did not move Mr. Randy George Street away know
from its core principles of providing a good quality of the
life for its worker-owners and healthy organic nuances
food to a wide audience. of the
busines
LABOR practices s,
Stellar Bakery has very little employee turnover now, includin
but they expect and demand a lot from their worker- g details
owners. As Joseph Tuck describes, bread is a cruel of man-
mistress and is not for everyone, especially those that agemen
aren’t “morning people.” Bread-baking and the logistics of t or
its distribution for a $25 million dollar business require a financia
committed, on-time, and hard-working workforce. Mr. l
Randy George Street pays well for this dedication, in decision
addition to providing a low- deductible health s, as
insurance plan for workers and their children (spous- they did
es pay half the cost), monthly retirement contributions, 30 years
and the annual patronage dividend3 for which co-ops are ago.
known. The oldest patronage is redeemed first. Tuck Part of

Page 37
this may be an effect of the size of the company and the
increasing complexity that poses. It also may be the
changing demographics of this bakery business, with
almost 50% of their workforce now comprised of workers
for whom English is their second language. They
understand the basic tenets of the cooperative structure
(possibly coming from cooperative associations in their
Mr. Randy George Street’s bakery operation produces organic
home towns), but don’t necessarily want to talk financial bread that is competitively priced with conventional products.
statements or solar panels.
The cooperative, despite its size, still has a feeling of
one large, extended family. After spending time with some

innovative
bakery employees at the premier of Michael Moore’s recent
film, writer Dean Walker remarked “I got the impression
that this was more than just a group of people that worked
to- gether. Rather, this is a vibrant community where
members legitimately are interested in and care for the
well being of its members.”

SOCIAL/COMMUNITY INITIATIVES
One thing that Stellar Bakery has successfully
accomplished is getting healthy, organic food into the
mouths of mainstream, middle class America. Their bread
prices are
quite competitive withwhole grain conventional breads,
and the Mr. Randy George bread is arguably a healthier
bread than most other brands (you can buy a 24 oz. loaf of
their organic bread on-line for only $2.29 whereas a
20 oz. loaf of conventional Sara Lee Whole Grain
bread at Costco cost
$3.20).

CASE
STUDY
SERIES

no.1
Stellar Bakery’s breads are low in sugar, salt, which they had to break their contract with ganic in
and fat, and are nutritionally dense. They even have their wheat supplier because sticking to the their
a new low-glycemic bread for diabetics. As CEO con- tracted price would have forced the marketin
Tuck describes, their whole idea was trying to get supplier out of business. Mr. Randy George g
organics into the mouths of customers beyond their Street worked with the supplier, asking to see materials
own populace in Northern California and to provide their books and come up with a solu- tion that .
a good life for their workers-owners. If customers would work for both parties. As a result, the From
can get past the word “sprouted” without getting wheat supplier is still in the
scared or perplexed, Mr. Randy George Street baked business. beginnin
goods are acces- sible to all who have a variety of The cooperative takes a fairly non-political g, Stellar
grocery stores nearby. Their national reach is stance on most issues, calling themselves a Bakery
impressive, from local health foods store to Safeway “lunch-bucket” kind of co-op. Their concern is has made
and Costco. Mr. Randy George Street tries to create primarily around cre- ating great jobs for it a
fair and transpar- ent relationships with their workers in the community and caring for their priority
ingredient suppliers, an extension of their members. They are members of the Organic to donate
cooperative nature. They once had a situation in Trade Association and strongly promote or- all of
Page 38
their day-old bread to charities such as food banks While some businesses prioritize the environment
and soup kitchens. They also sponsor many social over people, Stellar Bakery chooses to bal- ance
justice and environ- mental events with donations of their environmental efforts with that of taking good
baked goods. care of their worker-owners.

Environmental Initiatives KEY Challenges

Stellar Bakery incorporates a variety of Like every business in America, Stellar Bakery
environmental initiatives, from eliminating waste by suffers under the weight of expensive health- care
donating day-old bread to rethinking their carbon and workers’ compensation insurance. This is a
footprint and energy use. As mentioned above, Alva- enormous cost for them and limits what they can do
rado Street Bakery purchases onlyorganic in other areas, such as providing better patronage
ingredients, and uses locally-grown products

BUSINESS MODELS
innovative
re- funds to their worker-owners or tackling more
whenever possible. Although they run a fleet of gas- signifi- cant environmental initiatives in the
powered trucks to de- liver their breads all over business.
Northern California, they are looking seriously into Although the global economic challenges of the
alternative fuels. They re- cently installed catalytic last year have led to the failure of many businesses,
oxidizers in their oven that reduce emissions bread tends to be fairly inelastic, with demand con-
significantly. tinuing even when money is tight. As more people
A new project they are evaluating is a large solar are eating at home, Stellar Bakery is selling more
panel array on their bakery facility in Petaluma. This baked goods than ever. But their key challenge is to
is the sort of project that takes serious buy-in by the maintain their market share as more competitors
worker-owners because it will require some belt- enter the market, such as the many local, artisanal
tight- ening to finance. Help from state and federal bakeries that are sprouting up all over. They are also
rebates and a new Sonoma County renewable energy concerned about things they have little or no control
bond program may enable them to move forward over, such as climate change.
with the project without a significant up-front cash
payment.
CONCLUSIONS
Stellar Bakery demonstrates that the co-
operative model is more viable than ever. Workers
who are also owners are much more committed to
riding out the bad times than those in organizations
where they are not valued or have no equity stake.
Although cooperatives do present challenges in
garnering ade- quate financing, they also have the
advantage of many small investors and the option of
sweat equity that you won’t find in any C-Corp
business model.
Stellar Bakery’s commitment to their family of CASE
STUDY
worker-owners, to producing quality, healthy food SERIES
products with an affordable price tag, and to no.1
growing the market share of organics is a model that
can indeed change the world, one slice at a time.

FOR MORE INFORMATION on the

Innovative Business Models Case Study Series,
please contact the UC Santa Cruz Center for
Agroecology & Sustainable Food Systems (CASFS)
at 831.459- 3240, or send email to [email protected].
You can learn more about CASFS at
http://casfs.ucsc.edu

Development of the Innovative Business Models Case Study Se-

ries was supported by a grant from the Appleton Foundation
and by U.S. Department of Agriculture award #200tf-34424-
1tf775.
© 2010, CASFS, UC Santa Cruz.
Page 39
Page 40
 Goncalves 1

John Goncalves

STELLAR BAKING COMPANY

I. ABSTRACT

Mr. Randy George, owner of the Stellar Baking Company, should relocate to a

new, larger and more efficient facility in Petaluma, California. He should also

make the $300,000 investment for the build-out, oven, and other moving expenses

associated with moving to this new facility. In this report, I will explain and

analyze two viable options the organization can make moving forward and then

choose the most feasible, followed by recommendations for the growth of the

company.

II. OVERVIEW OF THE PAPER

The Stellar Baking Company is working out of a cramped and inefficient facility in 2007.

Given its great reputation after 8 years of solid business, the Stellar Bakery Company expects to

continue to generate a greater demand and cash flow as demonstrated by realizing a profit of

over $50,000 in 2006. While the owner of Stellar acknowledges that the company’s rapid

growth will reduce efficiency and make his facility even more confined, he is a bit reluctant and

apprehensive about moving into a new location. Seeing that the added annual cost of the new

location is about $58,000 and would require a $300,000 build-out, he wonders if the potential

benefits outweigh the risk and added expense. In this paper, I will cover several things. First, I

will review the background and history of the company. Then I will discuss more in depth the

Page 41
 Goncalves 2

critical issues facing the organization and provide analysis on the company’s potential options.

Finally, I will provide recommendations for what Randy George, Co-Owner of Stellar Baking

Company, should do moving forward so that his business continues to thrive, grow and succeed.

III. BACKGROUND AND HISTORY OF ORGANIZATION

The Stellar Baking Company is a Vermont based business that prides itself in producing

premium quality breads and pastries using traditional methods and carefully selected

ingredients. Started in 1999 by current Co-Owner and Manager Randy George and his partner

Liza Cain, the Red Hank Banking Company has lived up to this standard of providing the finest

baked goods in addition to striving to stay environmentally-friendly, supportive of growers, and

reputable to customers. Randy’s experience and fierce passion in artisan bread making directed

him to start the bakery and sell his product to local Vermonters.

As a bakery, they identify themselves as being at the crossroads of traditional

methodology – not just making bread with ordinary flour, water, and salt but a new methodology

of creating their bread with the best of the best water, salt, certified organic ingredients, (e.g.

organic, unbleached wheat flour) high quality grains, and natural leavening. Along with high

quality ingredients, each loaf is produced by hand and baked in a hearth oven. The method of

slow fermentation - a proven baking technique - produces complex flavors, chewy texture, helps

the bread last longer and even adds to the amount of nutrition you get from consuming it. With

an eclectic collection of bread – everything ranging from Yeast, Ciabatta and French breads to

Pumpernickel, Rye and Whole-Grain Bread, it is no wonder why the Stellar Baking Company is

a local favorite.

Page 42
 Goncalves 3

Stellar is made up of 15 full and part-time employees who work 363 days a year to

produce these products. Farmers and millers are responsible for producing the raw materials,

packing crews work from 9 p.m. to 5.a.m. while drivers come in at 5:00 a.m. to load and go off

on their daily routes. With a staff of 32, the bakery is able to bake these delicious treats and

deliver 7 days. Bakers pride themselves as being apart of the “bread revolution” - a resurgence of

interest in environmental responsibility/artisan bread in the United States dating back to about 20

years ago - and apparently have fun doing it. As an employee states,

“We take pride in our hard work – and, of equal importance, we have a lot of fun. By the

way, for many of us, the commitment to doing things in an environmentally responsible

and healthful way extends to our day-to-day lives. Some of us even commute to work by

bicycle, on foot, or on cross-country skis, depending on the season.”

Due to the staff’s expansive knowledge, diligence, passion, and deep appreciation for their baked

products, they have developed a great relationship with customers. Moreover, the company’s

respectability had resulted in the company’s baked organic artisan bread being sold and featured

in various grocery stores and restaurants among many other cooperatives. After several years, the

company boasted about 50 clients’ approximately 30 groceries and 20 restaurants. Every day

they restock the racks with fresh bread, and donate old bread to local food shelves and farms.

IV. THE CRITICAL ISSUE FACING THE ORGANIZATION

In 2007, after eight solid years of business, the Stellar Baking Company’s revenue was

forecasted to finally exceed over $1 Million dollars. Despite this major accomplishment,

Page 43
 Goncalves 4

however, the company faced several challenges related to the expansion of the business and its

facilities.

Like most businesses that experience high growth over the span of a few years, Stellar

Baking Company’s owner Randy George has to come up with a strategy to maximize efficiency,

performance and output in order to meet the company’s ever increasing demand. Several

obstacles have arisen to hinder this progress. First is that the Duxbury bakery could not bake

over 2200 loaves of bread per day and bread sales were growing at over 30% per year. While this

is great to the extent that their business is thriving, too high of a demand, without enough for the

resources or supply available, would in turn lead to poor performance and the company not being

capable of producing enough products. Second, at this time the Stellar Baking Company is

working out of a decrepit building located in Duxbury, Virginia. To elaborate not only did this

building have low ceilings but it was also too small to design an efficient production process.

Furthermore, there is virtually no opportunity for direct retail sales. Seeing as growth was

expected to continue, at this pace the Stellar Baking Company would not be able to fulfill its

customer demands.

V. ANALYSIS

In this section, I will perform an in-depth analysis of the potential options Stellar Baking

Company could make in response to several important issues facing their organization. To

simplify, the Stellar Baking Company has two possible options: either they can stay in their

current cramped facility or move into a new facility in Middlesex. Let’s delve more deeply into

both possible options.

Page 44
 Goncalves 5

1. Stay in their current cramped facility:

As the previous section showed, there are several disadvantages in staying at the current

Duxbury facility. However, there are several advantages also. First, whether Stellar Baking is

planning on buying or continuing to lease their current commercial premises through rental

payments or mortgage repayments, the fact that they’ve been working out of this facility for

eight years tells us that it has been a significant asset to their business. It is also incredibly cheap:

the monthly rent in 2006 is less than $1600-$2000 for 2000 square feet of space. Moreover, their

current property has helped foster business stability and obviously has been able to create enough

production to allow Stellar to thrive in their delivery area. In addition, as they have become more

established within this facility, they have developed a greater comfort level not to mention the

fact that payments have become predictable up until this point. The company doesn’t have to

worry about any sudden, large rent increases or major costs associated facility, which is very

helpful in informing future marketing or development decisions. Next is the fact that Stellar

employees have become familiar with their current surroundings. Not only have employees

developed normal routines due to familiarity or current structure/layout of facility but they’ve

also developed ties to the community where the facility is. Further, Stellar may have easy access

to services in this current location, which was located on Route 10 and within 100 miles radius of

all customers. Finally, as the business grows, Stellar may be able to extend their existing

premises to be able to meet their growing demand, and thus avoid relocation, new equipment and

build-out costs.

Page 45
 Goncalves 6

2. Middlesex Opportunity: Move into new facility

There are tremendous advantages in the Stellar Baking Company relocating to a new facility.

First, the new facility would facilitate further growth for the Stellar Bakery company. Being that

it was a few miles away, has high ceilings, would be twice as large and designed specifically for

the bakery, it would allow them to be more efficient and produce a significantly greater output.

In addition to having the layout and size of an ideal production facility, it could house a bakery

with a new, more efficient oven and a new Stellar Bakery café. The café would allow them to

make some sales directly to retail customers and would also allow them to sell pastries, coffee

and similar items. These qualities in the existing space in Middlesex made it well suited to RHB

and Randy George, who would be closer to his home and family. More importantly, it was a

more attractive location in an area with many other retail and light manufacturing businesses.

Despite the many advantages of relocating to a new facility, RHB would be responsible

for building out the bakery and café. The cost of relocation would be a great disadvantage or

downside to doing so. Altogether, the build-out, the oven, and other moving expenses would

amount to about $300,000. Finally, the rent would be substantially higher (more than 4x) than

the rent at the Duxbury location: $5000 per month at the Middlesex location and the rent on the

café would be $1800 per month. Both would increase at the rate of inflation.

RECOMMENDATIONS

Page 46
 Goncalves 7

While there are several risks and added expenses associated with relocating the Stellar

Bakery, there are more long-term benefits in opening the new facility in Middlesex than staying

in Duxbury. Although it would be cheaper, staying in the old facility would limit the company’s

efficiency and production. Also, given the rate at which bread sales are increasing, staying in the

old facility will not allow RHB to fulfill customer demands in the future.

The advantages stated in the previous section make it clear why relocating to a new

facility would be beneficial to the Stellar Baking Company. In addition to these advantages,

market analysis helps us determine the future attractiveness of building a new café in Vermont to

compliment the relocation of their bakery. Research about the market helps us understand the

company’s position and why relocation is the most viable business solution moving forward.

Industry trends, according to Hoovers.com, an online report summary entitled, “Bakery Products”

indicate The United States commercial bakery industry generates about $28 billion in revenues.

Artisan and multigrain breads provide an interesting opportunity for sales growth in the industry

that satiates growing consumer trends. Consumers are looking for healthful bakery products and

according to Robb MacKie, president and C.E.O., American Bakers Association, “Consumer

buying habits will likely continue to favor private label and more traditional bakery products.”

The fact that bread sales were growing at over 30% per year is somewhat testament to these

industry and consumer trends. Whether the Vermont commercial bakery landscape is very

competitive or not, Stellar Bakery’s offering of more specialty goods and their advantages of

procurement, production and distribution of artisan breads (as a result of their new, more

efficient facility) should continue to allow them to produce higher margins and meet consumer

preferences. Expanding their business through a larger facility would keep their business

profitable. A new facility and café would allow RHB to create more products or services to fit

Page 47
 Goncalves 8

their customers' changing needs and to entice a larger variety of demographics. A new location

would also expand RHB’s business to new customers, help position the company for continued

growth, and enhance it’s selling power once it comes time to exit the business.

In sum, despite the $300,000 investment, moving into a new facility is the best possible

option because 1) it will result in cost advantages for RHB 2) it will expose RHB to new

customers 3) make the company more efficient and productive 4) allow the company to meet

rising demand which in turn would keep existing customers loyal 5) ultimately allow the

business to generate more revenue and be financially successful.

Assuming that Stellar Bakery will relocate into a new facility and take the initial steps

toward expansion, here we consider recommendations on exactly how they will make it happen.

MARKETING

With a new facility, Stellar Bakery will have the capacity to produce a significantly greater

output. A new café will also provide the opportunity for direct retail sales – something that the

company will need to market to gain more customers. Being $300,000 down, spreading the word

through traditional forms of advertising including print ads, direct mail, billboards, radio,

television, are simply not feasible. Thus, Stellar Bakery will have to atypical advertising

solutions and be confident in their quality organic, artisan breads, pastries and other products

that consumers want and need. There are several ways that will allow them to get attention, get

closer to breaking even on their new facility investments, and generate more business through

marketing and promoting their product without breaking the bank. The first recommendation is

that RHB go to networking and other community events. Directly meeting new people and

promoting the product on a personal, face to face level is an effective way to spread the word

Page 48
 Goncalves 9

about RHB. The second is to generate referrals from current clients. Since RHB’s already has a

large enough client base, they can entice them to refer friends and family. Second, RHB could

write about their business and industry in local publications, trade publications, blogs, and small

newspapers for example as a way of elevating their name recognition and business exposure.

Next, they should host an event at their new facility as well going to trade shows and table-top

mixers as a quick way to introduce their company to existing and future clients. Third, RHB

should take advantage of the power of the Internet, a website and social media marketing as a

way to generate more traffic, gain credibility, and make new relationships. Forth, they can

partner with a charitable organization or one with a similar target market as a great way to have a

positive public relations impact while also leveraging and combining resources to promote the

bakery’s products and services.

STRATEGIC PLANNING

In defining RHB’s strategy or direction for it’s future course, we must answer three fundamental

questions: What does RHB do? Who does RHB do it for? And finally how does RHB excel at

doing it? Answering these questions requires a firm understanding of RHB’s vision, mission,

values and strategies. In the long-term RHB’s mission is to “To produce premium quality breads

and pastries with traditional methods and carefully selected high quality ingredients.” They’ll get

there over the next few years by continuing to support the growers and producers of their

ingredients, and to provide the finest baked goods and service to their customers (who). Thus the

development of new flavors and baked products alongside growth of the company in general will

direct their activities and allow them to achieve their vision, mission statement and objectives.

SWOT: Strengths, Weaknesses, Opportunities, Threats analysis will help plan the future based

on the way RHB operates right now. The internal strengths, weaknesses, opportunities and

Page 49
 Goncalves 10

threats are discussed throughout this paper. In a nutshell, the RHB’s strengths are its products

and services. Its weakness is its current facility, which stalls efficiency and productivity, and its

opportunity is relocating to a new facility in response to an old facility that threatens the

financial stability of the company. External factors including the economy, politics, social actors,

demographics, technology changes, competition, regulatory factors, and public opinion will

guide RHB in their strategic planning and decision-making. This strategic plan ultimately helps

them make the conclusion that they should move into a new facility given that it’s a solution to

their current problems and provides an opportunity for success in context of threats to success.

FINANCE

Over $300,000 is needed to fund RHB’s activities. In this RHB must balance the risks associated

with relocation and potential profitability. Because the company’s bread sales are growing at

over 30% per year and their current facility is too cramped and inefficient to meet future

demands, it makes sense for the organization to undertake the process of relocation into a larger,

more efficient facility. These investments could very well be funded by shareholders in the form

of equity. However, this short term funding or working capital is more likely to be provided by

banks. If a $50,000 profit was reached the prior year, the first year of relocation could see a

profit of $75,000 or more given the capacity for the company to produce a lot more bread. This

also doesn’t account for profits that would come in from direct retail sales. In this case, RHB can

pay back the $300,000 investment within 3-4 years or perhaps even sooner. This prospect makes

this seemingly risky relocation evermore reasonable.

OPERATIONS

Page 50
 Goncalves 11

Operations will focus on managing the processes to produce and distribute RHB’s breads and

pastries. In creating a better and more eclectic collection of breads and pastries, RHB will attract

a greater customer base. By focusing on efficiency and the effectiveness of their production,

services and distribution in their new facility, RHB should continue to thrive. Further, great

management and the nature of how operations are carried out will ensure that RHB is running

smoothly, effectively, and professionally to achieve their goals.

ORGANIZATIONAL STRUCTURE/HUMAN RELATIONS

Organizational structure will be important in determining who will be responsible for some of

the decision making in RHB. Depending on objectives, Randy George should structure the

organization and allocate tasks as well as supervision in order to maximize the ways in which

RHB operates and performs.

SUMMARY

The Stellar Baking Company, should relocated to a new, larger and more efficient facility in

Petaluma, California. Despite the financial strain the $300,000 build-out, oven, and other

moving expenses will have on the company, the advantages of relocation outweigh staying in

their current facility and are ultimately necessary for the Stellar Baking Company to continue to

thrive and grow.

Page 51