Change of Pace
September 1, 2007
Change of Pace
By Dan Malovany
By adding process controls and new systems, Alpha Baking is transforming the Natural Ovens plant to operate more efficiently while maintaining what the bakery does best, and that’s being all-things-natural to consumers.
When Paul and Barbara Stitt stood at the helm, everything about Natural Ovens Bakery focused on health. That’s because the brand was renown among emphatically loyal consumers for its all-natural breads, rolls, bagels and other baked goods that were loaded with whole grains, flax and other wholesome nutrients — all of which were formulated to nurture the body as well as benefit the mind.
In fact, health and wellness were so engrained into the company’s culture that the Stitts absolutely forbade anyone from smoking anywhere on their property. There was no coffee, soda, candy or snacks allowed, too.
But what about fast food? Well, forget about that. In the lunchroom, chefs prepared nutritious meals for employees daily. Even submitting a receipt from a quick-service restaurant was a no-no. The company wouldn’t reimburse that expense.
Now that’s practicing what you preach.
“It wasn’t so much about running a bakery as much as it was running a system to get nutrition to people, and it just happened to be a bakery,” notes Larry Marcucci, president of Alpha Baking in Chicago.
After Alpha Baking purchased Natural Ovens from the Stitts back in March, the rules were relaxed a bit, to say the least. Today, there are vending machines and coffee makers in the break room at the Manitowoc, Wis., facility, and if someone wants to eat a doughnut for breakfast, the new owners don’t mind a bit.
Maybe that’s because they distribute them throughout Chicago.
As far as a burger and fries for lunch or a spicy chicken sandwich and onion rings for dinner, bring it on. Those foods are no longer taboo.
At least, they’d better not be.
“That’s one of the first things we changed, being a major supplier to Burger King,” says Mike Marcucci, chairman and CEO of Alpha Baking. “We altered the culture up there. We didn’t get a lot of pushback either.”
During the past six months, Alpha Baking steadily has been changing not only the culture, but also the way the 45,000-sq.-ft. bakery produces baked goods as it integrates Natural Ovens Bakery into its operations. For Alpha Baking, the new facility provides much-needed capacity and a number of other synergies (See “Thinking Beyond The Alphabet”).
“We’ve been getting a sense of what they’re doing that’s good, and how we can fit them into Alpha and trying to figure out what changes we should make,” Larry says. “It’s easy to walk into an operation and say, ‘I know everything, and you don’t know anything,’ but that’s not always the best policy. In fact, it’s almost always not the best policy.”
As a result, Alpha Baking has taken to a step-by-step approach that initially focuses on fundamentals such as requiring operators to record mixing times and temperatures, asking packaging personnel to monitor slicing consistency and having the production department as a whole standardize other process controls. The company even trained office worker who volunteered to oversee quality assurance and product consistency.
Believe it or not, the Kosher-certified bakery scheduled its first audit by the American Institute of Baking for the end of this summer.
“They the Stitts were intuitively doing a lot of the right things,” Larry says. “We just had to institutionalize a lot of controls.”
Other modifications have been more practical — for example, adding refrigeration to the mixers. To enhance efficiency, the company created labor-saving devices such as a simple system that automatically removes bagels from peel boards. It also installed an oven unloader along with a video monitoring system that allows the employees at the front of the oven to see if there is a jam-up at the end of the bake cycle.
“We now have systems. We have reports. We are adding controls here. We look at all of the number, not just the top and bottom line,” says George Poulos, vice president of manufacturing for Alpha Baking.
To increase the plant’s versatility, Alpha Baking extended the flour system, added a third horizontal mixer, and brought in packaging equipment so it can crank out some of Alpha Baking’s bulk-packed foodservice items and super-premium variety breads for retail, which are single-bagged instead of over-wrapped and bagged like the Natural Ovens products.
Shifting production from one facility to another is an integral part of Alpha Baking’s initial integration strategy. As a result of the acquisition, its direct-store delivery geographic territory has been greatly expanded as far north as upper Wisconsin and as far west as Minneapolis.
Being able to manufacture its core products in Manitowoc allows the company to produce select varieties of S. Rosen’s baked goods and select short-run foodservice items closer to those distant markets Natural Ovens had served prior to the purchase.
At the same time, Natural Ovens bun and roll production has shifted to Alpha Baking’s facilities in LaPorte, Ind., as well as two Chicago plants, each of which range from 150,000 to 200,000 sq. ft., and together house 13 high-speed bread and bun production lines. Most of those lines, Poulos adds, can produce as much product volume as the Manitowoc bakery does on any given week.
To put the potential production synergies into perspective, the Manitowoc bread line produces 50 loaves a minute, while Alpha Baking’s bread lines can produce twice that amount. The slower speeds make the Manitowoc plant more ideal running shorter-run products and reduce the number of changeovers at its Chicago and LaPorte plants.
Then again, some of Natural Ovens’ products can be run more efficiently on Alpha Baking’s high-speed lines. For instance, the Wisconsin bakery produces 40 buns a minute, while the Chicago plants can bake 240 pieces a minute per line. Although conventional bun production is much greater on Alpha Baking’s high-speed lines, which typically can crank out from 800 to 1,000 buns a minute, Natural Ovens products must be run at slower rates because its formulas are unique in many ways.
“The whole wheat hot dog formula is very tough to run,” Larry says. “There are no dough conditioners in it. It’s all natural.”
Additionally, during the past few months, Alpha Baking has been carefully modifying Natural Ovens products to extend shelf life and improve their texture and flavor while maintaining the items’ naturally clean label. Shelf life had been a historical issue for these natural breads, which despite being double wrapped, tended to stale quickly. Even the front of the package urged consumers to freeze the items shortly after purchase.
Working with Natural Ovens Bakery veterans Glen Hietpas, plant manager, and Matt Taylor, general manager, Poulos developed a whole wheat sour that naturally lowered the pH in the natural breads and extended moisture retention. This not only extended shelf life, but also improved the products texture. Adding raisin juice, vinegar and other extenders also helped enhance shelf life.
“All they used were no-time doughs,” Poulos says. “There was very little fermentation. All of it was set up for fairly long proof times.”
The perpetual natural sour seemed like a good compromise.
“All of the items from a whole grain standpoint had a lot of high-gluten flour, and we converted quite a few of them to 100% wheat — either a red wheat or a combination of red and white wheat — and we got a lot of the enriched flour out of them,” Poulos adds. “We still use enriched high-gluten flour in products like bagels, but most of the grain items have no patent or high-gluten flour.”
Alpha Baking worked with Natural Ovens Bakery’s sales and marketing departments to improve product quality without alienating its extremely loyal but small customer base, which expected the products to taste a certain way. The challenge was how to improve the flavor and textures of the varieties to appeal to a broader customer base without losing its core audience.
“There were battles about what’s improving the product and what’s changing the product from a customer standpoint,” Larry recalls. “There may be a lot of reasons why you change something, but if the customers don’t want it, then maybe you don’t do it.
“We made a lot of functional changes to extend shelf life,” he adds. “We’ve been working on the flavors and the textures where you can get into something that is noticeable from a customer standpoint. They may not notice that the bread is lasting two or three extra days. Then again, they’re not afraid to call and complain.”
Take something as simple as pre-slicing bagels, which the Alpha Baking team thought would provide a convenience factor. Instead, the phone rang off the hook after the introduction with consumers complaining that this caused the bagels to become stale more quickly. It didn’t matter that they were packaged just seconds after slicing.
Instead of simply reformulating some items, especially the slow-moving ones, the company is re-launching several varieties under new names or platforms. Natural Ovens’ whole grain bread, for instance, has become whole wheat. Also hitting stores is new, brighter packaging for its most popular products, including Hunger Filler, Sunny Millet, Multigrain and 100% Whole Grain. The brand also is known for its low-carb offerings.
“We tried to maintain either the naturalness of the product or the enhanced vitamins in them,” Larry says.
For instance, flaxseed is a signature ingredient to the healthy line. In fact, it’s the foundation for Natural Ovens. One of Paul Stitt’s claims to fame was getting flaxseed approved for use in bread. Moreover, he used to own a flaxseed company, Poulos says. Ironically, the ingredient only recently caught on with mainstream consumers.
Maybe he was just ahead of his time.
Today, a Whole Grain and Flax bread anchors Natural Ovens’ new organic line, along with 100% Whole Wheat variety. A third organic bread is being rolled out under a private label brand to a major club store chain. All these products are at least 95% organic. The Wisconsin facility, which recently became certified by the Midwest Organic Services Association, also is looking to produce organic bagels.
“We decided to go whole hog instead of ‘made with organic,’” Larry says. “We had been all-natural and Kosher so going into organic wasn’t much of a stretch.”
Designed for Versatility
Natural Ovens had been looking into organic baked goods long before Alpha Baking acquired it. Alpha, too, had experience with organic, having rolled out organic French breads under its GrainWaves line in the late ‘90s. However, those products also were ahead of their time.
“A lot of people are now getting into whole grains and into natural so going into organic is like — and I know this sounds like an oxymoron — all-natural on steroids,” Larry says. “It’s the next premium level from where natural was so we felt it was an opportunity. Natural Ovens did all of the legwork already, so it was an opportunity to take the brand to another premium level.”
Bread production starts around 9 p.m. with the running of organic breads. Organic ingredients are received, stored and tracked separately, all the way through the process from ingredient handling to packaging, according to certified-organic standards. During production, for example, organic materials are portioned out of distinctive green bins. To produce the breads, specially cleaned mixers are used. Throughout the process, the products are kept separate from any others. Even a section of the proofbox is reserved for organic bread only. For conventional baked goods, flour is stored in a 200,000-lb. silo, while sunflower oil is held in 50,000-lb. tanks. Because the bakery produces so many varieties, the remaining ingredients come in totes or bags.
In one of three horizontal mixers, 1,000-lb. batches typically mix for 8-9 minutes around the high 70°F range. After passing through a six-pocket divider, the breads travel up a dual-canvas belting system to a sheeter, curling chain and 6-ft. pressure board before dropping into four-strap pans.
Something, however, is missing in the makeup area.
“When we first came in, we asked, ‘Where’s your rounder?’ They explained to us they never needed one,” Larry recalls. “The dough was always so stiff they never needed any intermediate proof or rounding.”
The pans then are racked and rolled into a 28-rack proofbox for around an hour before being loaded and baked in a 120-ft. oven. After de-panning, the loaves head up to a racetrack cooling conveyor on the second floor, then to a separate building that houses a spiral cooler prior to slicing and packaging. In all, the bakery has three bread packaging lines, a bagel slicer/bagger and bun bagger.
Freshly baked products are placed into Alpha Baking’s baskets and then shipped locally via routes. Baked goods also are transported to other depots in Milwaukee and Madison. At these hubs, Natural Ovens’ and Alpha Baking’s tractor trailers often exchange and backhaul product.
While bread production occurs overnight, during the day the bakery produces products such bagels at a rate of 160 a minute, as well as cookies and specialty rolls, all of which are baked in an 80-ft. tunnel oven. The plant also produces natural cereal, which is sold in boxes to retailers under its brand or shipped in bulk to a co-packer that produces Natural Oven snack bars.
New Sets of Priorities
The new owners point out that many of the synergies may take some time to fully realize and that the acquisition still is very much a work in progress. Integration is an ongoing process that often takes longer than expected.
Alpha Baking, for instance, eventually discovered that it’s computerized ordering and accounting systems were not compatible with what Natural Ovens had.
“You do due diligence, and you think you know everything you need to know, and you think things are going to work that don’t always turn out the way you thought,” Larry says. “One of the challenges has been integrating handhelds. We thought we could use some of their handheld systems, but it turned out to be totally incompatible with what we had. Then we had to turn around and roll out our handheld system on their route system. That took longer than we thought, and it was a lot more challenging.”
Another challenge is the design of the Manitowoc plant, which has a disproportionate amount of space dedicated to offices because the facility also served as the headquarters for Natural Ovens. If Alpha Baking had its druthers, it would have allocated more space to increase production capacity and versatility.
“From the end of the ovens to the packaging area were not designed with any flexibility,” Poulos explains. “We also have only two pan sizes, and because of the design, we’re relegated to those sizes without spending a whole lot of money.”
On the other hand, the acquisition has provided a load of benefits for Alpha Baking. Although it didn’t purchase Natural Ovens’ newer Valparaiso, Ind., plant, which had been only in operation for eight months before it was shut down, the company did acquire the equipment inside. For instance, Alpha Baking moved a practically brand new 110-ft. tunnel oven into one of its Chicago plants, and an older mixer ended up in Manitowoc. It then sold the cooling conveyor from the Valparaiso facility, which had a space-age circular design that looked more like a flying saucer than a bakery.
“We kind of divvied the pieces up among our operation,” Larry says.
In the coming months, Alpha Baking should begin to receive feedback from consumers on its organic and other new product offerings. Additionally, the company is redesigning the Natural Ovens labels so that they stand out better in the bread aisle.
Although the culture has changed, Natural Ovens is expected to remain the same from a core product perspective. It’s just that the priorities of the business are different today. Paul and Barbara Stitt’s focus was exclusively on nutrition, with baked goods as a vehicle to deliver it.
For Alpha Baking, all-natural and organic nicely complement its business and neatly fill a void in its product portfolio, but producing great-tasting products and making a profit to boot are what it’s really all about.
Freezing Their Assets Off
Alpha Baking Co.’s nationwide foodservice business has grown so much that the company has outgrown the cold storage space that it leases in Chicago.
As a result, Frozen Assets Cold Storage (FACS) is building a 51,000-sq.-ft. freezer that holds 8,700 pallet positions and will be dedicated solely to serving Alpha Baking’s customers. The facility, which will use a bar coding and automated racking and tracking systems to store and control frozen baked goods inventory, is expected to open this fall.
“Our [frozen] business 24 months ago required half of the space we require today,” says Bob McGuire, vice president of logistics, who spearheaded the project for the Chicago-based company. “That’s why we’re going to vacate the spot we’re in right now, and we’re literally moving into a state-of-the-art type of program to serve our frozen business.”
With the expansion, FACS will operate a 301,000-sq.-ft. cold storage facility with a total of 34,200 pallet positions. Besides adding much needed capacity, the expansion allows Alpha Baking to build inventory to react quickly to market fluctuations in its business.
“Basically, we’re going to have our own freezer,” McGuire says. “It’s a fantastic model for our business, especially with the seasonality of our business. It gives us the flexibility with regard to pallet positions. It gives us complete control of the operation from hours of service and everything else.”