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Experimental research methodology for physical distribution in bakery industry

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The research done in the bakery industry worldwide and in special in the Romanian market had their goals on the production and technological process, focusing on the end result products. Bakery industry focused on profits changed and developed their products according to the market need and preferences and very few traditional businesses know how to make the profits continuing the distribution routes and using the old bread recipes. During this study we aim to go through an experimental process in order to observe the influence that different cost factors have on the end result such as performance and profits. A questionnaire was designed to answer questions regarding the existent technology in the bakery industry, transportation vehicles, clients, turnover, invoice overdue, and the structure of the production, costs with workers, transport, maintenance, marketing and raw materials. The questionnaire will be applied only in the North West area of Romania to all the bakery companies that have over 5 employees and deliver bread products to business customers using predefine routs. In a future stage, it would be of a great interest to apply a similar questionnaire in different parts of Europe for further studies in this industry, where management has a deficiency in scientific research and managers have to take decision based most of the time only on their own experience.
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IOP Conference Series: Materials Science and Engineering
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Experimental research methodology for physical distribution in bakery
industry
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CEURSIS
IOP Conf. Series: Materials Science and Engineering 749 (2020) 012023
IOP Publishing
doi:10.1088/1757-899X/749/1/012023
1
Experimental research methodology for physical distribution
in bakery industry
A D Pop, G Rus and R F Drentaa
Technical University of Cluj-Napoca, Faculty of Engineering, Department of
Engineering and Technology Management, Baia Mare, Romania
E-mail: a raul.drenta@cunbm.utcluj.ro
Abstract. The research done in the bakery industry worldwide and in special in the Romanian
market had their goals on the production and technological process, focusing on the end result
products. Bakery industry focused on profits changed and developed their products according
to the market need and preferences and very few traditional businesses know how to make the
profits continuing the distribution routes and using the old bread recipes. During this study we
aim to go through an experimental process in order to observe the influence that different cost
factors have on the end result such as performance and profits. A questionnaire was designed
to answer questions regarding the existent technology in the bakery industry, transportation
vehicles, clients, turnover, invoice overdue, and the structure of the production, costs with
workers, transport, maintenance, marketing and raw materials. The questionnaire will be
applied only in the North West area of Romania to all the bakery companies that have over 5
employees and deliver bread products to business customers using predefine routs. In a future
stage, it would be of a great interest to apply a similar questionnaire in different parts of
Europe for further studies in this industry, where management has a deficiency in scientific
research and managers have to take decision based most of the time only on their own
experience.
1. Management tool for bakery performance
The most complex business model in bakery industry is the sale of the bakery products through the
distribution channel by own means on predefined distribution routes. For this business model we
continued the elaboration of the algorithms describing the distribution of the bakery products,
following that through software based on these algorithms and an intuitive interface, to provide a
simple and useful tool to support the improvement of the business performance of bakery enterprises.
Through this study, we aim to improve managerial performance (expressed at company level
through profit and profitability) by highlighting factors or groups of factors that contribute the most to
performance. To this end, by gathering information from bakery companies, we can validate a
generally valid level of costs and expenses that they must fit for each stage of the distribution process,
depending on the main factors of influence.
The term performance is used to highlight both individual, group, process, or system capabilities.
Due to these aspects, the existence of an all-encompassing definition seems to be almost impossible.
However, in the scientific context, for the performance in the managerial area, we came to the
definition formulated following a thorough research by Dr. Iulian Vişoiu, in his doctoral thesis. It
defined performance through its component elements and proposed a graphical representation of
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IOP Conf. Series: Materials Science and Engineering 749 (2020) 012023
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doi:10.1088/1757-899X/749/1/012023
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performance as a vector located in a three-dimensional space. According to the author, performance is
defined by three elements: effectiveness, efficiency and adaptability.
Further on, we will present the structure and main characteristics of the software we are developing
and how, using our questionnaire we can achieve the answers that will help the bakery managers to
optimize their business.
1.1. Software structure for end users in bakery management
The computer program is conceived as a tool available to bakery managers. It is made up of three
interactive segments to diagnose the situation and provide solutions to improve the company's
distribution process by pointing out missing factors or those that exceed the values identified at the
industry level as defining margins for profitable firms.
Figure 1.1. Software algorithm
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IOP Conf. Series: Materials Science and Engineering 749 (2020) 012023
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doi:10.1088/1757-899X/749/1/012023
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The architecture of the software algorithm to be used is described in figure 1.1 “Software
algorithm” and describes the steps to be taken by the end user (manager of the bakery production unit).
In a first step, the user of the software program will introduce its own variables in the same way as all
the respondents did in the questionnaire and the return returned to the first stage will be a relative one,
positioning the company described by the user compared to the results obtained from the questionnaire
reflects the influence factors and their share in activity for the companies that have profited in the last
years of activity.
1.1.1. Step one. On the first step the information provided by the software application will include
graphics and graphical user friendly expression as outlined in figure 3.2. Stage 1 information display
Staying in step 1 of the questionnaire and software program the same set of questions, the information
collected from both sources, highlighted in parallel, can provide the user with an overview of the
strategic location of his business in the area which can provide a profit
The application provides the same perspective and concrete information for managers already
involved in a business as well as those who are about to start and provide business plan information.
1.1.2. Step two. On the second step, the software application will ask the user to provide new
information in order to continue to evaluate the business and to provide information on the
improvements it can make to the production and distribution process in order to optimize them.
Starting from the information obtained by applying the questionnaire, at the level of the bakery
industry, for each influence factor and for the overall activity, the average values of the industry will
be determined, taking into account only the performances of the enterprises that obtained profit during
the analysed period.
Step two will begin by comparing the user's profit with the average of the bakery industry. If it is
found that the user is currently earning a profit equal to or above the average of the industry, the
application will rewrite a greeting message that will mention this and the program will stop.
If by this comparative method, the profit position below the average of the industry is noticed,
additional information will be required that will go through a mathematical model that will determine
the activities within the company to be tracked, giving the user a set of performance indicators
Incorporates profitable businesses from the bakery industry.
A mathematical model based on the described experience can be represented as follows:
Starting from the break-even formula where: Fixed Costs (Value-Cost Variable) = 1 or Amount of
All Expenses + Profit = Income from Sales of Products,
=> 40% Gasoline x Price + 1% Marketing x Price + 1% Interest x Price + Z% Raw Material =
100% Price
=> Price (40% + 5% + 3% + 2.5% + 7% + 1% + 1%) + Z% Raw material = 100%
=> 59.5% Ch + Z% Raw materials + profit = 100% Price
=> Raw materials = 40.5% Price
We can observe that the approximate method is currently being applied to reach the profitability
threshold, whereby the cost of raw materials cannot exceed one third of the sales price of the products.
Starting from this concrete example where we can see an overview of the cost and profit of
societies, we aim to develop an application to support bakery managers to improve their production
and distribution performance by identifying and addressing punctual the factors that need to be
improved so that the end result is to maximize economic performance.
1.1.3. Step three. On the third step of the software application, the information provided by the user
will be compared to those obtained from the analysis of the information provided by the participants in
the study conducted by us and on the basis of the publicly available financial information.
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Factors tracked in stage three: Staff expenditure, Expense Car Fuel, Car park maintenance costs,
Maintenance costs, Gas/ power production costs/ wood/ fuels, Marketing costs, Cash Flow/
Investment (Interest) Costs.
2. Methodology and questionnaire
The research will be carried out by applying a questionnaire developed on the basis of the research
studies analysed as well as relevant in the first chapters on the theoretical study of the distribution of
finished products in the bakery industry studies that each of them analysed the influence of the
identified factors on the efficiency, and generating profit.
Out of these studies, relevant factors have been extracted, capable of generating concrete and
conclusive data for the present study, factors analysed by formulating and adapting some of the
questions identified in the questionnaires identified, thus materializing in a questionnaire which will
include questions about the business model, the structure of expenditures and those of the obtained
economic results (profit), a questionnaire that will be applied online through specialized media
platforms.
Thus, the qualitative and quantitative data extracted will be analysed with the statistical data
analysis programs SPSS 20 and EXCEL 2010, thus generating statistical and mathematical testing,
concluding that the hypotheses launched or their invalidity are supported, on the existence of the
situation at the level of the Northwest Development Region of Romania
2.1. Description and evaluation of control variables
The following factors were selected:
The sector of activity comprises the area of activity of the selected target companies, in order to
analyse and highlight the activity of production and distribution of finished bakery products.
Regarding the sector of activity, it was appreciated the introduction as a control variable the
companies having the main field of activity and CAEN code 1071 Manufacture of bread and bakery
products.
At North Western Region level, according to the information obtained from the Trade Register,
CAEN 1071 is authorized for 700 active companies with at least one employee.
The present study aims to analyse and provide a management tool for bakery company managers
but the CAEN 1071 activity is also defining the production of cakes and confectionery products or
frozen bakery products. By determining the production structure in total revenues we aim to identify
firms based on a predominant production in bread and pastries fresh baked products.
The size of the firm will refer to the average number of employees of the sectarian industrial firms
in the chosen research area, with the selection of companies from the four categories: micro, small,
medium and large micro enterprises.
Regarding the size of the company, it was appreciated the introduction as a control variable the size
of the company, because at the level of the NW region of Romania, the activity of the organizations
from the smallest to the multinational is starting, for which, by questioning a representative number
within them, will lead to shaping a present situation of those categories of organizations that sell their
products through distribution based on pre-established routes and their own fleet.
In order to highlight this aspect, only companies with a minimum number of 5 employees will
belong to the target group, so that the number of companies that cumulatively meet these criteria is
reduced to 331 firms. In order to highlight this aspect, only companies with a minimum number of 5
employees will belong to the target group, so that the number of companies that cumulatively meet
these criteria is reduced to 331 firms.
The evaluation of all the above mentioned factors will be done through the SPSS 20 and EXCEL
2010 statistical program, which will generate statistical data based on the chosen mathematical model,
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IOP Conf. Series: Materials Science and Engineering 749 (2020) 012023
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doi:10.1088/1757-899X/749/1/012023
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to show the positive / negative correlations between these factors in order to validate / invalidate the
hypotheses launched.
Considering that this questionnaire will be sent to all 311 companies in the chosen field of activity
having at least 5 employees and operating in the North-West region of Romania, regarding the
representativeness of the group, according to the Taro Yamane formula (Israel 2003), a minimum of
171 questionnaires were needed for representativeness.
A probability of 90% and a maximum error of +/- 5% were taken into consideration, for which the
following calculation formula was used: (Israel 2003)
n = N / (1 + N (e2))
n - sample size;
N - the size of the total population;
e - the level of accuracy (maximum permissible error);
n = 311 / (1 + 311 (0.1 * 0.1)) = 311 / (1 + 311 (0.01)) = 311 / 4.11 = 76 questionnaires
Collecting the data when completing the questionnaire will be done through the Google Forms
electronic application, an application that will generate a record of the number of completed
questionnaires and statistics on respondents' answers.
The questionnaire is available online on http://www.UniversitatiRomania.ro/bakeryStudy
2.2. The structure of the questionnaire
The structure of the questionnaire is based on the structure described for the software as long as the
main purpose of this interaction with companies in the bakery industry is to identify alghoritms that
can provide guidance for new bakery managers to plan a profitable business plan or for other bakeries
to restructure and increase the profitability of their activity.
The information we aim to identify and structure is related to cost factors that must be kept well
under control and the positive experience of bakery companies with higher profits ill be able to offer
valuable information and guidance to other bakery managers.
First questions are designed to identify and position the company in the market, offering
information about their location in urban or rural area, a factor that can influence the strategy of the
company and the profitability in different areas.
Very important for our study is to identify the marketing strategy and branding importance for our
survey respondents.
Supply chain and production information are valuable and are present in our questionnaire right
from beginning, trying to identify the supply strategy, negotiation capacity, cash flow issues due to
suppliers rigidity, technology used in production and manipulation of the raw materials, last
investment in technology and the capacity of the production and total use of the capacity.
The portfolio of the company and structure of production for each type of products will help us
identify the new bakery companies that are not aiming to produce traditional bread and bakery
products and are not part of our research.
Packaging is a complex activity for each company and it is reflected in our study but so far we
don’t find it very relevant for final profitability compared with investment costs needed in the
beginning of a new business.
Distribution channels used, the amount of different routes, sale strategy, transportation vehicles
structured on capacity and volume for each type, age of the transportation fleet, mileage are a big
concert for our study. Our studies indicate so far that an important role in costs control is played by
these factors.
Distribution reflection is carried on with question related to the relation with the retail customer
and end consumer.
By defining an average distance route used in the industry, we can provide valuable information for
new bakery managers.
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IOP Conf. Series: Materials Science and Engineering 749 (2020) 012023
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doi:10.1088/1757-899X/749/1/012023
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Cash flow is a strategic decision and can determine the success or failure in a new business but also
can give the new companies a competitive advantage on the market.
Perishable products are a common problem for fresh products and we will study different approach
in the bakery industry in the observed area.
Employees are the most valuable asset and an efficient structure of personal that is common on
bakery industry level is the kind of information that each manager would like to possess.
Profitability questions in our questionnaire have two roles. To test the correctness of our survey
companies because we can check the information from the available financial information we have
access too. The second role is to find the profits companies estimate in different product.
Last questions relate to the most important aspect of our study. Percentage and intervals of cost
estimated for each department and activity. We are working on five option grill structure, the middle
answer being the one identified in our preliminary research on focus groups.
Acknowledgements
Being one of the first students to approach the topic of Business Management and Engineering on
Distribution of bakery products in Romania, I am keen to highlight the step by step support, guidance
and time offered by professor Nicolae Ungureanu from academic perspective and Andana Pan Baia
Mare Bakery for their full cooperation in designing and testing the current research methodology.
In perspective we are looking forward for other researchers with similar interest in order to apply
the questionnaire on bakery companies in different regions around the world as long as we can talk
about fresh baked products and traditional bakery product, not yet merged into a general approach of
food logistics. Feel free to contact us for a full version of the document.
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[2] Isachi S E 2015 The competitive advantage of microeconomical level in the context of
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[3] Isaksson L 2010 Corporate Social Responsibility: A Study of Strategic Management and
Performance in Swedish Firms Australia Bond University Gold Coast
[4] Israel G D 2003 Determing Sample Size University of Florida Ifas Extension
[5] Ungureanu N, Duval P, Mocan M L and Taucean I M 2010 Logistica Activitatilor de
Mentenanta Editura Universitatii de Nord Baia Mare
[6] Ungureanu N, Lung C and Cotetiu R I 2015 E-maintenance-a new trend in industrial
maintenance Mechanical Engineering Letters HU ISSN 2060-3789 12 (1) pp.70-77
[7] Ungureanu M, Pop N and Ungureanu N 2016 Innovation and technology transfer for business
development Procedia Engineering 149 pp.495-500
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