Welcome to Season 19 of the Troubleshooting Innovation podcast. We’re talking with Kristen Boschetto, owner and GM of Boston Baking, to learn how generations of baking experience can lead a midsize bakery straight to the future. Sponsored by Tutor Intelligence.
This week, Kristen shares how Boston Baking uses strategic expansion and smart investments in automation to build for the future.
Learn more about this season here, and tune into Troubleshooting Innovation on Apple or Spotify.
Joanie Spencer: Hi, Kristen. Welcome back to episode four.
Kristen Boschetto: Hi, Joanie. It’s great to be back. I’m excited for this topic.
Spencer: I am too. You guys have done a lot of really interesting things, so it’s going to be fun to unpack this. Okay, so we talked a couple of weeks ago about how tapping into your infrastructure was sort of the first big stage of your growth. How did that lead to operational improvements around things like quality and food safety and things like that?
Boschetto: So, since we were expanding, we needed the machinery as well as the people to expand and grow with us. As we were pigeon-holed into just one product, we needed to invest in some equipment that allowed us to diversify and create some versatility in the industry to be able to offer different products at scale. So, although we could do it by benchtop, but that did not translate into what our new goals and incentives and objectives were.
So, we partnered with a couple of manufacturers that at the time could really help us get to that next level, but in addition to that, we had to implement food safety standards and practices and documentation. And we needed to figure out how we are going to integrate that into our systems. You know, we were still very hands-on. We had a small team at the time, so our bandwidth was limited. So, in addition to investing in equipment, we also invested in people, and people that were experts in those departments that could really elevate us, and could teach us and educate us and get us to the level where we could really compete with some of the larger manufacturers but maintain our core values, maintain who we were, which is really a people centric-driven organization. So, how do we kind of integrate that into an industry that is full of automation and kind of really make our mark? So really identifying what those needs were and the steps that we needed to take to get to that level.
Spencer: At what point did these conversations take place? Because I know you put so much thought into this plan to diversify and change the name, going from Boston Bagels to Boston Baking. Did you take into consideration, ‘Okay, when we diversify our product line, we’re going to have to also change what kind of equipment we need. We’re going to need to bring in people.’ Or was that part of a longer process?
Boschetto: No, the conversation happened from the onset. So, in order for us really to be able to compete in this market, we knew that we had to make some significant changes. Although we had the resources and the infrastructure, we didn’t have the implementation. Simultaneously, not only did we have to invest in the equipment, we had to invest in the people. And with people comes culture. So culture was huge for us, so we really had to hone into culture that our grandfather had created for his bakery. And how do we scale that? How do we communicate it? How do we live it, and how do we translate that into, you know, big business, and what does that look like? So that was very important for us when we were growing and making sure that we did maintain our solid culture.
Spencer: And you know that really supports the conversation that we had last week, talking about, you know, culture is like there is a business case for it, and to maintain those values as you grow, you can’t lose sight of who you are.
Boschetto: Absolutely. You need those common values, the shared goals, the disciplines. And that really helps us to strengthen our ability to support our customers and build a foundation for growth.
Spencer: Let’s talk about growth from a strategic perspective. You have really focused on slow strategic growth. But then doesn’t it just inevitably lead to being at capacity? What does that look like? How does that happen, and what do you do with it?
Boschetto: So, we’re very creative, and what we are able to achieve out of a small space — but ultimately from a food safety, I will say perspective — because it introduced more rigorous controls, more standardized handling procedures to support traceability, and everything that kind of comes along with that. We really needed to expand our footprint, so we had to implement a sanitation program, and what does that look like, and how do we integrate that into the entire infrastructure of how we are currently doing business. We needed to add a maintenance team to support the maintenance of the equipment, to make sure that we didn’t have breakdowns, that we were following our GMPs, we’re following SQF as well. With that becomes more people, it requires more space, so we had to grow. And with growth, we learned a lot. We didn’t want to just upfront add all of these changes and be reactive; we wanted to be strategic about it.
So, what do these changes look like? How does it have an impact not only on the people, but the culture, but our customers as well? Or, if we’re adding all of this capital expense, what does that mean for our bottom line? How is that going to increase the cost of the product? Is it going to? There’s all of these factors and indicators that you have to consider. What areas are you going to grow? Which lines are you going to grow? How much space is really needed? What we did was a strategic plant layout. We did a systematic plant layout of what are our needs today, what are our needs, short-term, in a year, and then what are our needs in five years? We grew with kind of that model in mind, so we went from 10,000 square feet to just shy of 30, and then we went to 40, and then just recently we went to 50. So it has been, to us, a slow progressive growth, but it has really allowed us to be strategic and intentional with the decisions that we are making, so our customers don’t see a great impact with cost or delays on shipments, etc., so we can still maintain our excellent standards and our quality standards in delivering product and customer service.
Spencer: You know, I have to say, I never know how bakers do it, implement an operational improvement, or an operational expansion, or move into a new facility, and keep that product moving and have your customers not miss a beat. I can’t even move from one house to another without a complete and total upheaval, or like do any kind of renovation on my home and not have it impact every aspect of my life.
Boschetto: I mean, it sounds so simple on paper, right? It’s a lot of planning, it’s a lot of strategy, and then it’s implementation. But really, I mean, it does come with a lot of headaches, some areas that maybe we didn’t think of. But what really has helped us is our team and their dedication and their commitment to not only us but our customers, and that’s all part of the relationship. You know, the relationship isn’t just with sales and the customer; the relationship is with the whole team, and that’s why you get everyone involved.
When we have customer meetings, we have more people than just myself in the meeting, so they’re also building that bond and that relationship. Production knows what the expectations are, procurement knows what the expectations are. When you have a team that is all aligned, it works together so seamlessly to be able to overcome kind of these larger challenges. And yes, you’re going to have hiccups, you’re going to have bumps, you’re going to have to pivot because maybe you didn’t think of this, or this happened, you needed more electrical requirements, or we had to relocate some ovens here for some gas, or for zoning, etc. But really, we have a committed team that is really dedicated to our mission, which is to make everyday life more pleasurable, and they are committed to the value system and the culture and our vision. That is so critical. It really is honing in and leaning into the team that we have built to help execute. It’s so important because, as you know, it is a big undertaking.
Spencer: Yeah, kudos to you all, because I just.. I do not know how bakers do it. Okay, so you moved into a new facility in 2007 right? Is that the building you’re in now?
Boschetto: Yes. And that was the biggest move for us because we relocated from one facility to another facility. With that brings its own challenges. We had to operate simultaneously, so we did have to be strategic about inventories that we were building up, and how we were slowly integrating and doing the installation from one facility to the next. That was our largest, I would say, most complicated move to date. The subsequent orders have all been expansion and just reallocating lines and manufacturing capabilities in our facility.
Spencer: So, you’re in the same building that you’ve been in since ’07?
Boschetto: Correct. Yes.
Spencer: How many expansions have you been through since you’ve moved into this building?
Boschetto: Two, and we are just now starting the second expansion in this facility.
Spencer: What lessons did you learn from the move and the previous expansion that you can apply to what you’re doing now?
Boschetto: So, space is not always a problem solver. It does not always solve all of your problems. You do need the systems, and the people have to be in place in order to support the scale. If your processes aren’t secured, if communication, if your training isn’t dialed in, a bigger footprint can only create bigger issues, right? It just kind of expands those. And we also learned to be flexible, so although on paper what you have mapped out does not necessarily translate onto the floor, you have to be objective and have an open mind that things may have to change, and you may have to pivot a little bit. And there’s other demands that come with change and expansion, and making sure that you are meeting your customers’ needs.
I think overall kind of the big takeaway is making sure that layout works for not only today’s flow but also for your future workflow. One of the biggest takeaways on a positive side of it is it forces more clarity, so it gives you kind of more understanding: ‘Okay, these are our new capabilities.’ It kind of forces you to think in that mindset. So, from a sales perspective, it’s, ‘Well, how much more now can we produce? How much more now can we offer the industry?’ And for production it’s a different mindset as well: ‘How much more can we pump out of an 8-hour shift, now that we’re not on top of each other?’
We don’t have waste, we have increased productivity, so it really defines and tightens up kind of those processes that builds and creates that foundation for scale. Sales has a better understanding of operationally what we are able to accomplish and what those capabilities are, and it creates growth for the team as well. Our line workers have an opportunity to grow, and they can become bakers or key operators or mixers. It allows some career growth for our team members, and we can develop leaders. Because as we increase our footprint, we now need different tier levels of leaders to manage those departments. It really does overall strengthen your company. To me, that’s one of the biggest positive lessons that I have taken out of our expansion.
Spencer: Have you changed who you include in the conversations, or at what point they come into the conversation? Just thinking about how you said it’s really eye-opening for sales to know what your production capabilities are, and you know, coming up with new ideas or new plans. Does it change like where sales comes into the conversation, or does it change that dynamic?
Boschetto: That’s a great question. It changes not only from a sales perspective, but it changes that we have now created this group of strategic leaders. We call them ‘the empowering group.’ The decisions are made by our CEO, who is my father, but it’s a collaborative discussion. Everybody is able to participate and add some value, but at the end of the day, we do need to have one decision maker, but absolutely. It’s that collaborative environment that allows us to continue to grow in scale and adapt to today’s standards and to today’s food environment. So, 100% we have the leaders from each department, you know, that are really contributing to those conversations and those big decisions that have to be made to support our three objectives as well as our goals.
Spencer: It really is so strategic.
Boschetto: Yes, yes. And that model was greatly due to the consultants that we worked with. Because at the time it was just me and my father making all of these decisions, and it really wasn’t collaborative. We didn’t engage with the team, and ultimately they’re the ones that are performing these tasks. So, we really need to tap into their inputs and see, ‘How are these decisions going to have an input and an effect on your daily life?’ It was very important for us to really create this empowering team and let them know that their voice matters, what they do every day matters, and we want to hear that, we want to hear your ideas. So that was very important for us to kind of change how we do business a little bit.
Spencer: Let’s shift gears a little bit and talk about capital investments with these expansions. You said that you’re in process for your next expansion. What kinds of capital investments have you made, or are you looking at, to support this next stage of growth and production efficiency?
Boschetto: So capital investments, first and foremost, is part of our overall strategic plan. So, we have allocated a certain amount that we invest in the company. We identify different areas of improvement through our operations and our process improvement leaders, and also some input from sales and marketing. So, we collectively come to some sort of a consensus of, ‘Okay, it does make sense to invest in this line, or this line, or this line,’ and then from there, Bob does make the financial decision based on what lines that we are going to improve.
However, this year we took it a little step above, and we made some drastic capital investments to the facility. We automated some of the lines, we added some automation into the packaging line, because it was very much hands on, very labor intensive in that line. We made a lot of capital improvements overall in the facility. We increased our mixing capacity, which gives us more capacity on the line, and it helps the mixers, so they’re not mixing 20 mixes a day; instead they’re only mixing 10.
Spencer: They’re probably so happy!
Boschetto: Yes, exactly. We invested in some lifts, some bowl lifts, so we are not taking the 100 to 200 pounds of dough and/or batter out of the bowl and lifting it into the hopper. We invested in some aids to help us to be able to improve the whole continuity of the mixing department. We’ve really this year alone made some, I would say, aggressive capital investments, not only for the people but also to support our growth. We’ve identified some areas of improvement and opportunities in the industry.
So, what’s to come? Mini desserts, mini pastries are super trendy right now. People still want a sweet indulgent, but they don’t want a big 5-ounce cookie. They want a small bite-sized cookie where they can feel better about themselves. We needed the equipment in order to manufacture at scale, so we did make some capital investments there for future opportunities.
Spencer: How do you balance current needs and what you’re seeing happening out in the market and with consumer trends and thinking about what could be your future needs or your future opportunities? I know some operations wait for the business to come before they expand, and others build it first, and then bring the new business in to support it, which kind of sounds like that’s more of your school of thought. But how do you find that balance? That sounds very scary to me. There has to be some level of risk, so, what do those conversations look like?
Boschetto: So, my dad is very conservative. Let’s just say he’s not a big risk taker. He’s gone out of his comfort zone the last couple of years because we have an aggressive growth strategy. We need to invest in our infrastructure, really, to support it. Once again, it’s a collaborative discussion, so we include marketing, we include R&D. We include our customers as well. They’re a great resource. I will interview our customers and ask them, ‘What are some items that would help enhance your programs?’ I will ask some of our production partners, ‘What are some areas of innovation that you’re looking towards, and how can we help to support that?’ It’s really building on those relationships, getting some feedback, and from that feedback making an informed decision. ‘Okay, it does make sense for us to invest in this line or to create some automation.’
One of the biggest buzzwords in our industry is robotics. How do we not replace the team members, but how do we add some value and more automation in the line so that we can produce at a faster, more consistent rate? And then we can take those team members and really develop their growth. So that’s been very exciting for us. We have our first robot that we have installed in the facility that’s palletizing. So, identifying those areas of labor that we can help improve the lives of people, instead of picking up, you know, boxes and constantly palletizing? Well, there is an area of improvement. That was really a collaborative effort from the team, you know, John, our R&D pastry chef, identified this line, presented it to the team, and then we did an analysis, and then we implemented it. And the feedback has been amazing from the team.
Spencer: It sounds like it’s pretty calculated in that you’re looking at what you’re kind of doing, listening with your customers, and then listening with your staff, and figuring out what are the things that you know you’re going to need in the future, just because the trends are dictating that, but also what does your current team need to make their lives easier and to make the production run more smoothly. So, it sounds like you’re saying it’s sort of almost algebra, like there’s an equation to it.
Boschetto: Yeah, we build an annual plan, I would say, so we can make those informed decisions. You know, layering productivity gains, like what are the gains, obviously, when you’re going to make those investments. And gains don’t, they’re not just profit gains; it’s across the board. So, 100% that is our strategy.
Spencer: I have kind of a weird specific question for you because you mentioned that you invested in bowl lifts. And I know how important people are to this company, and it just reminded me of like five years ago, six years ago, I was in a bakery, and they had gotten bowl lifts, and it changed the opportunities for people on the plant floor, specifically for women who couldn’t work in the mixing station because they didn’t have the physical capabilities, but when the bowl lifts were implemented there were like a handful of women who said, ‘Hey, I want to try to work in that area now. I would love to learn how to do that. It was never on my radar.’ Are you seeing those kinds of opportunities, where investing in automation opens up opportunities for people who just physically couldn’t be in those areas previously?
Boschetto: Absolutely, 100%. And it’s not just women, but itit’s people over a certain age as well, who
may have been stuck on one line, but now gives them opportunities. And it empowers them, rather than just be on the line, just doing the same thing over and over. ‘Now I can learn how to mix.’ It 100% allows opportunities throughout the entire infrastructure of the organization. So, I agree with that. Yes.
Spencer: I really love sharing those kinds of stories because food manufacturing gets a bad rap on lots of different levels, from like the general public, and I think that there is this sort of skepticism about automation, that it’s taking jobs away, and I’ve never, honestly, never talked to a baking company who invested in automation and eliminated jobs. It always just shifted things around or created new opportunities or gave the people who were previously doing manual work in that specific area an opportunity to learn about technology. I’m glad to hear that I’m batting 1000 on what I learn in automation!
Boschetto: It’s great. It’s great for the industry as well. So, you know, manufacturing in any industry, I feel like can have a negative connotation, but you know, there’s a lot of us manufacturers that take people’s needs first and foremost above anything else. It’s so important.
Spencer: And I know a lot of teams also kind of are nervous about the implementation, especially of robots, because again that automatic assumption is that the robots are here to replace us. Especially if you’ve ever seen a Terminator movie. But I’m aging myself. How was the team members’ reaction to it?
Boschetto: At first, I think there’s some reservation and the same concerns, but once they see it in action, those concerns turn into excitement. They are excited about this. They see that the company is investing in its future, and in technology, and in its people. I think it’s all about your delivery, how you’re communicating, you know, how you do the implementation as well. We don’t ever just install a piece of equipment and then just walk away. We are very much hands on.
We partner also with vendors that have similar values to us, and they will not leave until they feel it’s fully commissioned, and that our operators fully understand the in-and-outs of that piece of equipment. That to us is very critical and important, that anything that we have installed is just an is not just an install and then you leave. It’s an install, it’s an integration implementation, and then they come back to make sure that you understand how to work the machine. There’s always some kinks and bugs that need to be worked out, so the fact that our vendors are willing and able to not only work through that, but then come and do a follow-up after, it’s so important. And I think it sends a good message to the team members as well.
Spencer: Do you prioritize those types of values when you are choosing vendors and what their training and post-installation processes are?
Boschetto: Yes, it is a process when we are making a decision who we are going to partner with. There’s a lot of different equipment manufacturers out there, and we’re pretty selective, I will say, when it comes to certain pieces of equipment. My dad has been working with certain vendors for 40-plus years and will not deviate from these specific pieces of equipment.
Spencer: Relationships matter.
Boschetto: He’s very loyal, very committed. They really do.
Spencer: I want to talk about something else that I think you guys have been investing in with your growth, and that is for streamlining inventory control. Can you tell me a little bit about what you’ve done there?
Boschetto: That’s a big buzz over here. So, we’re very antiquated when it comes to inventory management. We still count our inventory, both finished goods and raw materials, by hand, and it’s recorded on a paper worksheet. It is how my grandfather did business, and my father did business. So, I did mention that my uncle Tony came on board about six months ago now as our CFO, and that was his first big task. So, he is taking on that challenge to automate and implement an inventory management system, which will greatly help all of our team members, from buying to sales for forecasting to production planning, and then to producing the product. We have identified a company that is helping us, so we are working with Cin7. They have been wonderful. I will say it’s an entry-level system, which aligns with our needs. We are starting to, you know, create all of the data points. We have not done the full integration or the implementation, but it’s a step in the right direction. So everyone is so excited to support this initiative. Tony is taking the lead on it, and he’s done an excellent job in identifying a solution for us, and then managing the project. we are very excited to implement this and join the technology world when it comes to order entry and production planning and sourcing, so it’s going to be great.
Spencer: Okay, so I’m Gen X, and I know enough technology to sort of get by, and I still have a relationship with paper. How is your dad taking this change? Is he like, ‘Yes, let’s do this.’ Or is he like ‘You will take my manual process from my cold dead hands’?
Boschetto: He is great. He is so supportive, but he is still going to go out with his clipboard, and he’s going to count his inventory. So, if you want to spend your time doing that, go for it. We can compare. He is so supportive, and he understands that there is a need to implement a system, so he’s been excellent during this process. We are not allowing him in any meetings, so he does not have any involvement. We’re taking it over, and he is focused on some other areas.
Spencer: I love that so much. I love that. It’s funny to me — and I guess funny as in interesting — that there are certain aspects of the business that are old school, like the inventory control, but then you’re also doing some sort of outside-of-the-box modern types of things. I’m thinking of this interesting thing that you guys do that I don’t know a lot about, so I’m interested to hear more, and that is a program where you sort of have outsourcing your equipment in some respect, so can you walk me through that?
Boschetto: There is one piece of equipment that we do outsource, and that is the robot. We’ve been looking at robotics for years now, and that was one topic of agenda when we visited the IBIE this past fall, and we identified many different robotics. I mean, they were integrated in almost every large line that we saw. Some of it was just way above our needs, but some of it we identified this could really help us. So John connected with MIT —they’re local, they’re right in our backyard. So they have this engineering program where they help manufacturers, so John happened to reach out, and it’s an outsourced program. We pay by the hour. They have 24-hour support because it’s all done through AI, so they can identify if we are working off-hours and we don’t have leadership in the building, and something goes awry with the equipment, they can be able to reprogram it offsite. It is incredible technology, it is incredible support. We don’t physically own the equipment, we do outsource it. It’s a unique relationship to us, and it’s one that we have not done yet before. We kind of took a risk there, but it’s paying off in dividends. They’re an excellent group of people, and MIT is just amazing in and of itself. I mean, they’re just, and the fact that they could innovate not only this unit but this whole program to help support manufacturers, I think is just amazing. And they’re in our backyard. I think many people don’t realize that you don’t have to go overseas to find solutions, that oftentimes these solutions can be in your backyard, you know, and they can be local to you.
Spencer: You’ve got like MIT, I mean, it’s just a community of geniuses right there at your fingertips, but really it doesn’t even have to be MIT, I mean, there’s so much student innovation happening across the country, and I think that’s something that as we are on this kind of generational turnover in the industry, that’s good, like a good reminder to tap into the intelligence and creativity that’s coming.
Boschetto: The fact that John just happened to see something on social media, and he reached out, it’s been a great relationship so far. Thinking outside the box sometimes can have huge rewards.
Spencer: Yeah, okay, so do you work directly with MIT, or do you go through a third party?
Boschetto: We work with a company called Tutor, and Tutor was founded out of MIT’s computer science and artificial intelligence laboratory by two founders, Josh and Alan. They were tasked to build and scale physical intelligence for complex manufacturing and logistics environment, so our contact is one of their employees, who John reached out to via social media, and then he responded. And within a very short period of time, two to three months, we have their piece of equipment installed, and it is implemented, working in the facility. It’s been a great experience. It’s very young, so far — the relationship — but it’s been wonderful, and they’ve been very responsive, so we can’t be happier with the relationship.
Spencer: This is a really cool concept. I’ve never heard of outsourcing robotics. It’s on like a temporary basis, right?
Boschetto: Yes, correct. And we pay hourly, so we pay an hourly rate. Anytime the robot is in use, is when we are paying for it. If it’s sitting idle, we are not paying for it. It’s an excellent concept. I think that they have thought out, you know, all of the issues that manufacturers are dealt with, and they’ve created kind of a solution that helps to mitigate a lot of those issues. Kudos to them for, you know, doing all of the research and the development, and then, you know, really identifying what their customers’ needs and their pain points are, and creating a solution that is user-friendly. It’s really been a wonderful experience.
Spencer: With all of the change that’s happening, and thinking about the future while streamlining all of your efficiencies for right now, what do you think the next expansion is going to look like? Or are you like, ‘Let me get through this one before we start talking about more’?
Boschetto: Our next expansion is going to be pretty massive. Our lease expires in our current building in two years, so we are already starting to plan what our next step looks like as far as a building.
My dad and uncle are at two schools of thought. Uncle CFO wants us to buy. My dad wants to continue leasing. We’re looking into both options, but no matter which option we choose, the planning has to start today. We are starting to really sit down and plan what are our needs, and we have already mapped out what our physical space and needs are. And we’re starting to look at some buildings to see how can we equip those into meeting our needs today.
That is going to be a huge undertaking because we are most definitely going to have to move. There’s some limitations where we are today. We’re kind of maxed out on space, so we are going to need to look at a different location. That has been a huge task. It is front of mind for my dad. That’s one of his, he says, last big decision for the organization, and he wants to make sure that he sets up the company for the future. So, this has been one of his priorities, and he knows it takes about 24 to 36 months to outfit a new space from start to finish, so that is our big next strategic move.
Spencer: That probably has an impact on the strategy that you use for what you’re investing in right now. Because you got to think, ‘Okay, what’s movable, what’s scalable?’ And then it seems like then that robot, that strategy of outsourcing it, probably works really well to implement robotic technology in a space that has an end date.
Boschetto: Absolutely. And as we have identified, our needs are changing. In order to grow, we have to implement a new climate-controlled space. That is a space that we are using in that newer space that we’re expanding to, and we’re right now going to be outsourcing all of the infrastructure to support the climate control. We’re going to have to be able to transfer that into this new space. It’s kind of that balance of what are we investing in in the infrastructure to support the growth long term. And then short term, kind of forming those decisions based on what the financial implications are and without making too many capital improvements to our current space. Those are some big conversations we’re having, some big strategic decisions. We’re trying to take the emotions out of it, as you know, my dad, this is maybe his last big decision. But it is really setting us up for the future, and it’s putting us in a position where this is going to be multi-generational. We are really looking at this as a long-term. There’s so many family businesses that, for whatever reason, we’ve just seen kind of dissolve, or they’re not just the same footprint. And we don’t want that to happen to us, so we really are looking, this is more of a future decision, and how it’s going to impact the team members and the expansion in more generations to come.
Spencer: Oh my gosh, so you guys are at a crossroads. You’re about to step into the future, which is a great segue, because that’s going to be our topic for next week, which is our last episode together. Perfect place to close out this week’s conversation, Kristen. I loved it. This was really fun.
Boschetto: Excellent. Thanks, Joanie.
Spencer: I will see you next week, and we’re going to peek into the future.
Boschetto: Okay, sounds good.
