Bakery supply chains adapt to regulatory shifts and rising costs through innovative collaboration and technology

Bakery manufacturers are rethinking sourcing, planning, and production strategies amid rising input costs, stringent sustainability rules, and labour shortages, leveraging technological integration and collaborative planning to maintain resilience and margins.

Rising input costs, tighter sustainability rules and persistent staffing pressures are forcing bakery manufacturers to redesign how they source, plan and produce. Sharp swings in ingredient prices and energy bills...

, together with labour shortages and shifting consumer habits, have compressed margins and made reliable planning harder to achieve across the sector.

The challenge is intensified by the perishability of most baked goods: a disruption at any point , from ingredients supply through production scheduling to distribution , can quickly cascade into stockouts, waste and lost sales. Regulators are adding another layer of complexity. The European Union’s Deforestation Regulation (EUDR) requires users of commodities such as palm oil and cocoa to demonstrate those inputs are free from deforestation and compliant with local laws dating from 31 December 2020 onwards. That obligation extends due diligence requirements to operators and traders supplying the industry, prompting manufacturers to demand greater provenance and documentation from their suppliers. According to analysis by S&P Global, the EUDR will reshape trade in deforestation-linked commodities and alter supply chains for major producers over the coming decade. Industry commentators have also flagged the potential scale of economic impact, with one assessment estimating costs to European industry of up to €26 billion. At the same time, reporting from Bakery & Snacks has chronicled delays and political controversy around EUDR implementation, noting criticism directed at large processors and calls for firms to act rather than wait for regulatory certainty.

Against this backdrop, collaboration across supply chains , both vertically with suppliers and customers and horizontally with peers or shared service providers , is being framed as indispensable. Collaborative planning, forecasting and replenishment (CPFR) is offered as a practical framework: partners share sales history, point-of-sale data, inventory positions and promotional calendars to create aligned sales and inventory plans, refine demand forecasts, coordinate replenishment and jointly monitor performance using agreed KPIs. When executed well, CPFR can reduce the friction that turns routine variability into costly disruption.

Technology is central to that shift. Finsbury Food Group’s multi-site programme illustrates how standardised enterprise systems can connect previously isolated processes. According to the company’s implementation partner, Optimum PPS, Finsbury adopted the Infor M3 ERP to unify workflows across its UK and European facilities, aiming to improve visibility from raw material receipt to finished-goods dispatch. Optimum PPS says automation cut manual tasks, standard reporting sharpened forecasting and integrated planning improved traceability. “For bakeries, the supply chain is the heartbeat of the business. When every link is connected through shared systems and data, teams can plan better, waste less, and respond faster to demand,” says Steve Wilson, Managing Partner at Optimum PPS. Optimum PPS went on to outline a strategic roadmap to sustain and extend those gains. “When people and data are able to connect seamlessly, the decision-making process becomes smarter, and innovation naturally follows. We helped teams at Finsbury to see the bigger picture and understand how their daily actions supported the wider supply chain,” concludes Steve.

Linking strategic planning with shop-floor execution is another priority. A significant slice of unplanned downtime in bakeries stems not from mechanical failure but from gaps between high-level plans and hourly production realities: poor sequencing, mismatch between workforce qualifications and machine schedules, and insufficient accounting for cleaning or contamination constraints can all leave lines idle. RELEX, a provider of supply-chain planning software, argues that AI-driven production planning and scheduling can close that gap by translating weekly or monthly plans into granular, constraint-aware schedules. Its platform models operator certifications, machine qualifications, lead times and shelf-life constraints, and it optimises sequences to cut changeover and cleaning time. RELEX says this approach reduces controllable downtime by automating complex decisions and reserving human intervention for exceptions.

The industry’s near-term priorities reflect these pressures. According to a 2025 survey reported by BakingBusiness, 69% of wholesale bakers cited labour costs as a top concern and 66% highlighted the difficulty of attracting and retaining staff; 61% said rising raw-material prices were a major worry. The same survey placed automation high on the agenda, with 44% identifying it as a key priority. These figures underline why many operators are investing in systems that promise both resilience and efficiency: ERP suites, AI-assisted planning tools and cloud-based data-sharing platforms all claim to deliver better forecasting, lower inventories and faster responses to demand shifts.

Yet technology alone is no panacea. Successful transformation requires combining tools with process redesign and trusted relationships across trading partners. Shared data only yields value when parties align on metrics, governance and incentives; provenance systems are effective only when upstream suppliers meet documentation and compliance expectations; and AI-based schedules are only as reliable as the quality of the inputs they receive.

For bakery manufacturers navigating volatile ingredient markets, evolving regulation and tightening labour markets, the message is clear: build supply chains that are flexible, visible and collaborative. Industry analyses from S&P Global and others suggest the EUDR will continue to reconfigure sourcing decisions and trade flows, while cost-impact studies warn of significant compliance and operational expenditure. Against that uncertain horizon, the combination of collaborative practices and technology-enabled planning offers a route to reduce waste, limit downtime and protect margins , provided companies invest equally in people, processes and the data that must bind them together.

Source: Noah Wire Services