inventory management

Why should cake makers use inventory software?

Inventory tracking is not just about manually counting your products and ingredients once every year - it can be so much more than this and can have massive benefits to your cake making business.

Why should cake makers use inventory software? Photo by Brooke Lark / Unsplash

How to price your cakes and keep the right ingredients in stock when you need them are two of the biggest headaches for cakemakers.

What if I told you they could both be made much easier to manage by adopting one method? Inventory tracking is not just about manually counting your products and ingredients once every year - it can be so much more than this and can have massive benefits to your business.

True inventory tracking involves managing your stock on a constant basis (this is called “perpetual tracking”), so to do this you’ll need a system designed for this purpose. If you are starting out, you might use a customised version of Excel to do this however it will not be truly perpetual and will only really be a stop-gap until you upgrade to a proper system. To get the greatest benefits out of inventory management, you’ll want to adopt a system designed for true perpetual tracking.

So, what can a perpetual inventory tracker exactly do for your cake business?

Initially, you might find it’s most powerful feature will be to check your current prices against your exact manufacturing costs: this will expose any issues in your margins that are eating away your business profits.

For a cake maker it’s hugely important to know your production costs so you know that you are charging the right amount for your cakes. Setting prices based on perceived value without knowing your true production costs can result in unexpectedly small margins, or you might even find you are losing money on the sale of your products.

If you don’t use a perpetual system, you’ll only realise the true extent of your mispricing at the end of your first financial year - if your margins are dire enough at this point in time this can have massive ramifications on your business future. This is why tracking your inventory regularily during the year is so massively important - it allows you to find problems with your pricing and adjust them instantly before they cost your business money.

Craftybase is a web-based inventory package designed specifically for the handmade manufacturing process. Although you most probably identify with being a baker before being a manufacturer, it is important to remember that you are one as this determines how you should visualise your processes and your bookkeeping requirements.

Our software allows you to create recipes containing your exact ingredients and we will show you your current EXACT costs of producing your cake, along with your estimated profit - this means you will always have the information and confidence to set your prices to maximise your profit margins.

Any changes to your ingredient costs are instantly factored in as you add more information to Craftybase: for example, if your cost of sugar changes your recipe cost to manufacture will be updated to reflect the increased production cost and you can make instant decisions on your product pricing.

Your full raw material inventory can be completely tracked and costed within Craftybase - we call these “materials”. For a cake maker this generally means things like flour, sugar, eggs and butter. Tracking your usage of ingredients and to-the-minute shelf stock levels means you are always in full control of your stock ordering schedule and can ensure you have the ingredients on hand you need to produce your orders.

You can create projects to handle the different cakes that you make and thus have a complete picture on your sales and manufacture history for each: you’ll now know for certain what your popular products are, when they are popular and most importantly how much in profit you are making from them.

We also have a feature called Components that is really popular with bakers and cake makers. This allows for batches of sub-materials to be produced and tracked within the system. For cake makers, a component typically make is “Buttercream” where you would typically make up a batch of this for use on a number of different cakes. In Craftybase, you can manufacture your Buttercream from the raw ingredients as a separate process then apply this newly created ingredient to your cake recipes with the calculated price. This gives you a huge amount of flexibility and tracking accuracy to your cake production process.

Another really handy Craftybase tool for cake makers is our measurement unit conversions - perfect for instance when you purchase flour in pounds but measure your recipes in cups. Craftybase will automatically convert your purchases into the unit you want to track into instantly whenever you add in a new material purchase. We also support ANY conversion between units - so if you want one of your tracking measurements to be based on your grandmother’s old teacup, Craftybase can definitely accommmodate this!

As a cake maker, time is hugely important to the success of your business: Craftybase’s order features include integration with Etsy, Shopify, WooCommerce, PayPal and Square so that you can minimise on your data entry. You can see all of your orders at a glance by order date, due date and manufacture date from any of your sales channels - including offline market stall sales.

Best of all, we also calculate the figures you need for your end of year COGS - your inventory valuation is constantly calculated and is ready for your bookkeeper at a touch of a button.

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, inventory and manufacturing software designed for small manufacturers. She has been working with, and writing articles for, small manufacturing businesses for the last 12 years. Her passion is to help makers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.