Holste is a family-owned German SME in the food industry. The digitalisation of daily business operations such as book-keeping, information exchange between branches and training of employees required sizeable efforts but enabled the bakery to manage processes more efficiently. Two government support programmes helped the company to identify opportunities of digitalisation and overcome entrenched structures by implementing a variety of digital tools.
Employee empowerment through digital tools: The case of a German bakery SME
Abstract
is a family-owned, food industry SME famous for producing its unique Hedgehog bread while using only natural products. The bakery has six branches and 100 employees and is located close to Bremen, Germany.
Operational time constraints, lack of communication and fierce economic competition due to the market entry of discounters are major challenges that companies like The Hedgehog Bakery are facing. Digitalisation can help overcoming those challenges by making daily processes more efficient. However, following managing director Holste the change of traditional processes into digital ones requires sizeable efforts that do not directly pay off but involve a longer learning process.
A major challenge consists in the human factor and power of habits. For example, in pre-digital times important messages arrived at bakery branches via fax accompanied by a ring sounds. After the bakery changed its communication structure to a digital communication platform, some of these messages were overlooked by the employees due to certain features of the application such as the need to click on chat threads. The example shows how the introduction of digital tools can become an additional burden to the employees that have to adapt to changing requirements. The need to acquire additional digital skills to keep up with the transformation of work processes is particularly strong for SMEs. Data across OECD countries shows that, compared to larger companies SMEs lag behind in offering ICT training to non-IT experts, while the digital gap between SMEs and larger firms widens over time (OECD, 2021[1]; OECD, Forthcoming[2]). In 2020 on average only 15% of small companies and 34% of medium-sized companies delivered ICT trainings to their employees. On the contrary, 61% of larger firms provided such trainings (OECD, 2021[1]; OECD, 2021[3]).
The digital journey of The Hedgehog Bakery started in 2019 with a lecture evening on chances of digitalisation in the manufacturing sector organized by the local Chamber of Industry and Commerce. Managing director Jörn Holste was inspired. He took part in the federal support programme go-digital that enabled him to look at opportunities of digitalisation in all areas from production to marketing to administration together with an external go-digital consultant. Today, the company uses a variety of applications such as a business communication platform for internal communication purposes, social media and corporate planning software for financial controlling.
To overcome the aforementioned challenges, The Hedgehog Bakery introduces digital technologies following a step-by-step approach. Managing director Holste explains that these are small steps but the companies consequently follows a digital learning path. A striking example of the digital development are small video tutorials, e.g. on baking methods and different recipes that Holste produces himself and disseminates on the digital communication platform to upskill and empower his employees. Also new recipes arrive to the bakers of the different branches as attached documents in digital chats. However, the bakery does not only use videos for internal learning and communication but successfully entertains their social media audience of over 9 000 followers with daily short video stories.
Besides internal communication and marketing, the bakery is transforming daily processes towards a paperless office. Before, the company relied on paper checklists to report their compliance to hygiene standards to the supervisory authority. Nowadays, they use tablets to tick the boxes. Another digital change that simplified operations and helped to comply with legal requirements was the reformation of the payroll accounting system that managing director Holste achieved by introducing a digital timekeeping tool. For the future of the company, Holste is currently working to simplify the controlling and accounting system. According to him, the digitalisation and centralisation of documents requires sizeable efforts and time, but also enables him to become independent from external professional assistance with the tax declaration in the long-term. To further centralise documentation and simplify the profit and loss statement, he uses corporate planning software. Although there is a long way to go towards the goal to monitor all key performance indicators centralised in one digital space, he is confident that the efforts will soon pay off.
The bakery benefited from two different government support programmes. Firstly, the go-digital program set up by the Federal Ministry for Economic Affairs and Climate Action supported the company’s digitalisation pathway by looking at opportunities to kick start digitalisation in various processes (see section above). Secondly, the program unternehmensWert:Mensch plus implemented by the Federal Ministry of Labour and Social Affairs provided additional consulting and took the bakery on a participatory learning journey with the aim to equip with the necessary tools for the digital transformation.
OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, https://dx.doi.org/10.1787/bdb9256a-en.
OECD (2021), SME Digitalisation to Build Back Better, https://doi.org/10.1787/f493861e-en
References
[1] OECD (2021), “SME digitalisation to “Build Back Better”: Digital for SMEs (D4SME) policy paper”, OECD SME and Entrepreneurship Papers, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/50193089-en.
[3] OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/bdb9256a-en.
[2] OECD (Forthcoming), 2023 SME and Entrepreneurship Outlook.
