It is no secret that these days we are facing unusually high inflation rates, rising energy and transportation costs. This is the reality small businesses in the Baltic region have to deal with. Among them is Zelbukis, a family business from Lithuania, dedicated to milling natural flour.
We will present in this article how it decided to invest in its growth, in the midst of uncertainty.
Focus on serving customers looking for healthy food
Zelbukis is a family-owned milling company present in the Lithuanian market for about ten years. The Zelbukis family has been involved in the farming business since 1991 though.
The family inherited the land in the Šiauliai region, north of Lithuania, and decided to start a small farm. Year by year they continued buying more land and increased wheat production and expanded to other products such as rye, rasp, peas and industrial hemp.
The mill production idea came afterward, as the family always looked for healthy foods and the customers were looking for natural products. Zelbukis produce flour from their own harvests. They serve other small farmers producing grain, food shops & bakeries, as well as gourmet restaurants in Lithuania.
They produce flour from natural grain, as an alternative to organic farming, which falls under stricter laws and a higher level of restrictions. Even without being organically certified, they don’t use chemicals, and they sell to the smaller farmer shops, some of which are organic. But they still sell small farmer products. “The smaller the production, the more natural it is” adds Neringa Zelbaite, the Zelbukis business owner.
They attend small shops, organic shops or farmers’ shops, and also small bakeries. At the moment they attend the Lithuanian market. “We would like to focus more on locals. The people who demand our products are mainly located in Vilnius, which is like 200 kilometers from our farm.”
The advantage of Zelbukis is that they are grain growers. Neringa states: “We shorten the way from the grain to the consumer”. They start their process from the seed and produce the flour. They don’t need to purchase grains and the price doesn’t really fluctuate as much as for other companies.
And continues: “I would say 80% of sales are for consumers and 20% B2B, like bakeries.”
They produce different types of flour with passion and love. Their range goes from wheat to rye, spelt, pea, oat, and others. They have recently started to produce industrial hemp biomass for CBD extraction, hemp seeds, and hemp tea.
The products range from 1 to 25 kilos for flour and the hemp is in big bags, from 100 kilos to 400 kilos.
Common operational challenges of a business with organic growth
As a family-owned company, Zelbukis started with family members. Now they have several more workers and even more during the high season, from mid-July to mid-September, when the harvest starts.
Like any manufacturing business, Zelbukis had to face multiple challenges in the past. They needed to implement a system to manage the customers’ orders: “we needed help to better understand our customers, the product flows, and also the structure of sales, costs and areas for improvement and opportunity” concludes Neringa.
“The software really minimizes the paperwork, keeping the journals in one place. We can also manage the production batches and the expiration dates. Now I can consolidate the information and get a report showing the sales amount. It also helps with sanitary controls and inspections. And it eliminates a lot of unnecessary work, as everything was done by hand: the writing, milling volumes planning, the packaging data, and so on. Before I had to manage three journals not connected to each other.”
Acquire new machinery and awareness to invest in the right place
They had also expanded their range of products and increased the quality level. To do so, they needed to invest in new machinery.
Zelbukis decided to bet on business growth by acquiring a stone ground mill, an A 700 MSM Combi Mill, purchased from Austria. It is a handmade wooden mill, a stone grind mill, able to produce in small batches of natural flour. In addition, there are options for whole ground flour or ground mill flour or sifted flour.
“Like any business in which every euro counts, they had to analyze whether it was feasible to invest in new and better machinery. So we did it and it was a good decision,” confirms Neringa.
Right after the machinery investment, they reached out to higher efficiency levels and to more customers with higher service levels. The company is now researching in the development of new products because the mill is capable of producing a wide range of products, like finer grain and different kinds of semolina.
They are looking forward to shortening the supply chain even more. They are interested in increasing the B2C market, with customers coming to the mill rather than doing deliveries, which cuts the logistics cost.
The factory has a warehouse with sufficient capacity to store large volumes and varieties. Future investments are then focused on replacing the old mill and hiring more staff to sustain the growth.
Final recommendation to the small business owners
Neringa recommends to other small manufacturing business owners to go forward and not be afraid of big companies: “small companies have the flexibility and creativity to adapt to a vast market and have more customer proximity. In fact, many customers have become my friends.”
“The flour is a commodity, and it is cheap. Our clients do not usually ask for the price. Instead, they look for trust and quality”, Neringa concludes.
If you face similar situations where you need to improve the operational performance or increase the capacity of your manufacturing business, consult us.
UPKAIZEN is an industrial engineering and continuous improvement consulting firm in operations and supply chain management.
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