Bayonne Packaging Case Study MPE-14, NMIMS
Executive Summary Bayonne Packaging, Inc. is a printer and paper converter company Industry Vertical – Specialty Packaging Competitive Strengths: Beautiful product, great designs, classy printing, handling of innovative and difficult package design and the ability to fold and glue the complex blanks Specialized in innovative packaging solutions along with full service from design to final delivery They also work closely with customers to develop the design as per their need Manufactures customized packaging for industrial customers
Current state (point of Departure) of Bayonne Packaging
X
Computerized Scheduling system not being followed
X
No maintenance schedule being done
X
Two extra days at each work center
X
The company does not have a method of determining the priority of orders
X
Family member Neil Rand running expedites and not caring about the computer scheduling system
Problem Statement – Delivery, Quality leading to Net Loss
51%
of the orders are late for Oct’11
1.5 %
Scrap and customer rejects are very high, eliminating profitability
7.2
incurred a loss in October 2011 for the first time in past ten years
Financial Analysis Customer Rejections 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%
1.50% 0.50% customer rejections
-1.00% Oct-09
Oct-11
Financial Analysis Cost Of Goods Sold & Cost Of Shipped Material 100.00%
90.70%
90.00% 80.00%
72.11%
70.00%
64.90%
60.00%
55.30%
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Oct-09
Oct-11
This has happened because the company has reduced its profit margin in order to increase its sales volume
Quantifying Operations & Supply Chain Performance Percentage of full (i.e. not partial) deliveries that is on time per time DEPENDABILITY
period Average delay time of an order
QUALITY
SPEED
Down time per machine % of goods rejected by Quality Control and Customer % of goods with missing glue lines or excess glue No. of days for production The amount of time spent on set up times per order / per period No. of materials flowing through operations per period The average critical ratio The cumulative volumes in US dollars / The cumulative numbers of shipped
COST
orders The COGS per month as a percentage of net sales PBT – Profit before tax
FLEXIBILITY
No. of different orders that can be expedited No. of different packages possible to print Benchmarking
Capacity Utilization at various work Centers Total Hours Per Number of machine Machines
Combined Running times
Theoretical running times
Capacity Utilization per work center
Sl .No
Machine
1
Composition
255
1
255
347
73.49%
2
Jagenburg Sheeter
279
1
279
347
80.40%
3
Heidelberg Press
348
2
696
694
100.29%
4
Bobst Die-Cut
272
2
544
694
78.39%
5
Int. Roy / Queen F& G
156
3
468
1041
44.96%
6
Int. Staude F&G
179
4
716
1388
51.59%
7
Int. 3A window/ patch
145
2
290
694
41.79%
Heildeberg press is the bottleneck with capacity utilization of 100.29%
umber of working hours in October'11 is 347 hours
Capacity in pieces of the Die-cut center in three cases Order size (pieces)
30,00 0
Order size (pieces)
30,00 0
Time per sheet
0.007 5
Time per sheet
0.007 5
Time per sheet (1 sheet = 3 piece)
0.002 5
Time per sheet (1 sheet = 3 piece)
0.002 5
gang 2 orders in a batch, number of pieces in batch
60,00 0
Time to process order (30000 piece * Time per piece)
75 Minutes
Set up time 2,5 hrs
150 Minutes
Total minutes per order
225 Minutes
15 hours per day is All orders are ganged Total capacity of Die-cut center
900 Minutes
Total capacity of Die-cut center in Time per sheet pieces Time per sheet (1 sheet = 3 piece)
Time to process order (60000 piece * Time per piece)
150 Minutes
Set up time 2,5 hrs
150 Minutes
Total minutes per batch
300 Minutes
15 hours per day is
900 Minutes
Total capacity of Die-cut center
4 Orders
Total capacity of Die-cut center in orders
6 Orders
4 Orders 0.007 5
120,000 Pieces
0.002 5
Total minutes per day
900 Minutes
Minutes required for one required set up
150 Minutes
Orders in the Royal / Queens work center Number or partialed orders Royal Queen
Assumptions And Implicit Findings 40
Orders
77
Orders
231
Hours
3
Hours
Number of orders on Royal Queen total Total set up time Royal Queen in October Setup time per order
CASE - 1
CASE - 2
40 orders require 40 set ups (no partials)
40 orders require 80 set ups (no partials)
Total number of set ups 40 + 37
77
Setups
Total number of set ups 80 + 37
117
Setups
Time per set up
3
Hours
Time per set up
3
Hours
Total set up time
231
Hours
Total set up time
351
Hours
Total number of working hours for three machines (347 * 3)
1041
Hours
1041
Hours
Time left for folding and gluing (1041 - 231)
810
Hours
Total number of working hours for three machines (347 * 3) Time left for folding and gluing (1041 - 351)
690
Hours
Time required for F&G of one piece
0.0023
Minute s
Time required for F&G of one piece
0.0023
Minutes
Number of pieces to be folded and glued
21,130, 435
Pieces
Number of pieces to be folded and glued
18,000,0 00
Pieces
Order size to the Royal / Queen and Staude work centers Number of Machines
Set up per Machine
Total set up Time
Speed per machine (minute/piece)
Speed per work center (minute/piece)
Royal / Queen
3
180
540
0.0023
0.00077
Staude
4
40
160
0.015
0.00375
Work center
Difference in setup time
380 minutes
in 380 minutes, Staude center can process
101,333 pieces After both setups; the production breakeven point can be calculated as : x is minutes of both machines in process Staude Royal/Queen 101333 + x * 1/0.00375 x*1/0.00077 x= 98 minutes Breakeven point in time is 98 minutes after Royal/Queen's setup in 98 minutes, Royal/Queen can process 98/0.00077 pieces. Breakeven point in pieces is : 127.506 piece
Conclusion
380 minutes
98
set up time needed to set up the same order on Royal Queen, the Staude can produce 101.333 pieces
Will take Royal/Queen to catch up after both machines are operational
minutes
127.506
Above orders should be routed to the Staude
pieces
Recommendations Focused on Effectiveness and Efficiency SHORT TERM (0–3 MONTHS)
Increase capacity by allowing for overtime Daily meetings Prioritizing orders (e.g. red flags for rush orders) and weigh the consequences of rush orders for the remaining orders, therewith optimizing the number of rush orders Increase / improve maintenance on machines in order to increase quality
MID TERM (3–9 MONTHS)
Manage variability better by managing of demand e.g. introducing price reductions for bulk orders Increase capacity by widening the bottle neck (e.g. extra shift on the Heidelberg press) Introduce pre-Work Order Jacket – a report that is sent to other departments when the prior department starts working on and order. This way, the later department knows what orders are on the way in couple of days.
LONG TERM (9+ MONTHS)
Increase capacity by investing in additional equipment Introduce a companywide ERP system in order to schedule production in reliable, achievable way that is adhered to by all departments (including sales). This should result in fewer rush orders, fewer partial orders and less unnecessary set up time.
THANKS