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
No maintenance schedule being done
X
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% 1.5% -7.2%
of the orders are late for Scrap and customer rejects incurred a loss in October
Oct’11 are very high, eliminating 2011 for the first time in
profitability past ten years
Financial Analysis
Customer Rejections
5.00%
4.00%
3.00%
2.00%
1.50%
1.00%
0.50%
0.00%
customer rejections
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% This has happened
because the company
40.00%
has reduced its profit
30.00% margin in order to
20.00% increase its sales volume
10.00%
0.00%
Oct-09 Oct-11
Quantifying Operations & Supply Chain Performance
Percentage of full (i.e. not partial) deliveries that is on time per time period
DEPENDABILITY Average delay time of an order
Down time per machine
% of goods rejected by Quality Control and Customer
QUALITY
% 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
SPEED No. of materials flowing through operations per period
The average critical ratio
The cumulative volumes in US dollars / The cumulative numbers of shipped orders
COST The COGS per month as a percentage of net sales
PBT – Profit before tax
No. of different orders that can be expedited
FLEXIBILITY No. of different packages possible to print
Benchmarking
Capacity Utilization at various work Centers
Total Hours Per Number of Combined Theoretical Capacity Utilization
Sl .No Machine
machine Machines Running times running times per work center
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%
Number of working hours in October'11 is 347 hours
Capacity in pieces of the Die-cut center in three cases
Order size (pieces) 30,000 Order size (pieces) 30,000
Time per sheet 0.0075
Time per sheet 0.0075
Time per sheet (1 sheet = 3 piece) 0.0025
Time to process order (30000 piece * Time per piece) 75 Minutes Time per sheet (1 sheet = 3 piece) 0.0025
Set up time 2,5 hrs 150 Minutes
Total minutes per order 225 Minutes gang 2 orders in a batch, number of pieces in batch 60,000
15 hours per day is 900 Minutes
Time to process order (60000 piece * Time per piece) 150 Minutes
Total capacity of Die-cut center 4 Orders
Total capacity of Die-cut center in pieces 120,000 Pieces Set up time 2,5 hrs 150 Minutes
All orders are ganged Total minutes per batch 300 Minutes
Time per sheet 0.0075
15 hours per day is 900 Minutes
Time per sheet (1 sheet = 3 piece) 0.0025
Total minutes per day 900 Minutes Total capacity of Die-cut center 4 Orders
Minutes required for one required set up 150 Minutes
Total capacity of Die-cut center in orders 6 Orders
Remaining available minutes for running orders 750 Minutes
Number of pieces possible per day 300,000 Pieces
Total capacity of Die-cut center in pieces 180,000 Pieces
Number of orders possible per day 10 Orders
Orders in the Royal / Queens work center
Assumptions And Implicit Findings
Number or partialed orders Royal Queen 40 Orders
Number of orders on Royal Queen total 77 Orders
Total set up time Royal Queen in October 231 Hours
Setup time per order 3 Hours
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 Total number of working hours for three machines (347 * 3) 1041 Hours
Time left for folding and gluing (1041 - 231) 810 Hours Time left for folding and gluing (1041 - 351) 690 Hours
Time required for F&G of one piece 0.0023 Minutes 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 18,000,000 Pieces
Order size to the Royal / Queen and Staude work centers
Number of Set up per Total set up Speed per machine Speed per work center
Work center
Machines Machine Time (minute/piece) (minute/piece)
Royal / Queen 3 180 540 0.0023 0.00077
Staude 4 40 160 0.015 0.00375
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
set up time needed to set up the same order
on Royal Queen, the Staude can produce
101.333 pieces
98
minutes
Will take Royal/Queen to catch up after both
machines are operational
127.506
pieces
Above orders should be routed to the Staude
Recommendations Focused on Effectiveness and Efficiency
SHORT TERM MID TERM LONG TERM
(0–3 MONTHS) (3–9 MONTHS) (9+ MONTHS)
Increase capacity by allowing for Manage variability better by managing of Increase capacity by investing in
overtime demand e.g. introducing price reductions additional equipment
for bulk orders
Daily meetings Introduce a companywide ERP
Increase capacity by widening the bottle system in order to schedule
Prioritizing orders (e.g. red flags for
rush orders) and weigh the neck (e.g. extra shift on the Heidelberg production in reliable, achievable
press) way that is adhered to by all
consequences of rush orders for the
departments (including sales). This
remaining orders, therewith Introduce pre-Work Order Jacket – a
should result in fewer rush orders,
optimizing the number of rush report that is sent to other departments
fewer partial orders and less
orders when the prior department starts working
unnecessary set up time.
on and order. This way, the later
Increase / improve maintenance on
department knows what orders are on the
machines in order to increase quality
way in couple of days.
THANKS
