Bayonne Packaging Inc. Case Analysis
BAYONNE PACKAGING, INC. CASE 1 OPERATIONS MANAGEMENT teached by Manuel Baganha and Virginia Ulfig
GROUP 18 DAVID STIEHL 10217 GONÇALO CORREIA 10613 RUI SOROMENHO 10308 TIAGO SILVA 11006
This case is based only on data available on “Bayonne Packaging, Inc.” by Roy D. Shapiro and Paul E. Morrison
Case 1
BAYONNE PACKAGING INC.
Bayonne is a “specialty packaging” paper converter that produces customized, complex design packaging used by industrial companies in promotional materials, software, luxury beverages, gift food and candy. The company is located in New Jersey, USA and is worth 43 million dollars. In spite the company’s sales growth in the last few years, it is now struggling with lower profit margins and it even had a loss in October 2011, the first since 2001, due to performance complications. This loss is a result of three main related aspects: quality, delivery and cost. In order to understand the sources of these problems this report will analyze October 2011, the worst month of the 2011 fiscal year, in order to provide insights about what can be done to turn around the situation. Currently, the company’s capacity isn’t matching its demand requirements. Heidelberg presses are using 100% capacity (consult Exhibit 1 to get every activity capacity utilization), making Printing activity the bottleneck. Bottleneck slows down the subsequent activities because it can only produce 9.326.913 pieces per month, limiting the inputs available for the Die-Cut center. As the company faces an increasing demand and an expansion of its business the capacity constraint is a challenge. It’s already difficult for Bayonne to fulfill all the orders it receives. In order to improve the company’ situation we need, in the short-term, to be more efficient using our current resources and, in the midterm, to increase the productive capacity to allow growth. Efficiency can be attained by improving
GROUP 18 DAVID STIEHL 10217 GONÇALO CORREIA 10613 RUI SOROMENHO 10308 TIAGO SILVA 11006
This case is based only on data available on “Bayonne Packaging, Inc.” by Roy D. Shapiro and Paul E. Morrison
Case 1
BAYONNE PACKAGING INC.
Bayonne is a “specialty packaging” paper converter that produces customized, complex design packaging used by industrial companies in promotional materials, software, luxury beverages, gift food and candy. The company is located in New Jersey, USA and is worth 43 million dollars. In spite the company’s sales growth in the last few years, it is now struggling with lower profit margins and it even had a loss in October 2011, the first since 2001, due to performance complications. This loss is a result of three main related aspects: quality, delivery and cost. In order to understand the sources of these problems this report will analyze October 2011, the worst month of the 2011 fiscal year, in order to provide insights about what can be done to turn around the situation. Currently, the company’s capacity isn’t matching its demand requirements. Heidelberg presses are using 100% capacity (consult Exhibit 1 to get every activity capacity utilization), making Printing activity the bottleneck. Bottleneck slows down the subsequent activities because it can only produce 9.326.913 pieces per month, limiting the inputs available for the Die-Cut center. As the company faces an increasing demand and an expansion of its business the capacity constraint is a challenge. It’s already difficult for Bayonne to fulfill all the orders it receives. In order to improve the company’ situation we need, in the short-term, to be more efficient using our current resources and, in the midterm, to increase the productive capacity to allow growth. Efficiency can be attained by improving