Case Study 1: Lew-Mark Baking Company
The Lew-Mark Baking Company is located in a small town in western New York State.The bakery is run by two brothers. Lew and Mark, who formed the company after theypurchased an Archway Cookie franchise. With exclusive rights in New York and New Jersey,it is the largest Archway franchise. The company employs fewer than 200 people, mainly bluecollar workers, and the atmosphere is informal.
The company’s only product is soft cookies, of which it makes over 50 varieties. Larger companies, such as Nabisco, Sunshine, and Keebler, have traditionally produced biscuit cookies, in which most of the water has been baked out, resulting in crisp cookies. Archway cookies have no additives or preservatives. The high quality of the cookies has enabled the company to develop a strong market niche for its product.
The cookies are sold in convenience stores and supermarkets throughout New York and New Jersey. Archway markets its cookies as “good food” no additives or preservatives and this appeals to a health-conscious segment of the market. Many customers are over 45 years of age, and prefer a cookie that is soft and not too sweet. Parents with young children also buy the cookies.
The Production Process
The company has two continuous band ovens that it uses to bake the cookies. The production process is called a batch processing system. It begins as soon as management gets orders from distributors. These orders are used to schedule production. At the start of each shift, a list of the cookies to be made that day is delivered to the person in charge of mixing. That person checks a master list, which indicates the ingredients needed for each type of cookie, and enters that information into the computer. The computer then determines the amount of each ingredient needed, according to the quantity of cookies ordered, and relays that information to storage silos located outside the plant where the main ingredients (flour, sugar, and cake flour) are stored. The ingredients are automatically sent to giant mixing machines where the ingredients are combined with proper amounts of eggs, water, and flavorings. After the ingredients have been mixed, the batter is poured into a cutting machine where it is cut into individual cookies. The cookies are then dropped onto a conveyor belt and transported through one of two ovens. Filled cookies, such as apple, date, and raspberry, require an additional step for filling and folding. The nonfilled cookies are cut on a diagonal rather than round. The diagonal-cut cookies require less space than straight-cut cookies, and the result is a higher level of productivity. In addition, the company recently increased the length of each oven by 25 feet, which also increased the rate of production. As the cookies emerge from the ovens, they are fed onto spiral cooling racks 20 feet high and 3 feet wide. As the cookies come off the cooling racks, workers place the cookies into boxes manually, removing any broken or deformed cookies in the process. The boxes are then wrapped, sealed, and labeled automatically.
Most cookies are loaded immediately onto trucks and shipped to distributors. A small percentage is stored temporarily in the company’s warehouse, but they must be shipped shortly because of their limited shelf life. Other inventory includes individual cookie boxes, shipping boxes, labels, and cellophane for wrapping. Labels are reordered frequently, in small batches, because FDA label requirements are subject to change, and the company does not want to get stuck with labels it can’t use. The bulk silos are refilled two or three times a week, depending on how quickly supplies are used. Cookies are baked in a sequence that minimizes downtime for cleaning. For instance, lightcolored cookies (e.g., chocolate chip) are baked before dark-colored cookies (e.g., fudge), and oatmeal cookies are baked before oatmeal raisin...
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