Scharffen Berger
Executive Summary
For “premium” chocolate maker Scharffen Berger (SB), quality is king. Their distinct process creates a “taste experience” second to none, an unparalleled quality that must be maintained despite apparent capacity issues. To satisfy the rising market’s demand for its product, it must address three primary issues related to capacity: bottlenecks, expansion, and economies of scale. The current bottleneck in the Conche (output=1,344 kg. /day) will be remedied with the installation of the ball mill, however other bottlenecks will be created starting at the Melangeur. A cost-benefit analysis has determined a need for a second melangeur as well as added Roasting time from 8 hours/day to 12-13 hours/day to keep up with the demand. Other costs will include additional labor for operations as well as machine maintenance due to increased wear.
Regarding expansion, SB should consider outsourcing the vast majority of the tempering and molding processes. Not only will this help increase capacity, but it could also eliminate redundancy. Currently, 65% of this process is handled by co-packers without any loss of quality, according to COO Jim Harris. In order to deal with the redundancy of re-tempering and re-molding the chocolate, a cost benefit analysis of transporting the liquid chocolate to co-packers for tempering and molding is necessary.
Through economies of scale, SB should negotiate for short-term contracts with their co-packers, which would give them process management capacity flexibility. With any unforeseen decreased demand, SB could reduce capacity by bringing the co-packer processes back in-house. We feel attention put into these key areas will help keep SB on top of the “premium” chocolate market. Evidence to support these arguments follows.
Brief Summary of Key Problems and Issues
SB had reached a point of strategic inflection. By 2005, the premium chocolate segment of the chocolate industry had a projected annual growth rate of
For “premium” chocolate maker Scharffen Berger (SB), quality is king. Their distinct process creates a “taste experience” second to none, an unparalleled quality that must be maintained despite apparent capacity issues. To satisfy the rising market’s demand for its product, it must address three primary issues related to capacity: bottlenecks, expansion, and economies of scale. The current bottleneck in the Conche (output=1,344 kg. /day) will be remedied with the installation of the ball mill, however other bottlenecks will be created starting at the Melangeur. A cost-benefit analysis has determined a need for a second melangeur as well as added Roasting time from 8 hours/day to 12-13 hours/day to keep up with the demand. Other costs will include additional labor for operations as well as machine maintenance due to increased wear.
Regarding expansion, SB should consider outsourcing the vast majority of the tempering and molding processes. Not only will this help increase capacity, but it could also eliminate redundancy. Currently, 65% of this process is handled by co-packers without any loss of quality, according to COO Jim Harris. In order to deal with the redundancy of re-tempering and re-molding the chocolate, a cost benefit analysis of transporting the liquid chocolate to co-packers for tempering and molding is necessary.
Through economies of scale, SB should negotiate for short-term contracts with their co-packers, which would give them process management capacity flexibility. With any unforeseen decreased demand, SB could reduce capacity by bringing the co-packer processes back in-house. We feel attention put into these key areas will help keep SB on top of the “premium” chocolate market. Evidence to support these arguments follows.
Brief Summary of Key Problems and Issues
SB had reached a point of strategic inflection. By 2005, the premium chocolate segment of the chocolate industry had a projected annual growth rate of