Business Case: Bayonne Packaging

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Machine

N. Of Machines

Total Hours/ Machine

Work Hours Net

Capacity Utilization

Composition (plates)

1

255

347

73.5%

Jagenburg Sheeter (Sheets)

1

279

347

80.4%

Heidelberg press (sheets)

2

348

347

100.3%

Bobst die-cut (Sheets)

2

272

347

78.4%

Int. Royal/ Queen F&G (Pieces)

3

156

347

45.0%

Int. Staude F&G (pieces)

4

179

347

51.6%

Int. 3A window/ patch (pieces)

2

145

347

41.8%

Most of the machinery have been under utilize, that means the company has an opportunity in utilizing their maximum capacity. However, the results also reinforce the queuing problem on the die area with the 4- and 6- color Heidelberg, both are operating on their maximum capacity provoking a bottleneck on the operation process.

Explanation of Bayonne’s performance problems

Bayonne problems have affect its performance in costs, quality and delivery aspects. In this section are describe the performance indicators and their causes:

- 51% of their orders are late.

- Working in silos. Bayonne is not communicating between department and even inside of them. Each area if focusing in their own interests and unaligned objectives. They are not talking between them and this is traducing on delays and unsatisfied customers. It is evident that the sales and operating area are no working together, the sales department is just focusing in selling volume without taking in to account the operation cost and capacities. They are doing what they can to sale not even caring that much on margins, we can say they are over promising thing just as delivery dates just to achieve high sales indicators. In the other side operation is not talking clear to the sales department of the consequences this is having on the area and the company.

- Ganging and juggling orders due to the standard set up times and rush orders. The operation area has a weakness managing the variation on orders and predicting the costumer’s behavior. This causes a retention or queuing of orders for one or two weeks. This specially occurs in the die-cut area. Usually when orders get out this section they are one or two day away from the due date, and in some occasions they already come out late.

- Ineffective Schedule system. Bayonne computerized scheduling system is not being used because of the Capacity Constraint Resource (CCR). The schedules are not effective because they are missing information and are not well feed. The system works by a critical ratio that will help relief the inability to deal with orders variation and try to get thing done in order of importance. But leaders instead of using it as a helpful tool decide to do what they think is correct, going back to point one, working in silos.

- Lack of capacity to manage the variability on the delivery dates. Bayonne needs a system that help them predict of forecast its customer behavior (CRM) and one that helps them prioritize and organize orders, such as the scheduling system they are not using. They also need to improve the communication with the sales department in order to avoid over promising.

- Bottlenecks. Without a doubt there is a bottleneck in Bayonne’s production process, and this is in the die-cut area that ques orders from one to 2 weeks.

- 11.8 % of scrap

- Ineffective quality control. They have an insufficient quality strategy or plan. They are leaving different aspects outside their scope, limiting their process in picking two samples of the production line and final products every two hours, but this leaves a gap which has increased the scarp indicator.

- inexistence programs for preventive or predictive maintenance. This can inhibit the machines to operate on their 100% capacity and even can cause deterioration, leaving a bigger margin for failures or mistake such as the fold and glue. The broken machinery stops and delays the production process that is why the importance of considering a preventing and control maintenance.

- Ganging and juggling orders due to the standard set up times and rush orders. This delays in production due to the ganging, affect the rest of the areas, such as the die – cut area affects the fold and glue area. This rushing in time delivering does not leaves the adequate time for a correct setup and process of the machinery, what causes more mistakes on the production.

- 1.5% of costumers rejects.

- The causes of the low performance of this indicator are the same as the scrap. Just making more emphasizes on the Ineffective quality control because the main purpose of this area is to assure that a final product will satisfy the requirement quality parameters. The actual quality system is permitting defective product go out on the market.

- -7.2 Net profit before tax

- This is the consequence or effect of all the other causes. Improving the mentioned situations Bayonne must better its performance indicator that will be reflected into the