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

Computerized Scheduling system not being followed

No maintenance schedule being done

Two extra days at each work center

The company does not have a method of determining the priority of orders

Family member Neil Rand running expedites and not caring about the computer
scheduling system

Problem Statement Delivery, Quality leading to Net Loss

51%

of the orders are late

for Oct11

1.5
%

Scrap and customer

rejects are very high,
eliminating profitability

7.2

incurred a loss in
October 2011 for the
first time in past ten
years

Financial Analysis
Customer Rejections
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

1.50%
0.50%
customer rejections

-1.00%
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%
40.00%
30.00%
20.00%
10.00%
0.00%
Oct-09

Oct-11

This has happened

because the
company has
reduced its profit
margin in order to
increase its sales
volume

Quantifying Operations & Supply Chain

Performance
Percentage of full (i.e. not partial) deliveries that is on time per time
DEPENDABILITY

period
Average delay time of an order

QUALITY

SPEED

Down time per machine

% of goods rejected by Quality Control and Customer
% 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
No. of materials flowing through operations per period
The average critical ratio
The cumulative volumes in US dollars / The cumulative numbers of shipped

COST

orders
The COGS per month as a percentage of net sales
PBT Profit before tax

FLEXIBILITY

No. of different orders that can be expedited

No. of different packages possible to print
Benchmarking

Capacity Utilization at various work Centers

Total Hours Per Number of
machine
Machines

Combined
Running
times

Theoretical
running
times

Capacity
Utilization per
work center

Sl .No

Machine

Composition

255

255

347

73.49%

Jagenburg Sheeter

279

279

347

80.40%

Heidelberg Press

348

696

694

100.29%

Bobst Die-Cut

272

544

694

78.39%

Int. Roy / Queen F& G

156

468

1041

44.96%

Int. Staude F&G

179

716

1388

51.59%

Int. 3A window/ patch

145

290

694

41.79%

Heildeberg press is the bottleneck with capacity utilization of 100.29%

umber of working hours in October'11 is 347 hours

Capacity in pieces of the Die-cut center in

three cases
Order size (pieces)

30,00
0

Order size (pieces)

30,00
0

Time per sheet

0.007
5

Time per sheet

0.007
5

Time per sheet (1 sheet = 3 piece)

0.002
5

Time per sheet (1 sheet = 3 piece)

0.002
5

gang 2 orders in a batch, number of pieces

in batch

60,00
0

Time to process order (30000 piece * Time

per piece)

75 Minutes

Set up time 2,5 hrs

150 Minutes

Total minutes per order

225 Minutes

15 hours per day is

All orders are ganged
Total capacity of Die-cut center

900 Minutes

Total capacity of Die-cut center in

Time
per sheet
pieces
Time per sheet (1 sheet = 3 piece)

Time to process order (60000 piece * Time

per piece)

150 Minutes

Set up time 2,5 hrs

150 Minutes

Total minutes per batch

300 Minutes

15 hours per day is

900 Minutes

Total capacity of Die-cut center

4 Orders

Total capacity of Die-cut center in orders

6 Orders

4 Orders
0.007
5

120,000
Pieces

0.002
5

Total minutes per day

900 Minutes

Minutes required for one required set up

150 Minutes

Orders in the Royal / Queens work center

Number or partialed orders Royal Queen

Assumptions And Implicit

Findings
40

Orders

77

Orders

231

Hours

Hours

Number of orders on Royal Queen total

Total set up time Royal Queen in October
Setup time per order

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

Hours

Time per set up

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

1041

Hours

Time left for folding and gluing (1041 - 231)

810

Hours

Total number of working hours for three

machines (347 * 3)
Time left for folding and gluing (1041 - 351)

690

Hours

Time required for F&G of one piece

0.0023

Minute
s

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

18,000,0
00

Pieces

Order size to the Royal / Queen and Staude work

centers
Number of
Machines

Set up per
Machine

Total set up
Time

Speed per machine

(minute/piece)

Speed per work

center
(minute/piece)

Royal / Queen

180

540

0.0023

0.00077

Staude

40

160

0.015

0.00375

Work center

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

98

set up time needed to set up the

same order on Royal Queen, the
Staude can produce 101.333
pieces

Will take Royal/Queen to catch up

after both machines are operational

minutes

127.506

Above orders should be routed to the

Staude

pieces

Recommendations Focused on Effectiveness and

Efficiency
SHORT TERM
(03 MONTHS)

Increase capacity by
allowing for overtime
Daily meetings
Prioritizing orders (e.g. red
flags for rush orders) and
weigh the consequences of
rush orders for the remaining
orders, therewith optimizing
the number of rush orders
Increase / improve
maintenance on machines
in order to increase quality

MID TERM
(39 MONTHS)

Manage variability better by

managing of demand e.g.
introducing price reductions for
bulk orders
Increase capacity by widening
the bottle neck (e.g. extra shift on
the Heidelberg press)
Introduce pre-Work Order
Jacket a report that is sent to
other departments when the prior
department starts working on and
order. This way, the later
department knows what orders
are on the way in couple of days.

LONG TERM
(9+ MONTHS)

Increase capacity by
investing in additional
equipment
Introduce a companywide
ERP system in order to
schedule production in
reliable, achievable way
that is adhered to by all
departments (including
sales). This should result in
fewer rush orders, fewer
partial orders and less
unnecessary set up time.

THANKS