GroupO1 OPM1 Scharffen Berger

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It was founded in 1996 by Robert Steinberg and JohnScharffenberger.

By 2000, they expanded their business. They acquired a27,000 sq. ft. warehouse where the production and retailinghappened.

In 2003, Jim Harris was recruited as the Chief Operating

Officer and was made to handle company’s growth.

As of May 2005, they were around 60 employees with 24 inproduction area, 18 in retail stores and another 18 inadministration.

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There are two categories in chocolate industry: mass market& premium category. The company falls in the latter of thetwo.

It was competing in a market of $1.2 bn. where in theproducts were priced in a range of $10 to $100 per pound.

The premium industry projected a growth of 15-20% between

2000 – 2010

Being at the higher end in premium category, its majorcompetitors were brands such as Godiva, Ghirardelli/Lindtand so on.

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The primary products are: unsweetened(99% cocoa, by weight),extra dark(82%), bittersweet(70%), semi-sweet(62%),mocha(62%), mint(62%), rubby bar(62%) and milkchocolate(41%).

The derivative products are: chocolate sauce, cocoa powderand chocolate-covered figs.

Sales of these products grew from $1.1 mn in 1999 to $10 mn in2004.

The products were sold through their five retail stores, distributionto retail stores and their website.

Price of their products stand as:

Weight Price($)

5 gram 0.50

1 oz. 2.00

3 oz. 4.00

10 oz. 10.004



i

nput

Bean Cleaner

time = 15mins

Capacity = 200kg

Bins

96 Kg100 kg

Of 100 kg

Capacity = 250kg

Roaster

time = 75mins

rack

Cooling = 15mins

Winnower

Capacity = 450kg

time = 7.5mins

Bins

Melangeur

Capacity = 115kg

time = 75mins

Conche1

conche2

Capacity = 1400kg

time = 50mins

rack

TemperingMoldingPackaging

185 Kg

Of 250 kg

Capacity = 140kg Capacity = 140kg

time = 20mins time = 60mins

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Process Output in

onecycle(kg)

Time taken

(minutes)

8-Hour shifts End of day

production(kg per day)

BeanCleaner

96 15 1 3072

Roaster 250 75 1 1600Winnower 185 15 1 5920

Melangeur 115 75 2 1472

Conches (2in number)

1400 1500(avg. ofboth)

3 1344

Temper 140 60 2 2240

Mold 140 20 2 6720

End of day production = (o/p in one cycle)/(time taken)*60*shifts

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Table 1



A system is no stronger than its weakest link.

Dr. Eliyahu M. Goldratt, in his book - The Goal, had mentioned thatthe bottlenecks, no matter where they occur, limit the production

capacity of your system. The success of the entire factory lies onthat choker.

In the above scenario, as tabulated, we found that the conches arethe bottle necks whose output capacity is limiting the entire plant’s

capacity to only 40,000 (~1344*30) per month. This neededimprovement.

Jim Harris, came forward with a plan to tackle this bottleneck byintroducing Ball Mill. Let us see how.

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Jim Harris expected the Ball Mill to reduce the refining timeto15 hours as opposed to some odd 50 hours taken by theconches.

Effect on output(in kg per day) – › Output in one cycle(kg) = 1400

› Time taken in minutes = 450

› Total hours deployed = 8*(3shifts) = 24 hours

› End of day production = (1400/450)*60*24 = 4480

* We observe that the refining process which, initially, was a bottleneck at1344 kg per day now produces 4480 kg per day. Definitely not thebottleneck anymore!! So who is new the bottleneck?

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Referring to ‘Table 1’, we find that the Melangeur is now anew bottleneck as it processes the least in a given day as itwas processing just higher than the bottleneck but not ashigh as others.

End of month production of the mixer = 1472*(30)= 44160 kg in a month

Good News. The net production capacity finally increased to44,160 kg per month from 40,000 kg per month. Registering anincrease of 10%!!

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Goldratt’s idea of maximizing capacity was by eliminatingthe bottlenecks. All of them.

Once the bottleneck is cleared, we can now increase the

shifts of other processes.

We work on the similar lines. Invest $50,000 refurbishing theMelangeur and also getting a new one so the cycle time for115 kg now reduces to 37.5 min. from 75 min. because there

are 2 mixers now and also their 8 hour shifts are increased to 3 in number.

End of day production of Melangeur =(115)/(37.5)*24*604416 kg per day

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Therefore, we now a new bottleneck, Temper End of the month production = 2240*(30)

= 67200 kg per month

We see a substantial increase of around 68% from theprevious scenario where in we were not using any Ball Milland no refurbishing of Melangeur was done.

This is directly in line with what Goldratt had proposed thatmaximum capacity production can be achieved bytargeting and eliminating the bottleneck one after the other.

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But the target to be achieved is around 150% by the start of2006 because their production is driven by demand in themarket.

Following on the previous lines of elimination of bottlenecksby increasing the shifts and machines we see that a growth incapacity is possible.

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Process Output inonecycle(kg)

Machinesinstalled

Timetaken(minutes)

8-Hourshifts

End ofdayproduction

(kg perday)

BeanCleaner

96 1 15 2 6144

Roaster 250 1 75 3 4800

Winnower 185 1 15 1 5920

Melangeur 115 2 37.5 3 4416

Ball Mill 1400 2 450(avg.of both)

3 4480

Temper 140 1 60 3 3360

Mold 140 1 20 2 6720



In the final process, the ultimate bottleneck turns out to beTemper whose production in kg in one day is 3,360 kg in aday.

End of month production = 3360*30 = 1,00,800 kg per month.

Hence, the percentage increase in production capacity= [(100800-40000)/40000]*100

= [60800/40000]*100= 152%

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