National Cranberry Cooperative Harvard Case Solution & Analysis

National Cranberry Cooperative The Case Solution  

Question No 2

1. What needs to be changed to achieve the Goal?
   1. How do you apply a Cause-Effect-Cause thought process to identify the constraint?
   2. Where have the compromises been made over time to “Fix” the problem?

• How does the word/idea of “Cost” used in this case? It is used in a manner that leads to a solution.

To reduce the waiting time and overtime cost the plant operations should start at 7:00 AM rather than 11:00 AM.

On peak days there would be 18000 bbl. and among that 70% are wet berries (12600). The processing average rate is 600 bbl. /hour. So it would complete in 21 hours (12600/600 =21). Overtime is 13 hours. Even if the plant operations start at 07:00 AM the overtime is 13 hours. Which is less than 21 hours. (See Exhibit 1)

The installation of the berry grader would increase the Cranberry Cooperative’s income which is the goal of the company, while it would negatively impact the income of the farmers.

In current scenario, the farmers are being overpaid by the company at $112,500 per year. It is because of inaccuracy in grading of berries i.e. the grading should actually be 2B rather than 3. The installation of the berry grader would increase the Cranberry Cooperative’s income, while it would negatively impact the income of the farmers. Within the current operations, a premium amount of 50 cents per barrel over the 450,000 barrel of berries. The premium is paid even the berries are not of the number 3 grading.

The analysis shows that the berry grader installation would result in a huge saving, but the being a cooperative organization should also be considered. Though the installation of light grading system would bring additional profit margins for Plant 1, but it would also lead towards an approximate loss to the whole Cooperative in terms of money, as the money will not be given to farmers, instead it will be paid to the hired employee. Additionally, the status quo can’t be maintained, as the proposed solution would be based upon the unfair distribution of benefits, i.e. the low quality crop will go to the farmers.

The scenario indicates that the company is paying more premium on 225000, which should be approximately on $112,500. The installation of a berry grader would cost the company about $10,000 along with the cost of an additional full-time skilled operating person. However, the incurred would ultimately bring increased profitability for Cranberry Cooperative Company. From the farmers’ perspective, they would still prefer the company to grade the berries on the basis of color (through pictures), as the farmers are granted a premium of 50 cents, over almost half of the grading 3 berries, which must be graded as 2B. (See Exhibit 2)

The alternative solution for resolving the issue should be maintaining the shade cards’ variety and having a strict control over the manual grading process, so that they can be accurately graded basis on the basis of their quality, color and key factors. In addition to this, an additional category should be introduced between the 3 and 2A categories, the premium of which should be lesser than premium being offered at 3 graded berries. Lastly, the additional costs of berry grader installation and farmers resentment must be considered before initiating this step.

Question No 3

1. What changes should be made to achieve the Goal?
   1. How do you apply the 5 focusing steps to this case?

• During peak days; the plant’s operations should start at 7:00 AM instead of 11:00 AM, and the employees should work for eight hours shift
• This RP1 will reduce the blockage in the process and will decrease the overtime cost
• The truck waiting time will reduce from 511 hours to 127 hours.
• The berries’ time spread would be 12 hours, starting from 7:00 AM.

• Installation of berry grader for light grading system would bring additional profit margins for Plant 1.

Five Focusing Steps

In this case, we have observed that drying unit is the bottleneck of this case, so to address that we have applied five forcing steps of theory of constraints as follows.

The Constraint

To achieve your goal, must know the constraint of bottle neck which in this case is the drying-unit.

Exploit the Constraint

In this step it is recognized that the capacity of the drying unit is 600 bbl. /h and the required is 1050 bbl. / hr. and it is more than it.

Subordinate Everything Else to the Constraint

In this step, the ins and outs of constraint means the drying process is only the constraint or any other processes also not give their best. From the case it is recognized that At 7:00 am the trucks come for loading and start loading so, the total capacity of the bins is 3*400+8*250= 3200 bbl. Trucks start operations after waiting for 3 hours.

Elevate the Constraint

Elevate the constraint, as we know that on peak days there would be 18000 bbl. and among that 70% are wet berries (12600). The processing average rate is 600 bbl. /hour. So it would complete in 21 hours (12600/600 =21). Overtime is 13 hours. So to reduce the waiting time and overtime cost the plant operations should start at 7:00 AM rather than 11:00 AM.

Avoid Inertia and Repeat the Process

In this step avoid the inertia, it would be checked that although the constraint could be addressed by starting the plant operation at 7:00 but what if it the machines have not enough capacity to perform the plant operations effectively, to avoid that situation the company would have to acquire more machines.

Question No 4

1. How do you induce change in this case?

On peak days there would be 18000 bbl. and among that 70% are wet berries (12600). The processing average rate is 600 bbl. /hour. So it would complete in 21 hours (12600/600 =21). Overtime is 13 hours. Even if the plant operations start at 07:00 AM the overtime is 13 hours. Which is less than 21 hours. (See Exhibit 1)............................

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