Scharffen Berger Chocolate Maker (A) Case Study Solution
Evaluation of Expansion Options
All the alternative solutions provided by the company have been evaluated before suggesting a way to consider.
It is difficult for the company to further expand its capacity without purchasing a new equipment. Therefore, the company is considering to purchase a customized ball mill to increase the production capacity. Ball mill would grind almost $1400 Kilograms in three hours, while conche was doing the same job in 40 to 60 hours. The drawback in ball mill is that it could only do grinding, and aeration would be done in conche. Aeration process would take 10 hours and the entire process would be completed in 13 to 15 hours instead of 40-60 hours. The company’s main concern is the product’s quality, which will not be affected by this alternative solution as the company has done various experiments to check the product’s quality. Ball mill would increase the production capacity by at least 75%. The company is considering to change its production process to maximize the capacity utilization up to 100%. According to the company’s analysis melanguer could become a bottleneck during the production process, therefore, the company is considering to purchase one more melanguer. Another option is to purchase or outsource the molding process. The purchase of the molding machine would be expensive and outsourcing would decrease the quality. The transportation of liquid chocolate would be expensive as well. Both the options will increase the expenses but one time investment would be a better option as outsourcing could decrease the product quality. Ball mill and melanguer would result in the lack of integration during the production process.
For a smooth transition of the process, bean cleaner is essential as it is a predecessor of all the activities i.e. none of the production process can be done without the bean cleaning process. However, the company usually keeps a stock of two weeks for beans, and this will be accounted for safety stock. Therefore, it can be concluded that the company would have to maintain the hygiene properly to keep the process on the track and to ensure the proper production.
Recommendation
The demand of chocolate is expected to grow by 50% in 2005 and later on by 150%, which the company is considering to achieve.The current production process is not capable enough to meet the excessive capacity production according to the demand. It is suggested to the company to take a look at the overall production process and opt for ball mill as it will decrease the grinding process from almost 60 hours to 15 hours. It would increase the production capacity by up to 75%. The company could face various threats by taking initiative in only one part of the production process. Therefore, other production stages would also require improvement.
After the installation of ball mill, there could be a bottleneck problem regarding melanguer. The old process of melanguer will not match the new capacity of the ball mill.Therefore, both of the processes could face lack of integration. In this situation, it is suggested to the company that it should purchase or upgrade the melanguer machine too. This expansion would allow the company to achieve the growing demand by up to 100%. To achieve the rapidly growing demand and to match the production capacity with it, the company has opted to use the proactive or reactive approach. The company has to revise the overall manufacturing process and upgrade the overall process to stay competent as well as to avoid the strategic threats. The company should follow the Business Process Reengineering to over come the threats and to respond fully to the changing environment in order to fulfill the excessive demands. The company can also sell its additional assets or processes to relax its cost structure by placing them with the most appropriate solutions in to maximize the revenue while minimizing the cost and threats.
In a nutshell, to increase the production capacity without affecting the quality of the products, the company should install a ball mill as it would decrease the production’s processing hours, but along with that the company should also purchase one more melanguer as it could be a bottleneck after the implementation of a ball mill. Ball mill would increase the production capacity by approximately 75%, but melanguer would increase the capacity up to 100%. The company could not go for outsourcing as it would be expensive and might decrease the quality of the product because of an inappropriate check and balance. Therefore, the company is suggested to purchase ball mill and melanguer.............
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