Bayonne Packaging Inc Harvard Case Solution & Analysis

Problem Diagnosis

            Bayonne Packaging Incorporation is basically a paper converter and printer company. The main source of revenue for the company is to sell the promotional materials to the industrial customers, candy, gift food, luxury beverages and software to the industrial customers. The company designs such packaging solutions and then also it delivers to its customers. The packaging is innovative packaging for the industrial customers which is designed according to the requirements of the customers. Despite the fact that the revenues for the company have been increasing over the years, however, the profitability record that had been maintained by the management of the company had been broken and the company had reported the first loss after a period of 10 years. The late deliveries, quality problems and the cost overruns have now to be evaluated and all the operational problems need to be examined by the new Vice president of the company who has been recently hired. All the key departments of the company including the sales and the quality control department of the company have been visited by him in order to investigate all the operational issues in the current production process of the company. The yield analysis, capacity utilization, bottleneck and break even analysis will have to be performed in order to evaluate all the work centers and provide recommendations for the operational problems currently faced by the management of Bayonne Packaging Incorporation.

Analysis

            The in-depth analysis of the operational problems of Bayonne Packaging Incorporation has been performed. All the current measures of the company have been evaluated and the performance of the work centers have been performed by using four key tools that are capacity utilization, breakeven analysis, yield analysis and identification of the bottleneck.

Current Performance Measures of Company

            There are a range of performance measures that are used by the management of the company in order to evaluate the performance of the company. The key performance measures of the company are dependability, quality, speed, cost and flexibility. Regarding the dependability of the Bayonne Packaging Incorporation the company has not been performing well. If we look at the performance of the company two years ago 5% of late orders was considered as a bad performance however, the current late order percentage stands at about 20%. This is not viewed positively by the customers and they want to receive their orders as soon as possible.

            Regarding the quality of the company’s products, the gluing operation is proving to be a major problem for the company. Around 6% of the total products of the company are found to be defective by the Quality Assurance department of the company. Also, because of the glue problems about 1% of the goods were rejected by the customers. Some of the packages also required additional parts along with the original package and as a result they were shipped incomplete.

            If the speed of the Bayonne Packaging Incorporation’s products is considered, then the company is not doing good regarding its speed. All the operations of the company are operating at their full capacity and it could also be seen that the bottleneck has been identified which is Heidelberg Press. Increasing queues could occur if any variability is observed in the orders of the customers. Therefore, when this happens the sales department of the company has to reject some orders at the expense of the most urgent and large orders. Sometimes the expediting of the orders also takes place which increases the setup time for the main production machines. These all factors cause the speed to be slowed down of the whole process.

            Looking at the cost performance measure then it could be seen in exhibit 1 that the management of the company has incurred a net loss of -7.2%. This is because the cost of goods sold for the company has increased significantly which have risen from 83% to 91% in just few months. Also, if we look at the flexibility measure of the company then this is the only measure which shows good performance of the company has the company has been able successful in entering the new markets such as the market for the corporate gifts and candies and has also been meeting the requirements of FDA............................

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