Bayonne Packaging, Inc. Harvard Case Solution & Analysis

Bayonne Packaging, Inc.Case Solution

Introduction

Milliken joined Bayonne as vice president operation. He was BS alumnus of Rensselaer Polytechnic Institute. He was much aware about the manufacturing process in order to deliver customized designed products. Due to his 5 years working experience as an Operations manager he got selected as New VP Operations of Bayonne. Bayonne was operating since 48 years and currently it worth $43 Million.  The industry in which this company was operating was facing some troubles because of emergence of new trends and styles. Bayonne primary product line was Customized packaging solutions for industrial customers which were ultimately used as promotional material mainly etc.

Certain obstacles are being faced by this company at both Industry level and company level. From 1982 to 2001 company grew at CAGR of 6.31%. Indeed in late nineties company faced some critical problems like dotcom bubble burst and change in advertising method. Initially software was sold in CDs so printing business got new customers in shape of CD manufacturers but now soft wares are sold over the internet. Now coming towards the problems which company is facing is cost, quality, and delivery. Bayonne visited each department and asked them about their problems. Head/manager of each department conveyed their problem. Schuler who was the head of quality department, told him that problems were occurring due to inconsistency and non-reliability of glue. Wascov, VP sales told him that major problem is concerned with expensive promotions and not fulfilment of promises. During his visit, he went to composition, sheet, and print and die cut department. After analyzing each department he was now supposed to present few recommendations in front of President Dave Rand in first week of his job.

Bayonne Packaging Inc Case Solution

Problem Statement/Identification:

The main root of all problems was inefficient flow of orders from each department. While reading whole case in my opinion flow of information was not predictive. Every department has to fulfil the order very quickly. Some machines required time to come in working manner but due to limited time cycle of delivery they had to complete the job with in assigned time. That’s why certain problems were incurring like Cost, Quality and Delivery. Outcomes of current strategies of company are very disastrous in nature. If we look at rejection rate then rejections are increasing year over year which can be seen from below graph. Same is the case with scarps, Scraps are also increasing over the year that all shows inefficiency of management and workflow. Rejection might be the result of inappropriate glue stickiness. Scrap would be the result of wrong input, inventory breakage and improper functioning of machines.

Case analysis

In this case the problem which were causing the company to go in the loss were mainly cost, quality and delivery.

Cost:

Cost of selling and administrative expense was increasing over the year. If we look at exhibit 1, in year 2009 it was 5.2% of sales and but in October 2011 it reached upto 8.3% of sales. Company was spending huge on administrative and selling expense. This is looking significant cost amount that is actually happening to be the reason of loss. If we look at scrap rate then scrap proportion to sales is also increasing over the year. It has just jumped from the 6.2% to 11.8% from 2009 to 2011. This shows inefficiency of management that can way in the company for the Bankruptcy. If we look at overall COGS of company then it has just jumped from 72.1% to 90.70%. That is quite high among all. This shows company is not taking measures to reduce cost........................

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