1. Describe the brand position of Scharffen Berger. How does the current production process contribute to that brand?
a. Scharffen Berger Chocolate’s value position is “producing chocolate of the highest quality possible with the finest cacao possible.” It is a premium priced product with strong brand recognition.
b. The company’s use traditional artisan production method allows it to differentiate itself from competitors by being one of only a few brands that produces chocolates “from beans to bars.” It has strict regulations on quality control of products produced both in-house and via 3rd partners. Using human tasters, such as controllers and a blind taste testing at the end of the process, removes a certain percentage of errors that may be made via a machine-only testing process. Scharffen Berger also strives to minimize machine errors via a twice/month calibration procedure protocol. This close regulation of quality allows the company to ensure a high percent of high quality only products are shelved.
2. What is the current capacity of the process? What is the current bottleneck?
a. Current Capacity of the Process is 40,600 kg/month
b. The current bottleneck resource is the conche, which limit the production quantity since each has the lowest resource capacity (1353 kg/day) within the process.
3. What are your conclusions regarding the proposed ball mill? What are the benefits? What are the risks? As Jim Harris, would you proceed with the implementation of that change? How would you do so?
a. While the Ball Mill has the potential to increase capacity production by
10.4%, the Mixer resource will become the new bottleneck in the process. b. Benefits:
i. Reduce Conching flow time (60hrs to 15hrs)
ii. Increased Revenue
i. Risk not being able to have a high return on capital investment (Cost of Purchase – $300,000)
ii. Training employees/3rd party partners on new machine
iii. Diminished quality if not properly cleaned
iv. Actual Revenue lower than forecasted if machine is not properly integrated into system
4. Assuming all the production is of semi-sweet (62%) chocolate, what changes beyond the addition of the ball mill will you need to consider to increase your capacity by 150% (to 250% of current capacity, where “current” means before the installation of the ball mill.)?
5. Take the role of Jim Harris, COO of Scharffen Berger. The purchase of the ball machine will not alone allow Scharffen Berger to expand capacity 150%. It will require expanding most of the other steps in the process except the first, Bean Cleaning, by either adding shifts and using the current equipment, by adding and equipment and staff to the current shifts, or by outsourcing some of the steps. As Jim, you know that maintaining the quality of the process is key to maintaining Scharffen Berger’s brand position. Prepare a recommendation for the owners, Robert Steinberg and John Scharffenberger, on how Scharffen Berger should expand its operation to meet this increased demand, maintain quality, keep costs low, and position it for possible future expansion.