Scharffen Berger Chocolate Maker

1.EXECUTIVE SUMMARY
Scharffen Berger Chocolate Maker, one of the most prominent players in America's premium
chocolate segment, have been struggling to meet the increased demand in the market for their
product while maintaining product quality. Founded by two friends in 1996, Schaffern Chocolate
followed traditional, artisanal production methods to produce chocolate of the highest quality from
the finest cacao beans. Unlike many chocolate manufacturing, Scharffen Chocolate manufactured
their products "from beans to bar". The company competed in $1.2 billion market premium segment
a large part of which was dark chocolate, with a projected annual market growth 15-20 % between
2000 and 2010.

Company's sales growth is as follows:

$1.1 million in 1999

$10 million in 2004

$15 million in 2005 (Estimated)

In this case, various processes followed by Schaffern Berger in their production facility have been
analyzed and recommendations have been made to increase the overall capacity.

2. PROBLEM DESCRIPTION
Scharffen Berger Chocolate’s main problem consists of meeting the increased demand while
maintaining the very high quality , they provide. The problems that needed to be
addressed:
1. Meeting increased demand of 50%, 100% and 150% by the start of 2006.
2. Analyzing other bottleneck processes after the instalment of Ball mill.

3. ANALYSIS
COMPANY OVRVIEW
The Company was founded by Robert Steinberg and John Schraffenberger and had its
production facility of 27000 sq-ft in Berkley, California. The facility consisted of offices and a
small retail outlet along with production area. It also had an area that could be used to host
tours for its customers. The company later moved to a new factory in May 2001, to meet
the fivefold increase in production. As of May 2005, there were 60 employees: 24 worked in
the production area, 18 at the five retail stores and 18 in administrative and management
functions.
INDUSTRY OVERVIEW

The chocolate industry was segmented into two categories: mass market and premium. The
$14 billion industry was dominated by Hershey food Co., Mars and Nestle with collective
market share over 75% of the market. The mass market annual growth was only 1-2% in the
last few years. The greater market of mass market consumption consisted of milk chocolate,
which accounted for 70% of total chocolate sales in the US, down from about 90% in the
1980s. Recently the industry had shown an increased demand for dark chocolate, with less
sugar and higher concentration of cacao. Scharffen Berger competed in the premium
segment of $1.2 billion market size. Premium segment was considered to grow at an annual
growth of 15-20% between 2000 and 2010. Within premium segment, Schraffen Berger to
be at the high end, competing with European high end premium chocolate makers such as
Valrhona, Godiva and Lindt.

BUSINESS OVERVIEW

The company’s primary products included unsweetened (99% cacao), extra dark (82%
cacao), bittersweet (70% cacao), semi-sweet (62% cacao), mocha (62% cacao), mint (62%
cacao), nibby bar (62% cacao) and milk chocolate (41% cacao). Scharffen Berger offered
chocolate products in four sizes : 0.2 oz, 1 oz, 3 oz, 10 oz. It also produced 2kg, 3kg and 15kg
that were used in food in the food service industry. The unsweetened and extra dark
products accounted for approximately 20% of sales, with the sweeter product making up for
the other 80%. Three-ounce bittersweet bar was their most popular product.

PRODUCTION OVERVIEW

The production facility in Berkeley consisted of three sections:

Production area (20000 sq-ft)

Office space (5000 sq-ft)

Retail space(2000 sq-ft)

There were seven primary functions:

1. Bean Cleaner

It involved cleaning of beans, which were of nine varieties and of the highest quality from
Ghana, Trinidad, Jamaica, Dominican Republic, Madagascar and other countries. The cleaner
machine could process approximately 200kg in 15 minutes.
2. Roaster

The beans were roasted afterwards to enhance its flavor. The beans were fed into a roasting
cylinder which was pumped full of air heated by natural gas up to 3000 F. Each kind of bean
was roasted separately and it took about 1.25 hours for 250 kg of beans.
3. Winnower

The task of winnower was to crack each cacao bean to separate the “nib” located at its
center. It was capable of processing approximately 450 kg of whole beans each hour.
4. Melangeur

The melangeur was used to grind the nibs in order to release the cocoa butter and turn the
dry nibs into a chocolate paste. It operated for 1.25 hrs for a 115 kg batch of beans.
5. Conche

Two conches were used to refine, mix and aerate the chocolate. Each conche could hold
1400 kg batch and operated for 40-60 hours for each batch. Batch time varied with the ratio
of chocolate with other ingredients.
6. Tempering

In tempering process the liquid chocolate was turned into a solid state, performed by a
series of steps that raised and lowered the temperature of the chocolate. The tempering
machine could process up to 200 kg per hour, but operated at 140kg per hour to match the
molding process.
7. Molding

During molding process the chocolates were pumped into plastic molds and travelled
through a refrigerated compartment that caused the chocolates to solidify. The machine
operated at a speed of 140 kg per hour.

(Process flow for the existing production facility)

Current capacity of each process:
Process Capacity Number of Time (mins) Shift No. of Monthly
(Kg) Machines days/month O/P
Cleaner 192 1 15 8 30 184320
Roaster 250 1 75 8 30 48000
Winnower 333 1 60 8 30 79920
Melangeur 115 1 75 16 30 44160
Conche 1400 2 3000 24 30 40320
Tempering 140 1 60 16 30 67200
Molding 140 1 60 16 30 67200

4.FINAL RECOMMENDATIONS
 PLAN – 1

In order to meet the increased demand of 50%, one more Conche is to be added in the
production line. After addition of the Conche, Melangeur will be the new bottleneck in the
process. Therefore, one more Melangeur will be added to the line and now the bottleneck
will be Roaster. By engaging machine and labor for 2 extra hours in the process, the final
capacity of the process will match the desired process output, i.e 60000kg.
Process Capacity Number of Time (mins) Shift No. of Monthly
(Kg) Machines days/month O/P
Cleaner 192 1 15 8 30 184320
Roaster 250 1 75 10 30 60000
Winnower 333 1 60 8 30 79920
Melangeur 115 2 75 16 30 88320
Conche 1400 2 600 24 30 201600
Ball mill 1400 1 300 24 30 201600
Tempering 140 1 60 16 30 67200
Molding 140 1 60 16 30 67200

 PLAN – 2

In order to meet the increased demand of 100%, i.e output of 80000kg/month the machine
and labor involved in roaster will have to engaged for 8 hours more. For tempering and
molding, winnowing and melangeur processes 4 hours of overtime each will be provided.

Process Capacity Number of Time (mins) Shift No. of Monthly

(Kg) Machines days/month O/P
Cleaner 192 1 15 8 30 184320
Roaster 250 1 75 16 30 96000
Winnower 333 1 60 11 30 109890
Melangeur 115 2 75 20 30 110400
Conche 1400 2 600 24 30 201600
Ball mill 1400 1 300 24 30 201600
Tempering 140 1 60 20 30 84000
Molding 140 1 60 20 30 84000

 PLAN – 3
In order to facilitate production of 100000 kg/month ( 150% increase in capacity) the
machine and labor involved in roaster, tempering and molding are to be engaged for 3 x
8 hours shift everyday of the week.

Process Capacity Number of Time (mins) Shift No. of Monthly

(Kg) Machines days/month O/P
Cleaner 192 1 15 8 30 184320
Roaster 250 1 75 16 30 96000
Winnower 333 1 60 11 30 109890
Melangeur 115 2 75 20 30 110400
Conche 1400 2 600 24 30 201600
Ball mill 1400 1 300 24 30 201600
Tempering 140 1 60 20 30 84000
Molding 140 1 60 20 30 84000