GroupO1 OPM1 Scharffen Berger

It was founded in 1996 by Robert Steinberg and John
Scharffenberger.
By 2000, they expanded their business. They acquired a

27,000 sq. ft. warehouse where the production and retailing
happened.
In 2003, Jim Harris was recruited as the Chief Operating

Officer and was made to handle companys growth.
As of May 2005, they were around 60 employees with 24 in

production area, 18 in retail stores and another 18 in
administration.
2
There are two categories in chocolate industry: mass market

& premium category. The company falls in the latter of the
two.
It was competing in a market of $1.2 bn. where in the

products were priced in a range of $10 to $100 per pound.
The premium industry projected a growth of 15-20% between

2000 2010
Being at the higher end in premium category, its major

competitors were brands such as Godiva, Ghirardelli/Lindt
and so on.
3
The primary products are: unsweetened(99% cocoa, by weight),

extra dark(82%), bittersweet(70%), semi-sweet(62%),
mocha(62%), mint(62%), rubby bar(62%) and milk
chocolate(41%).
The derivative products are: chocolate sauce, cocoa powder

and chocolate-covered figs.
Sales of these products grew from $1.1 mn in 1999 to $10 mn in

2004.
The products were sold through their five retail stores, distribution
to retail stores and their website.
Price of their products stand as:
Weight
Price($)
5 gram
0.50
1 oz.
2.00
3 oz.
4.00
10 oz.
10.00
i
n
p
u
t
Capacity = 200kg
100 kg
Bean Cleaner
Capacity = 250kg
96 Kg
Of 100 kg
Bins
time = 15mins
time = 75mins
185 Kg
Bins
Roaster
Of 250 kg
Capacity = 450kg
Winnower
time = 7.5mins
rack
Cooling = 15mins
Capacity = 1400kg
Capacity = 115kg
Melangeur
time = 75mins
Conche1
conche2
rack
time = 50mins
Capacity = 140kg
Packaging
Molding
time = 20mins
Capacity = 140kg
Tempering
time = 60mins
Table 1
Process
Output in
one
cycle(kg)
Time taken
(minutes)
8-Hour shifts
End of day
production
(kg per day)
Bean
Cleaner
96
15
3072
Roaster
250
75
1600
Winnower
185
15
5920
Melangeur
115
75
1472
Conches (2
in number)
1400
1500(avg. of
both)
1344
Temper
140
60
2240
Mold
140
20
6720
End of day production = (o/p in one cycle)/(time taken)*60*shifts

6
A system is no stronger than its weakest link.
Dr. Eliyahu M. Goldratt, in his book - The Goal, had mentioned that
the bottlenecks, no matter where they occur, limit the production
capacity of your system. The success of the entire factory lies on
that choker.
In the above scenario, as tabulated, we found that the conches are

the bottle necks whose output capacity is limiting the entire plants
capacity to only 40,000 (~1344*30) per month. This needed
improvement.
Jim Harris, came forward with a plan to tackle this bottleneck by

introducing Ball Mill. Let us see how.
7
Jim Harris expected the Ball Mill to reduce the refining time
to15 hours as opposed to some odd 50 hours taken by the
conches.
Effect on output(in kg per day)

Output in one cycle(kg) = 1400
Time taken in minutes = 450
Total hours deployed = 8*(3shifts) = 24 hours
End of day production = (1400/450)*60*24 = 4480
* We observe that the refining process which, initially, was a bottleneck at

1344 kg per day now produces 4480 kg per day. Definitely not the
bottleneck anymore!! So who is new the bottleneck?
Referring to Table 1, we find that the Melangeur is now a

new bottleneck as it processes the least in a given day as it
was processing just higher than the bottleneck but not as
high as others.
End of month production of the mixer = 1472*(30)

= 44160 kg in a month
Good News. The net production capacity finally increased to

44,160 kg per month from 40,000 kg per month. Registering an
increase of 10%!!
Goldratts idea of maximizing capacity was by eliminating

the bottlenecks. All of them.
Once the bottleneck is cleared, we can now increase the

shifts of other processes.
We work on the similar lines. Invest $50,000 refurbishing the

Melangeur and also getting a new one so the cycle time for
115 kg now reduces to 37.5 min. from 75 min. because there
are 2 mixers now and also their 8 hour shifts are increased to 3
in number.
End of day production of Melangeur =(115)/(37.5)*24*60

4416 kg per day
10
Therefore, we now a new bottleneck, Temper

End of the month production = 2240*(30)
= 67200 kg per month
We see a substantial increase of around 68% from the

previous scenario where in we were not using any Ball Mill
and no refurbishing of Melangeur was done.
This is directly in line with what Goldratt had proposed that

maximum capacity production can be achieved by
targeting and eliminating the bottleneck one after the other.
11
But the target to be achieved is around 150% by the start of

2006 because their production is driven by demand in the
market.
Following on the previous lines of elimination of bottlenecks

by increasing the shifts and machines we see that a growth in
capacity is possible.
12
Process
Output in
one
cycle(kg)
Machines
installed
Time
taken
(minutes)
8-Hour
shifts
End of
day
productio
n
(kg per
day)
Bean
Cleaner
96
15
6144
Roaster
250
75
4800
Winnower
185
15
5920
Melangeur
115
37.5
4416
Ball Mill
1400
450(avg.
of both)
4480
Temper
140
60
3360
Mold
140
20
6720
13
In the final process, the ultimate bottleneck turns out to be

Temper whose production in kg in one day is 3,360 kg in a
day.
End of month production = 3360*30 = 1,00,800 kg per month.
Hence, the percentage increase in production capacity

= [(100800-40000)/40000]*100
= [60800/40000]*100
= 152%
14

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It was founded in 1996 by Robert Steinberg and John

By 2000, they expanded their business. They acquired a

In 2003, Jim Harris was recruited as the Chief Operating

As of May 2005, they were around 60 employees with 24 in

There are two categories in chocolate industry: mass market

It was competing in a market of $1.2 bn. where in the

The premium industry projected a growth of 15-20% between

Being at the higher end in premium category, its major

The primary products are: unsweetened(99% cocoa, by weight),

The derivative products are: chocolate sauce, cocoa powder

Sales of these products grew from $1.1 mn in 1999 to $10 mn in

Price of their products stand as:

End of day production = (o/p in one cycle)/(time taken)*60*shifts

A system is no stronger than its weakest link.

In the above scenario, as tabulated, we found that the conches are

Jim Harris, came forward with a plan to tackle this bottleneck by

Effect on output(in kg per day)

* We observe that the refining process which, initially, was a bottleneck at

Referring to Table 1, we find that the Melangeur is now a

End of month production of the mixer = 1472*(30)

Good News. The net production capacity finally increased to

Goldratts idea of maximizing capacity was by eliminating

Once the bottleneck is cleared, we can now increase the

We work on the similar lines. Invest $50,000 refurbishing the

End of day production of Melangeur =(115)/(37.5)*24*60

Therefore, we now a new bottleneck, Temper

We see a substantial increase of around 68% from the

This is directly in line with what Goldratt had proposed that

But the target to be achieved is around 150% by the start of

Following on the previous lines of elimination of bottlenecks

In the final process, the ultimate bottleneck turns out to be

End of month production = 3360*30 = 1,00,800 kg per month.

Hence, the percentage increase in production capacity

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End of day production = (o/p in one cycle)/(time taken)60shifts

End of day production of Melangeur =(115)/(37.5)2460