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Homework answers / question archive / Case Study 1: Homestyle Cookies 1
Case Study 1: Homestyle Cookies 1. Write a brief (one-paragraph) summary of the case. 2. Each case has several questions associated with it. Read the questions carefully. Answer the questions with a critical eye based upon both the readings.
The Company
The baking company is located In a small tewn in New York State. The bakery is run by two brothers. The company employs fewer than 200 people, mainly blue-collar workers, and the atmosphere is informal.
The Product
The company’s only product is soft cookies, of which it makes over 50 varieties. Larger companies, such as Nabisca, Sunshine, and Keebler, have traditionally produced biscuit cookies, in which most of the water has been baked out, resulting in crisp cookies. The cook-ies have no additives or preservatives. The high quality of the cack-ies has enabled the company to develop a strong market niche for its product gives a dramatic depiction of supply snafus that resulted in delays and cost increases,
As an. independent company, “Burgmaster thrived because the Burgs knew their business," Holland writes. Their departure under Hou-daille was fellowed by an “endless and ultimately futile search for a better formula.” But, he concludes: “Ne formula was a substifute for management involvement on the shop floor.”
in the end, however, Holland puts most of the blame for the indus-try’s decline on government policy. He targets tax laws and macra- economic policies that encourage LBOs and speculation instead of productive investment. He also criticizes Pentagon procurement policies for favoring exotic, custom machines over standard, tow-cest models.
This adds up to an industrial policy, Holland writes—a bad one.
The point is well taken, but Holland gives it excessive weight. Like their brethren in Detroit and Pittsburgh, demestic tool-makers in the
1978s were too complacent when imports seized the lower end of the
product line. The conservatism that had for years served them in their
cyclical industry left them ill-prepared for change. Even now some of
the largest US. tool-makers are struggling to restructure. Blame the
government, yes. But blame the industry, too.
Questions
1. Write a brief report that outlines the reasons (both internal and external) for Burgmaster’s demise, and whether aperations man-agement played a significant role in the demise.
2. Do you think that inadequate strategic planning was a factor that resulted in the company's-asking for trade protection?
3. Can you think of a strategy that could have increased Burgmaster’s chance of survival? Explain why you think that strategy would have
Been effective.
The Customers
The cookies are sold in convenience stores and super-
markets throughout New York, Connecticut, and New Jersey. The company markets its cookies as “geod food”—no additives or preservatives—and this appeals ta-a health-conscious segment of the market. Many custom- ers are over 45 years of age, and prefer a cookie that is soft and not too Sweet. Parents with young children also buy the cookies.
The Production Process
The company has two continuous band ovens that it uses to bake the caok-ies. The production process is-callad a bateh processing system. It begins as soon as management gets orders from distributors. These orders are used to:schedule production. At the start of each shift,.a list of the cook-
ies to be made that day is delivered to the person in charge of mixing.
That person checks a master list, which indicates the ingredients needed
for each type of cookie, and enters that information into the computer.
The computer then determines the amount of each ingredisnt needed,
according te the quantity of cookies ordered, ard relays-that information
to-storage silos located outside the plant where:the-main ingredients (flour,
sugar, and cake-flour)are stored. The.ingredients are automatically sentto
giant mixing machines where the ingredients are combined with proper
amaunts of eggs, water, and flavorings. After the ingredients have bean
mixed, the: batter is poured into-a-cutting machine where it is eut into indi-
vidual cookies. The cookies are then dropped anto a conveyor belt and
transported through one: of two-ovens. Filled.cookies, such-as-apple, date,
and raspberry, requite:an-additional step for filling:and folding.
The nonfilied cookies are cut on a diagonal rather than round. The
diagonal-cut cookies require fess. space than straight-cut. cookies,
and the result is a higher Jevel of productivity. in addition, the com-
pany recenily increased the length of each oven-by 25 feet, which also
increased the rate. of praduction.
As the-cookles emerge from the ovens, they:are fed:onto:spiral:-cool-
ing racks 26 feet high and 3 feet wide. As the cookies come off the
cooling racks, workers place the cookies:into-boxes.manually, removing
any broken or deformed cpokies in the process. The boxes are then
wrapped, sealed, and labeled automatically.
Inventory
Most cookies are loaded immediately onte trucks and shipped ta dis-
tributors. A small percentage are stored. temporarily in the company’s
‘warehouse, but they must be shipped shortly because of their limited
shelf life. Other inventory includes individual cookie boxes, shipping
‘bexes, labels, and cellophane for wrapping. Labels are reordered fre-
quently, in smail batches, because FDA label requirements are subject
to change, and the company does not want te get stuck with labels it
can’tuse. The-bulk siles:-are refilled two or three times a week, depend-
ing on how quickly supplies are used.
Cookies are baked in a sequence that minimizes downtime for
éleaning. For instance, light-colored cookies (¢.g., ehocolate chip) are
‘are baked before oatmeal raisin cookies. This permits the company to
avoid having to clean the processing equipment every time a different
typeof cookieds:produced.
Quality
The-bakery prides itself on the:quality of its cookies, Cookies-are sampled
randomly by-a quality controkinspector as they-come off the dine to assure
that their taste-and consistency are satisfactory, and that they have been
baked te-the-proper degree. Also, workers-on the line are responsible for
removing defective:cookies when they spet them. The company has:also
installed.an X-ray machine-on the-line that can detect small bits of metal
filings that may-have gotten into ecokies during the production process.
The use of automatic equipment for transporting raw materials and mix-
ing- batter has made it easier to- maintain a sterile process.
2
Chapter Two A. 4 strategy, and Productivity
Scrap
The. bakery is run very efficiently and has minimal amounts of scrap.
For example, #f a batch is mixed improperly, it is sold for dog food. Bro-
ken cookles are used in the oatmeal cookies. These practices reduce
the cost of ingredients and save on waste disposal costs. The com-
pany also uses heat reclamation: The heat that escapes from fie two
ovens fs captured and used to.boil the water that supplies the. heat
to the building. Also, the use of automation in the mixing process has
resulted in a reduction in waste compared with the manual methods
used previously,
New Products
ideas for new products:come from customers, employees, and observa-
tions of competitors’ products. New ideas are first examined to deter-
mine whether the cookies can-be made with existing equipment. if so, a
sample run is made fo determine the-cost and time requirements. If the
results are satisfactory, marketing tests are conducted to:see ff there is
@-demand'for the:-product.
Potential Improvements
There are a number of areas of potential improvement at the bakery.
One possibility would ba to.automate packing the cookies into boxes.
Although Jaber costs are not high, automating the process. might save
some money and increase efficiency. So-far, the owners have resisted
making this change because they feel an obligation to the community
to employ the 30 women who now do the boxing manually. Another
possible improvement would be to use suppliers who are-Jocated closer
to the plant. That would reduce delivery lead times and transportation
costs, but the owners are not convinced that local. suppliers: could pro-
vide the same good quality. Other opportunities have been-proposed in
recent years, but the owners rejected them becatse-they feared that the
quality of the product might-suffer.
Questions
1. Briefly describe the cookie:production process.
2, What are two ways that the company has increased productiv-
ity? Why did inereasing the length of the ovens result in a faster
output rate?
3. Bo-you think that the company is making the right decision by not
automating the packing-of cookies? Explain your reasoning. What
obligation-does:a.company have toits employees:in asituation.such
as. this? What abligation does it have to the community? Is the size
of the town.a factor? Would it make a difference if the company was.
located‘in -a'large-city? Is:the size of the company a factor? What if it
were.a much:larger company?
4, What factors cause the company to carry minimal amounts of cer-
tain javenteries? What benefits result from this policy?
§. AS a.consumer, what things-do you consider in judging the quality of
cookies you buy in a-supermarket?
6. What advantages and what limitations stem from the company’s.not
using preservatives in cookies?
7. Briefly-describe the-company’s-strategy.
