Reference no: EM131464999

Question: CASE STUDY: THE EAT ‘N ENJOY BAKING COMPANY

The Company

The Eat ? Enjoy Baking Company is located in Roodepoort on the West Rand. Two brothers, Peter and John, who formed the company after purchasing a cookie franchise, run the bakery. The franchise assures them of exclusive rights in Gauteng and is one of the largest franchises in South Africa. The company employs fewer than 200 people, mainly blue-collar workers, and the atmosphere is informal.

The product

The company's only product is a soft cookie, of which it makes more than 50 varieties. Larger companies, such as Bakers, have traditionally produced biscuit cookies from which most of the water has been baked out, resulting in crisp cookies. Eat ? Enjoy cookies have no additives or preservatives. The high quality of the cookies has enabled the company to develop a strong market niche for its product.

The customers

The cookies are sold in supermarkets throughout Gauteng. Eat ? Enjoy markets its cookies as ‘good food' - no additives or preservatives - and this appeals to a health-conscious segment of the market. Many customers 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 uses two continuous band ovens to bake the cookies. The production process is a batch processing system. The process 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 cookies 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 ingredient needed, according to the quantity of cookies ordered, and 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 sent to giant mixing machines, where they are combined with the required amounts of eggs, water and flavourings. After the ingredients have been mixed, the batter is poured into a cutting machine, which cuts it into individual cookies. The cookies are then dropped onto a conveyor belt and transported through one of two ovens. Filled cookies - such as those filled with lemon cream, strawberry and raspberry - require an additional step for filling and folding.

The non-filled cookies are cut in a diagonal, rather than round, way. The diagonally cut cookies require less space than straight-cut or round cookies, and the result is a higher level of productivity. The company recently increased the length of each oven by 25 metres, which also increased the rate of production.
As the cookies emerge from the ovens, they are fed onto spiral cooling rack 20 metres high and 3 metres wide. As the cookies come off the cooling racks, workers place the cookies into boxes manually, removing any broken or deformed cookies in the process. The boxes are then wrapped, sealed and labelled automatically.

Inventory

Most cookies are loaded immediately onto trucks and shipped to distributors. A small percentage is stored temporarily in the company's warehouse, but the cookies must be shipped as soon as possible because of their limited shelf life. Other inventory includes individual cookies boxes, shipping boxes, labels, and cellophane for wrapping. Labels are reordered frequently in small batches because governmental label requirements are subject to change and the company does not want to get stuck with labels it cannot use. The bulk silos are refilled two or three times a week, depending on how quickly supplies are used.
Cookies are baked in a sequence that minimises downtime for cleaning. For instance, light-coloured cookies (for example, chocolate chip) are baked before dark-coloured cookies (for example, fudge), and oatmeal cookies are baked before oatmeal raisin cookies. This permits the company to avoid having to clean the processing equipment every time a different type of cookies is produced.

Quality

The bakery prides itself on the quality of its cookies. A quality control inspector samples the cookies at random as they come off the line to assure that their taste and consistency are satisfactory and that they have been baked to the proper degree. Also, workers on the line are responsible for removing defective cookies when they spot them. The company has also installed an X-ray machine on the line that can detect small bits of metal filings that may have got into cookies during the production process. The use of automatic equipment for transporting raw materials and mixing batter has made it easier to maintain a sterile process.

Scrap
The bakery is run very efficiently and has minimal amounts of scrap. For example, if a batch is mixed improperly, it is sold as dog food. Broken cookies are used in the oatmeal cookies. These practices reduce the cost of ingredients and save on costs of waste disposal. The company also uses heat reclamation; the heat that escapes from the two ovens is 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 observations of competitors' products. New ideas are first examined to determine whether the cookies can be made with existing equipment. If, so a sample run is made to determine the cost and time requirements. If the results are satisfactory, marketing tests are conducted to see if there is a demand for the product.

Potential improvements

There are a number of areas of potential improvement at the bakery. One possibility is automating the packing of the cookies into boxes. Although labour 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 is to use suppliers located closer to the plant than the suppliers the company currently uses. This would reduce delivery lead times and transportation costs, but the owners are not convinced that suppliers could provide the same good quality. Other opportunities have been proposed in recent years, but the owners rejected them because they feared that the quality of the product might suffer.

CASE STUDY QUESTIONS AND ACTIVITIES

1. Discuss the steps the owners of the franchise must take to understand their business better.

2. What type of manufacturing structure is utilised by the organisation?

3. In your opinion, which process structure for manufacturing would be better suited in this instance? Motivate your answer.

4. According to inventory holding, which strategy for manufacturing is utilised? Motivate your answer.

5. Is there room for improvement? If so, which methodologies would you utilise?