National

Cranberry
Cooperative, 1981

Executive Summary

As a leader in the fruit industry, National Cranberry Cooperative

(NCC) is ready to take on some changes in order to increase
efficiency in its operation. The entire process flow by which
cranberries enter, move, and exit Receiving Plant No. 1 (RP1) can
be improved by tweaking certain stages of the overall operation.
Such improvements will reduce the expensive overtime costs that
have been incurred and reduce the waiting time for inbound
delivery trucks, hence, enabling the plant operate at more normal
business hours and increase the overall profitability of NCC.

Problems faced at the National Cranberry Cooperative (NCC) were

not properly addressed in the new capital expenditures made in
1995. The previous $200,000 investment in a new dumper did not
solve the problem because NCC did not recognize the existence of a
bottleneck in RP1 operations. As a result, overtime expenses
continue to plague NCC due to slower throughput time. In addition,
growers (suppliers) are upset at the additional cost burden and idle
time of truck deliveries. NCC must keep these growers happy and
make critical adjustments to end the bottleneck at RP1.

In the existence of a bottleneck, few dimensions can be altered to alleviate it.

The path of the process can be elongated or altered (which adds time), work-inprogress areas can be created, or the path can be widened with increased
capacity (capital investment). Based on the predicted harvest makeup of 70%
wet berries, RP1 needs to be augmented to accommodate wet capacities through
additional capital equipment expenditure (widening the path) or additional labor
expense (stretching the time). The exact decision will be based on NCCs short
and long-term strategies.

If the VP of Operations anticipates fluctuation in berry harvests from year to year

in terms of wet vs. dry berry composition, it may be more practical to keep costs
low and flexible by continuing to rely on additional shifts of seasonal workers
where needed. This, however, will come with seasonal overtime expense. If the
composition of future berry harvests is expected to remain consistent over the
long term, then a capital expenditure is a better option. This will eventually
eliminate overtime expense.

We recommend avoiding any further purchase of dumping bins. Increasing inputs

at the front-end will only further exacerbate the bottleneck at RP1. Instead, we
recommend the addition of two dryers to the RP1 process to increase capacity
and reduce throughput time. Additionally, the capital investment in two dryers
will achieve payback within approximately four years via offset of overtime
expense savings over the period.

Industry Analysis

A. Threat of Substitutes
In the fast Cranberry industrthe threat of substitute products is high. The availability of
the substitute product facades an enormous threat for fast fruit-selling sellers. The
worst thing is that when the switching costs in a certain industry are low since the
buyer can facilely determine substitutes, substitutes that have the same levels of price
and quality.
B. Threat of New Entrants
In the fast Cranberry industry, the threat of new entrants is low and the reasons for this
threat are double. External forces such as globalization and information technology
developments are two main factors driving the need to reassess industry structure on
an ongoing basis to determine how to maintain a competitive advantage. Limited
connections of competitive forces to microeconomic principles that drive them are
made.
C. Rivalry among Competitors
In the fast Cranberry industry,the rivalry among competitors are more intense among
competitors. The main rivals are BKC, YUM, etc.)
D. Threat of Buyer Power
In the fast Cranberry industry, the bargaining power of buyers is moderate.
Consolidation in the food industry and supply drives much of the market for
cranberries. As company acquire the other companies, their buying power increases.
Market such as Walmart and Costco buy in huge quantities, giving them the bargaining
power to depress prices to undercut the smaller competition.
E. Threat of Supplier Power
In the National Cranberry Cooperative industry its supplier power is low because there
lots of market such as Walmart, Costco that are offered in some developing countries.

Problem
Statement

National

Cranberry Cooperative needs to find a

way to create efficiencies for the production of
cranberries during the peaks in production,
otherwise a bottleneck will occur, causing
delays and increased overtime costs.

Objectives
of the Study

Improve mechanism by making fine adjustment

Such improvements will reduce the expensive overtime costs
that have been incurred and reduce the waiting time for
inbound delivery trucks, hence, enabling the plant operate at
more normal business hours and increase the overall

The light grading system

They should install at least one more dryer to reduce the truck
waiting time, convert bins to hold both wet and dry berries. The
light grading system should be avoided as far as possible and
as far as possible stricter grading rules should be applied.

Reduce idleness of trucks

It is nessesary to efficiently unload all the cranberries at peak
time. The long idling time of trucks and drivers caused extra
cost and much unhappiness among the growers, who are the
owners of the cooperative.

Strategic Alternatives

In order to make improvements in the scheduling of the process,

the company needs to take some measures regarding the delivery
time of the trucks along with the amount of cranberries that needs
to be delivered. To warrant that the waiting time is decreased, the
company needs to make evener schedule. The company needs to
set a minimum acceptable weight so that quantities of trucks that
are required can be identified that in turn will reduce the overall
waiting time of the process.

As far as the issue of absenteeism is concerned, it is directly

related to the payroll of employees working in a plant. In order to
motivate the existing employees and to attract new ones, the
management of the company needs to find an optimal level of pay
or extra wages. This strategy can be implemented during the
highest selling months that in turn will attract more people to work
for the company. In this way, the company will be able to decrease
the level of absenteeism to some extent.

Analysis and Conclusion

In conclusion, National Cranberry Cooperative is facing a bottleneck in

RP #1 that is causing several hours of excessive overtime and delivery
truck wait-time at the front-end of the facility. Our team analysed the
data and offered alternative solutions towards correcting the problem
that is upsetting suppliers because of idle time and additional cost
burdens. National Cranberry understands that it must augment its
processes to become more efficient or potentially lose business and
overall profits.

As discussed in detail above, commencing the process at 7:00 am,

installing 2 dryers, and an additional grading line, will ultimately
decrease the amount of hours worked by 8 hours, and National
Cranberry will achieve a savings of $194,040 because of these reduced
hours and proposed recommendations. Our team after reviewing the
data believes this proposed solution is the most proactive, and costeffective way to reduce the bottleneck issue and excessive wait-times
plaguing our front line. Our team suggests we implement said changes
immediately as they are critical to effectively adjust the efficiency, and
overall productivity of National Cranberry Cooperative in the future.


Recommendation to Management
Efficiency does not mean to produce as much as you can and build up inventory its about operating at capacity level of
the machines. Here I have a recommended a plan of action for the different constraints however the recommendations
might change the system and improve it but it could be only for a short period of time. Its important to keep in mind
that new-implemented actions might carry their own problems afterwards.
Grading berries
Sampling each load of berries takes some time, as there is only one chief berry in place to grade the arriving trucks.
Sampling is done poorly therefore in order to improve these two problems. I suggest farmers to assigned one of their
employees to grade the berries (wet or dry) while barrels are being load into trucks. Of course it is impossible to grade
each barrel accurately but it will enable to grade more fairly as each barrel is inspected rather than one small sample from
the truck. I would introduce a new scheme of colors and add a new category 2C for example, between 2B and 3, that will
help grade the berries more accurately. Adding a 10 000 $ light meter which requires another killed operator will increase
costs, something that NCC is trying to reduce.

Reduce waiting time

Cranberry season is said to be between September and December. And peak season according to exhibit 2 is between 19th
of September to end of October therefore why not extend the length of the peak season so daily volumes are reduced.
Large amount of wet berries start to arrive only towards the end of September and continue all through the month of
October but has 1971 is said to have additional wet berries harvested then extending the peak season by a day or two will
reduce inflow.

To accommodate more wet berries at the holding bin level I would suggest converting the temporary bins (17-24) into wet
berries only. Then to take 1000 bbls, an equivalent of 4 bins from the temporary bins (1-16) as dry berries only need 1800
bbls of space, and allocate it to the wet berries temporary bins. That will increase capacity to receive more wet berries
therefore reducing waiting time of trucks.
When berries are placed in the held in the bins, I suggest you keep wet berries temporarily in the bins designed for dry and
start processing them first. Like that trucks do not have to wait anymore.
One Kiwanee dumper could be allocated to dry berries only as dry berries only represent 30 % of the total quantity
delivered. If you dont assign one to dry berries, then the wet berries will take them all since their quantity is larger. Trucks
delivering dry will then have to sit idle.

Bottlenecks for wet and dry berries

As mentioned in the case wet berries do not have a long shelf life therefore they need to be processed quicker
and it is preferable to be shipped in bulk in frozen bags. As the peak season increases the volumes of wet
berries then berries should be dried only partially as they are going to be frozen anyways. Therefore wet
berries can continue flowing to the drying process at its maximum of 600 bbls.

Removing the wet berries bottleneck will then enable to reduce the separating capacity of wet berries from
840 bbls 600 bbls. The difference of 240 bbls is then, given to the dry berries and increase their capacity of
separating.
Working hours
To beginning processing the berries quicker rather than waiting 4 hours form 7 am to 11 pm, as receivers are
busy unloading, RP1 should schedule the deston, dechaft and dry workers to come in an hour after 7 am. As
we can see on exhibit 8, no wet berries were received at the plant until 459 time which is approximately 7 30
am. Therefore an appropriate time to come in would be 8: 00 am in order to have a good accumulated amount
of berries to begin the process, and workers should remain until shut down. That will reduce idleness of trucks.
The case gives no reason for why there is a lot of absenteeism, there from a management point of view its
important for the manager who schedule the workers to have a meeting with all workers both full time and
temporary to see what the issues are, why are workers missing so much? Is it overtime? Is it lunch break? As
manager you need to find out what will motivate the employees to increase efficiency at the plant.
For example lunch break could take place while keeping wet berries processing at full capacity. By looking at
Exhibit 1 we can assume that at time 671, which is approximately at noon trucks, will slow down for lunch. If
trucks do not arrive anymore there is no need for receivers and they can take the time to replace the ones in
processing berries who need to take their lunch break.

Introducing two shifts instead of having overtime will relieve number of overtime workers work per day during
peak season. That could motivate but if overtime is kept I would suggest paying the employees to the price of
a full shift for the overtime.