National Cranberry Cooperative Case Study

National Cranberry Cooperative Case Study

In 1971, the National Cranberry Cooperative (NCC) was urgently addressing issues that had been decreasing efficiency of the Receiving Plant No. 1 (RP1). "The NCC is an organization formed and owned by growers of cranberries to process and market their berries." (Tucker, 1983) The NCC operated in North America and involved growing areas in Massachusetts, New Jersey,

Wisconsin, Washington, Oregon, British Columbia, and Nova Scotia. It is February, and the NCC has approximately six months until the growing season, to address a few issues and hopefully improve efficiency.

The superintendent, Will Walliston, is the Superintendent of the receiving plant No. 1

(RP1). The NCC management and the members are extremely upset and concerned because the $75,000 spent for the fifth Kiwanee dumper did not solve the problems that are associated with the processing plant last year, during the peak harvesting season. RP1 experienced high delivery truck wait times, the employee overtime was high due to inefficiency and absenteeism, and the color grading of the berries was inefficient. In general, the bottlenecks are caused at every individual process within the plant.

Problem Statement:

Walliston is faced with fixing the inefficiencies, in the berry receiving plant while addressing the change in the expected crop mix. “The percentage of water-harvested berries this year will increase to 70% of total process fruit from last year’s 58%.” (Tucker, 1983) He has approximately six months until the peak harvesting season to implement better efficiencies to the overall process to maximize the profitability for the NCC and restore the faith, of its members. The NCC has a problem with the turnover time of trucks during the peak season.

Because of the problem, there has been an overwhelming amount of overtime. When the trucks arrive, the truck drivers have an ample amount of idle time before the berries get removed from the truck. Improving the inefficiencies will remove additional overtime.

Due to the 12% increase of the wet berry harvest the storage of the dry berry holding bin, the conversion from the wet berry storage to dry berry storage is $5,000 per bin. At this time, the water harvest berry barrels are 41%, which need to be converted by the coming year. There is 70% of the 27 barrels that must be used for wet berry storage and this is amounts to 19 barrels. There will have to be a total of 8 dry barrels to be converted at $5000 per barrel, which totals to $40,000 thus, decreasing the idle time for the following year.

Adding 1 Dryer:

On a peak day, a total of 18,000 barrels will be received, out of which 12,600 will be wet. The average processing rate of 840 barrels per hour will take 15.75 hours to complete. Overtime will be reduced to 7.75 hours, creating a savings of 5.25 hours.

The question is, will there be waiting times for the trucks? After reviewing the formula (Inventory buildup rate= arrival rate – processing rate = 1050 bbl – 800 bbl = 250 bbl), it has been determined that the change will create a positive outcome. At this rate, the wet bins will be filled at a rate of 3200 / 250 = 12.8 hours. This will improve the process but, there remains 0.8 hours that will still need to be addressed with further improvement. This does eliminate the wait time for offloading the trucks in the 12 hours, making the overall process more efficient.

Adding 2 Dryers:

On a peak day, a total of 18,000 barrels will be received out of which 12,600 barrels will be wet. The average processing rate of 840 barrels per hour will take 15 hours to complete. This will cause overtime of 7 hours and an additional savings of .75 hours

When adding two dryers, the milling area will become the bottleneck, which can only process 1200 bbls per hour of both dry and wet berries. The processing rate will be 1,200 x .7 =

840 bbls per hour.

The overtime of each member, on an average day, would total 10,000 bbls received, where 7000 bbls are wet. With the processing rate of 840 bbls per hour, it will take 8.33 hours to complete the process. If an employee works a typical shift of 8 hours, the co-op will incur overtime of .33 hours for each employee per day. This will only generate a savings of .42 hours.

It appears that the savings from adding a second dryer are not enough and adding just one dryer should create enough dry berries.

Employees need to be shifted to accommodate better individual processes:

Moving the processing time from 11 am to 7 am during the peak period is critical to downloading trucks and avoiding the cost of idle time. The co-op receives 18,000 bbls, on a single day, during the peak season and that yields 12,000 barrels of wet berries and 6,000 bbls of dry berries which equates to 240 truckloads of berries. The wet truckloads would have 160 bbls of berries, and the dry loads would have 80 bbls, with the emptying process taking 8 minutes to complete. With a 7 am processing start time, the plant would be able to end the day shift at 8 pm. This change would benefit everyone including the growers.

Working beyond 11 pm:

The total cost of the workforce is $10,584 total and this total needs to be minimized for savings. Purchasing one dryer, as mentioned above would reduce the work hours from 4 am to 11 pm, with a savings of $52,920, which would not cover the cost of the dryer. When purchasing two dryers, we see that the working hours would be 4 am to 10 pm, and this would allow a savings of $99,960, which is not enough to cover the cost of the two dryers. However, if we purchased the two dryers and added a separator line, there would be a reduction in the hours of operation from 4 am to 8 pm. Ultimately, there will be better efficiency and profit if the NCC purchases the dryers.

What Are the Savings:

• Y= 5 x ($10,584) + 3 x (47,040)

• Y= $52,920 + $141,120 = $194,040

• $120,000 Cost of dryers

• $74,040 Cost of the new separator line

Water harvesting is expected to increase from 58% to 70%. Peak harvest season is from September 1- December 15. Purchasing additional dryers will increase the volume of berries processed and shipped out, therefore, supplying increased capacity to fulfill the additional demand for cranberries. The proposed time adjustment to the current operation