n
cn
Roy D. Shapiro
Harvard Business School
old grey light came through the window of
John Milliken's cubicle in the Production office
of Bayonne Packaging at 6:30 AM on Monday,
|anuary 2,20L2. The new VP of Operations, Milliken
had arrived a half-hour before the first shift srarted
on his first day of work at Bayonne to review reports
that had been prepared for him, and to begin his tour
of the factory and interviews with key Manufacturing
and other personnel. When he had been hired in mid-
December, the president, Dave Rand, had asked him
to analyze Bayonne's operations swiftly and present
his recommendations by the end of the week.
SOMPANY ANffi INNLI$TRV
ffiAtrKSMSUNM
Bayonne Packaging, Inc., was a $43 million company
iocated in Bayonne, N.J., a sub-chapter S corporation
founded 48 years earlier by Rand's father. The board was
composed of family members, a local banker, and out-
side counsel. Bayonne was a "specialtypackaging" paper
HARVARD HBS Professor Roy D. Sha-
piro and Boston University
BUSINESS
PUBLISHING 44zo
Professor Paul E, Morrison
prepared this case solely as
a basis for class discussion
and not as an endorsem€nt,
a source ofprimary data, or an illustration of effective or ineffective
mmagement. This case, though based on real events, is fictionalized, and
any resemblance to act ual persoils or entities ir coincidental. There are
uccasional reference, to actual companies in the narralion.
Copyright O 2012 Harvard Burines. School Publishing. To order copies
or request permission to reproduce materials, call 1-800-545-7685, write
Harvird Business Publishing, Boston, MA 02163. or go to http://www.
hbsp.harvard.edu. No parl ofthis pubiication may be reproduced.
stored in a retrieval system, used in a spreadsheet, or transmitted in any
form or by any means-electronic, mechanical, photocopying, recording,
or otherwi\e-without the permi:rion oI Harvard Business Publishing.
Harvard Business Publishing is an affiliate oF Harvard Business Schoo-i.
rn
h,
v
Paul E. Morrison
Boston University
converter that produced customized, complex-design
packaging that was used by industrial customers for
pro-otionut materials, roftt,vur., luxury beverages,
and gift food and candy. Except for a few low-volume
operations such as Iaminating and gold- or silver-
foii finishing, Bayonne provided all rhe necessary
services lrom design assistance through final delivery
of the package. Bayonne's sales force worked closely
with customers to develop the artwork and package
design, culminating in a proof for customer approval.
Bayonne then created the printing plates and die,
sheeted the paper from roll stock, printed the artwork
on 4- and 6-color presses, die-cut the printed sheets
into "blanksl'l and folded and glued the blanks into
the final product, which was typically finished at this
point and ready to be shipped to the customer or a
contents lulfillment house. ln some cases Bayonne
provided additional finishing work if needed such as
attaching string-and-button fasteners, Velcro dots, or
other attachments.
The paper packaging industry grew rapidly in the
1980s and early 1990s as consumer goods companies
sought to make a greater impact with their promo-
tional materials or moved their promotional budget
from print media and broadcast forms to the package
itself at the poinL ol purchase. In addjtion, the explo-
sive growth of software packaging, which featured
expensively printed large "boxesi' provided additional
customer market segments that were often willing
to spend freely to make a quick impact in a crowded
marketplace. Bayonne had grown from just over
$i0 million in sales into $32 million in 2001.
1982
The company then laced new challenges with the
bursting of the dot-com bubble and the subsequent
migration of software sales and distribution from CDs
to the Internet. Bayonne survived by diversifying into
new markets where the company could apply its great
c-360 Part 2 Cases in Crafting and Executing Strategy
strength in innovative and difficult package design
and the ability to fold and glue the complex blanks.
President Rand had asked Milliken to focus on
three problem areas: cost, quality, and delivery. At the
end of November 20ll Rand had fired the previous
Iong-serving VP of Operations. Rand told Milliken,
"Our sales are up-we have to run two shifts now. But
we ran a loss for the first time last year since 2001.
[See Exhibit 1 for income statements.] We're getting
more and more complaints about quality, and, what
might be even worse for our customers, wdre deliver-
ing late more often. I understand we're a job shop and
there's usually a tradeoff between keeping your costs
down, getting good quality, and hitting your delivery
promises-but lately it seems we cant even hit two out
of the three. What started to go so wrong for us? Your
predecessor couldnt explain it to me, and his plan of
'We'll just have to try harder' told me he had no idea
what to do. I hope you can do betterl'
TOURIhIG THE FACTCIRY
IN JANUARY 2OI2
fohn Milliken graduated in 2001 from Rensselaer
Polltechnic Institute with a BS in Mechanical Engi-
neering. For the past five years he had been the Oper-
ations Manager of a small packaging firm serving the
northern New /ersey pharmaceuticals industry, so he
came to Bayonne familiar with the general manufac-
turing processes Bayonne used to design and deliver
customized small-unit packaging. During the hiring
process he met most of the management at Bayonne
and also the factory supervisors on both shifts, and
had asked for several reports to be prepared for him
when he came to work in lanuary. Digging into the
pile, Milliken focused on October 201 I since that was
Bayonne's highest-volume month and, as October 31
closes the fiscal year, it would show him complete and
audited l2-month financial statements for the com-
pany. He reviewed the Income Statement, keeping in
mind Bayonne's practice-a common one-of rec-
ognizing revenue when it billed the customer, and it
billed when it shipped product. Milliken then turned
to a production report that listed standard setup and
run times, as well as scheduled production and stan-
dard hours for October in key work centers (Exhibit 2).
A second report showed 'good pieces in/ out" for the
month (Exhibit 3). The last report presented the daily
and cumulative dollar volumes shipped in October,
net of customer returns (Exhibit 4). He also had his
own chart showing the usual flow of orders through
the plant's departments (Exhibit 5).
Quality Control
Milliken left his office and crossed the factory floor to
the Quality Control office to find QC Manager Fran
Schuler inside. They chatted about the procedures for
the start of each shift, then Milliken asked where the
main problems arose.
Schuler told him that quality problems were
concentrated in Fold & Glue with either missing glued
Iines or excess glue. Schuler showed him a report from
October, their worst month of fiscal 2011, indicat-
ing that 60/o of products were found defective due to
glue problems and were scrapped, with a further 1%
of shipped product rejected by the customer due
to glue problems. There were also some problems
in Finishing-a much lower volume department-
primarily due to orders shipping with some or all
pieces missing an attachment like a button or zipper.
If the customer returned these they could usually be
reworked rather than scrapped.
"Whatt your staffing, and your procedures for
preventing or finding defects?" asked Milliken. "The
supervisor signs offon the first good piece the opera-
tor runsl' said Schuler. "That goes in the Work Order
facket." The Work Order facket traveled with the job;
it listed the routing, the standard setup and run times,
any special instructions, and ship-to information. It
also held the customert signed proof along with sam-
ples signed by operators, supervisors, and QC at each
operation.
Schuler told him that QC had one inspector on
each shift covering the Composition, Sheet, Print, and
Die-cut departments, and a second for Fold & Glue,
Finishing, and the shipping dock. The inspectors went
from machine to machine checking two pieces every
hour during the production run, and performed a final
inspection of material before it shipped out. Schuler
said, "In Shipping we check the product against the
proof in the Work Order facket, and against any spe-
cial instructions like special packing or ship-to. Usu-
ally it takes about 15 minutes to do an order. Of course
we might not have the Work Order facket at that point
if it's been partialed since the jacket gets filed up in
the Production office after the first shipmentl' If an
order was running late it was sometimes possible to
rush a "partial" quantity of the whole order to satisfy
part of the customer need, with the rest of the order
completed and shipped later.
EXHIBIT I lncome Statements for Bayonne Packaging,2oog-Oct.2ot1 ($ooo)

Gross Sales $5,140,467 101 .5% $4,438,500 100.8% $3,075,860 1OO.7% $30,758,666 100.9% $37,071,038 100.6% $35,069,202 100.5%
Less: Customer Rejects (75,455) -15% -0.8%
(33,834) -0.7%
(21,531) -0.9%
(276,828) (222,426)-0.6% (175,346) -O5%
Net Sales 5,065,012 100.0% 4,404,666 100.0% 3,054,329 100.0% 30,481 ,B3B 100.0% 36,848,61 2 100.0% 34,893,856 100.0%
COGS:
Shipped Material 3,285,673 64.9"/" 2,704,465 61.4% 1,820,380 59.6% 17,770,912 58.3% 20,782,617 56/% 19,296,302 55.3%
(Scrap) 597,671 11 .8"k 405,2299.2% 268,781 8.8% 2,529,993 8.3% 2,616,251 7.1% 2,163,419 6.2%
Regular DL 525,748 10/% 396,4209.0% 271,835 B.S% 2,499,511 8.2% 2,874,192 7.8"/" 2,547,251 73% o
o
OT DL 1 16,495 2.3% 1.7%
74,879 12,217 0.4o/o 173,746 0.6% 294,789 0.8% 265,193 0,8% o
lL, supervisory 29,884 0.6% 0.6%
25,107 15,272 o.5% 134,120 0.47" 125,285 0.3% 139,575 0.4k N
!

Other Mfg OH 44,520 0.8% 1.3%

57,26'l 51,924 1.7% 548,673 1.8% 736,972 2.O% 732,771 2.1% t!
p
Total COGS 4,595,992 90.7% 3,663,360 83.2% 2,440,409 79.9% 23,656,955 77.6% 27,430,107 74.4% 25,144,5't3 72.1%
Gross Profit 469,020 9.3% 741,345 16.8% 613,920 20j% 6,824,884 22.4% 9,418,505 25.6% 9,749,343 27.9%
Selling Expense 419,383 8.3% 277,4946.3% 167,988 55% 1,493,610 4.9% 1,547,642 42% 1,817,970 5.2"k o
Fd
Admin. Expense 415,331 8.2% 259.8755.9% 186,314 6.1% 2,011,801 6.6% 2,284,614 6.2% 2,128,525 6.1"k p
o
Total Selling and Admin. 834,714 16.5% 537,369 12.2% 354,302 11.6% 3,505,411 115% 3,832,256 10.4% 3,946,495 11.3k p
Net Profit Before Tax (365,694) -7.2o/o 203,9364.6% 259,618 8.5% 3,319,472 10.9% 5,586,250 15.2% 5,802,848 16.6"/" 0q

gc

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c-362 Part 2 Cases in Crafting and Executing Strategy

EXHIBIT 2 October Scheduled Orders, Standard Setup and Run Time (minutes)

Composition (plates)b 402 1 1,438 310 207 48 255

Jagenburg sheeter (sheets) 20 0.0033 1 3,185,032 310 103 175 279
Heidelberg press (sheets) 50 0.0083 2 3,162,737 3'10 258 438 348
Bobst die-cut (sheets)c 30 0.0075 2 3,'108,971 310 155 389 272
lnt. Royal/Queen F&G (pieces)d 180 0.0023 3 6,209,329 77 231 238 156
lnt. Staude F&G (pieces) 40 0.015 4 2,242,039 233 155 561 179
lnt. 3A windoM patch (pieces)e 100 0.01 1 2 782,274 88 147 143 145
Finishing (pieces)r 30 0.1 N/A 687,601 28 14 1,146 N/A

Nofej October 2011 had 347 scheduled work hours net of breaks, including half-day Saturdays.
a "Standard Times" were estimates of setup and run time per job, derived from times recorded in Work Order Jackets from previous, similar
jobs.
b ln
Composition, Setup time is per order while Run time is per plate. App rox. 213 ol the orders were for 4-color (4 plate) printing; the rest
were for 6-color.
c
Changing dies took 2-3 hours but the standards assumed that four to six or more different orders using the same die would be "ganged',
or run together on a single setup. Since Cost Estimating could not know-when routing any individual order-how many orders it might be
ganged with at Die-cutting, Estimating simply routed each order for 30 minutes.
d Blanks
could run on a Royal/ Queen or a dtaude, but no order ran on both.
e
30 of the 3A orders ran on the Royal/ Queens, the remaining 58 on the Staudes.
r
Finishing was labor-intensive piece-work. Bayonne was able to vary the labor as needed, and so effectively could apply as much capacity
as it needed.

EXHIBIT 5 Material Flow through ads, Internet, direct marketing mailings, point-of-
purchase display units and coupons, commission pay-
Operations, October 2ot'l
ments to the retail channel so they'll push the product,
people handing out samples on the street-you name
it. Its all scheduled to hit, to have impact, on a spe-
Sheet 9,555,097 9,4A8,2i1 cific date. If our product isn t there, the customer goes
Print 9,488,211 9,326,912 nuts. We have orders as small as 1,000 pieces, but we
Die-cut 9,326,912 9,233,643 sell some of those for a high price per piece-they're
Royal/Queen 6,209,329 5,588,396 just as important to the customer. In October, since
Staude 2,242,039 2,085,096 you ask, we were late more than 20o/o of the time. Two
34 782,274 768,193 years ago I hit the roof if it was 5% in a month. The
Finishing 687,601 675,335 factory doesnt agree with me on this, they take a bow
Total pieces shipped: 8,441 ,6BG
for being 'bn time" if they get a partial out. But that's
nowhere near good enough for the customer. You try
a getting the customer to give us a second look if weve
Material scheduled at Sheet, Print, Die-cut has been converted
from sheets to pieces, sheets averaged 3 pieces been late once. I'm telling you, it's getting worse not
better, year after yeari' Milliken nodded. "The second
biggest problem is the boxes popping open with not
Sales Management enough glue or no glue at all. Sometimes there's too
Milliken next spoke with VP Sales AIex Wascov and much glue laid on so it bleeds out, it looks bad or you
asked him about his biggest concerns. "On-time deliv- cant open it because it's stuck so bad. Dont get me
ery," said Wascov. "We're selling a piece of an expen- wrong-we have a beautiful product, great designs,
sive promotional campaign. The customer has bought classy printing. tsut the giue problems are real, or
 Case z7 Bayonne Packaging, Inc c-363

EXHIBIT 4 Value of Actual Shipments in October (dollars)

1-Oct 189,380 189,380 15 43

3-Oct (3,405) 185,976 6 21
4-Oct u4,208 326,184 5 0't
5-Oct 3,674 329,858 7 12
6-Oct 76,914 406,772 9 12
7-Oct 366,641 773,413 12 23
8-Oct 7,711 781,124 11 01
10-Oct (23,639) 757,485 o 12
11-Oct 163,777 921,262 12 21
12-Oci 243,332 1,164,594 I 02
13-Oct 56,747 1,221,341 7 02
14-Oct 208,154 1,429,495 15 14
15-Oct 113,677 1,543,172 12 12
17-Oct 134,586 1,677,758 I 01
18-Oct 204,803 1,882,562 b 01
19-Oct (5,080) 1,877,482 15 13
20-Oct 211,883 2,089,365 12 02
21-Oct 456,738 2,546,103 18 24
22-Oct 184,201 2,730,304 14 13
24-Oct 1 92,1 85 2,922,489 16 33
25-Oct 191,585 3,114,074 15 34
26-Oct 284,708 3,398,782 19 47
27-Ocl 338,036 3,736,819 17 56
28-Oct 222,682 3,959,501 22 812
29-Oct 419,952 4,379,453 28 12 15
31-Oct 685,559 5,065,012 J4 19 20
Total pieces shipped: 8,441,686

aCounts each partial separately 353 73 107

sometimes the product is just missing some Finishing
piece. Delivery is the big issue, thoughi'
Milliken asked why customers sometimes wanted
to "move up'or expedite a due date to receive prod-
uct sooner than they had originally been promised,
assuming schedule was part of a coordinated market-
ing project. Wascov said that, first, some customers
had learned or heard that Bayonne on-time delivery
was not to be trusted. Second, the customer may have
originally wanted the material sooner but someone had
settled for the standard date, and then later come back
to get what they really wanted. Third, some other
component of the marketing project might become
available earlier than anticipated, giving the cus-
tomer hope that all of the pieces, including Bayonne's,
could come together sooner. Fourth, sometimes the
customer was putting together the project for some
other company that wanted more lead-time-for
example, it was not uncommon for retail channels to
demand that promotional materials be staged sooner
than originally promised.
Hoping to switch away from this iitany of woe,
Milliken asked, "Other than the problems, how is
Bayonne doing?" Wascov looked immediately happier.
"Greatl" he said. "We're grabbing into new markets,
getting aggressive about taking customers wdve never
had before. This year for the first time weve had some
big, solid hits, like up to two-hundred thousand piece
orders in candies, pretty much a whole new product for
us. Same thing with those little corporate gift sets. I told
c-364 Part z Cases in Craftlng and Executing Strategy

ffiXg"{FSgY $ Flow of Orders through Production Department

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my sales people to do what it takes, price aggressively to
the market, and boy they surely did. Dave Rand com-
plains about the margins, but he doesnt complain about
getting the volume. The designers had to learn a few
new tricks, and the Fold and Glue operators too, plus
we got into some FDA requirements about coatings,
adhesives, and liners, but the amount of business were
pulling in is great. If we could just get a track record
for delivering on time we can win a lot more custom-
ers too, especially with the kinds of products we havent
touched before, just over the river. You know how much
promotional material money there is in Manhattan?!"
Cornpositicn, Sheeting, Frinting,
and *ie-Cut
By mid-afternoon Milliken had worked his
through most of Bayonne's factory work centers. First
he toured the Composition Department, where both
printing and package designs were developed and
finalized, printing plates made, and die-cutting dies
ordered. From there Milliken passed through the Sheet
Department, where the fagenburg sheeter turned
roll stock into sheets of paper stacked on skids to be
printed. In the Print Department he watched 4- and
6-color Heidelberg presses print the sheets. He fin-
ished this part of his tour in the Die-Cut Department,
where Bobst die-cutters cut the printed sheets into
blanks-the flat cut-out shapes of printed paper ready
to be folded and glued into finished product. He was
led through these areas by Sean Quinn, the manager
for these departments. Quinn had a supervisor within
each department on both shifts reporting to him.
Watching the assistant sheeter operator expertly
maneuver the clamp truck to fetch and stack up rolls
of paper, Milliken asked Quinn how they scheduled
way the sheeter and the Heidelberg printers, and how
often a lack ofstock caused delays.
Quinn told him that he scheduled the sheeter by
what needed to be printed in the following day or two.
 Case
gX${6ffi&T &A Bobst Die-Cut Machine
They rarely stocked out of because they kept enough
variety on hand, and their supplier, International Paper,
could restock from their warehouse in Montvale, New
fersey, within a day or two in almost all cases.
Quinn scheduled printing by due dates, which
were either the standard ones originally promised
to the customer (typically three weeks from signed
proof, depending on the number of operations and
the size of the order), rush orders soid from the start
with shorter-than-standard lead times or, about twice
a day, dates expedited after the order was placed.
In Quinnt office looking out a window at pallets
of printed sheets waiting to be die-cut into blanks,
Milliken asked how the Bobst die-cutters were sched-
uled. 'As much as we can by having the same diel'
Quinn said. "We sell enough of the same package
designs so we can gang orders.2 Jerry, the cost estima-
tor, knows that when Order Entry routes the orders
they give us 30 minutes as a standard setup time-
they know it really takes two or three hours if you have
to change over a Bobst die, but they figure on me gang-
ing. I juggle the orders I have in the department and
that generally allows me to gang six or eight orders on
a setup. If I didnt gang, I couldnt get enough run time
to stay on schedule." Milliken asked how long Quinn
usually held an order waiting for more to come in to
the department for ganging. Quinn said it was usually
about a week, sometimes as much as two.
While he taiked, Quinn illustrated his scheduling
by pointing to a board where small magnetic clips
each held a piece of paper with a Work Order number
z7 Bayonne Packaging, Inc c-36s
gX&"{$ffi*Y &ffi lnternational Queen Fold
and Glue Machine
and its die number. Most were placed neatly in col-
umns under the two Bobst machine numbers, lined
up in the order to be run. Pushed off to one side of
the board was a jumble of clips with orders that had
not yet been scheduled to run. Miliiken studied the
jumble for a moment. Each order appeared to have
a different die number. Milliken asked Quinn about
the schedule that was generated twice weekly by the
computerized scheduling system. "It's uselessi' Quinn
said bluntly. Milliken asked him why. Quinn said,
"The biggest reason being, between rush orders and
ganging the orders to keep the machines running, I
couldnt afford time-wise to do what the printout says.
Apart from that, what the schedule tells you is, excuse
me, garbage. It says you have an order when you've
never seen it, or that you still have an order that you
know you finished and got out of here. That doesnt
have to happen too many times before you just dont
worry about the printouti'
Fold & Glure
Milliken's next stop was the Fold & Glue Department,
where the die-cut blanks were turned into finished
product. The department had four kinds of machines:
two International Queens and one International
Royal, which were high-speed machines but complex
to setup; four International Staudes, which were slow
machines but easier to setup, best used for low-volume
jobs; and two International 3.A machines which were
"window/patch" machines, using rotating cylinders
c-366 Part z Cases in Crafting and Executing Strategy
which attached clear plastic "windows" and also tear-
strips on envelope-style products.
Milliken asked department manager Rick Gomes
about his problems. Gomes told him, "The department
runs pretty good, but we get a lot of problems that are
not our fault. Sean Quinn sends me a lot of orders that
are one or two days from the due date, or even late
already. So we have to run them as soon as possible, but
there are already orders ahead ofthem here lined up. So
I cant gang orders like he can. With those, and the rush
orders too, I have to breakinto runs, get the order done,
and then go back to the first order I broke into-so that
makes for partialsl' "\{hat about the glue problems?"
asked Milliken. "Getting the hot melt glue guns q/n-
chronized to the belts and swords3 is the tough thing
about a setupi' said Gomes. "If you do the setup quick
and dirty, it runs slow-but I cant run slow with our
volume. Usually we get it alright, but sometimes not.
Let me show you here on this Queen." Milliken was
familiar with fold & glue machines, but he stood with
Gomes looking at the 35' straight-line machine and
nodded while Gomes talked over the noise. "The feed
takes the blank from the stack here we get from Die-
cut, lays it down flat, then the fingers grab and move
it. At the first glue gun a line of glue gets laid down,
then the swords pick up the tabs, fold them over and lay
them down. They go between the top and bottom belts,
which squeeze the fold while the glue sets, for the first
fold. On this order, that happens again at the second
guns. Getting it running at 22,000 to 27,000-an-hour
like this with the swords, belts and guns synched, not
too little, not too much, and not folding off-it's not
easy. The Staudes are quick to setup. They're great for
little jobs, but they run slow, of coursel'
Milliken looked at a hot melt glue gun closely.
The tiny glue orifice in the brass nozzle was open,
with some hardened residue around it. The fitting
from the glue canister was tightened on with an auto-
mobile-style hose clamp. He touched the nozzle and it
shifted slightly. "How often do you change the filter?"
he asked. Gomes said, "When it's needed-we can tell."
Milliken asked, "How do you decide between
the Royal and Queens or the Staudes where to run
orders?" Gomes said, "If we could do what we wanted
we'd run orders of 60,000 or more on the Queens or
the Royal, and an1'thing less on the Staudes. 'Course, a
lot of times we cant do thatl'Milliken asked about the
shop floor schedule. Gomes said, "|ust personally, I
dont look at it. By the time I get orders, I'm just going
by what's getting expedited and due dates. Whatever
fire is hottest, I'm putting it out."
They watched, a grizzled operator setting up the
Royal, banging forcefully on a sword adjustment with
a steel mallet. The part didnt move. The operator
swung the mallet harder and the part jumped about
an inch. "What's your maintenance schedule?" asked
Milliken. "Well, operators are responsible for clean-up
at the end ofshift, and checking oil and grease points
at the start. If something breaks down, Maintenance is
good about getting right on it. Weve got a pretty good
supply ofspare parts there in the cageJ'
Scheduling
The Finishing Department manager was out sick so
Milliken decided to tour there the next day. Back in the
Production office Milliken sat down with fim Worthen,
the plant scheduler, and asked him about his job.
Worthen told Milliken that his job was to do
whatever it took to deliver on time. The plant held a
daily production meeting every morning where the
main topic was what had gone wrong the previous
day, the status of large, important orders, and what the
department managers would do to deliver on time any
newly expedited orders. Worthen indicated that gen-
erally they did not tell Sales if an order was going to
be late. He said, "We're supposed to but a lot of times
we dont know for sure until the end because we're
hoping to get a partial out on time. If you tell Sales
ahead of time an order is going to be late, Wascov just
starts hammering us and calling up Dave Rand and
the rep starts screaming. It creates a lot of unneces-
sary work-and then they bump something else, so
the ripple effect is just more jobs late. Of course, they
dont blame themselves for that, do they?"
Milliken asked, "When you partial, do you
break orders in half or have a little part and a bigger
part usually? And do you break into more than two
pieces?" Worthen said, "It's always just the first and
second piece, and they're just about always the same
size-itt easier that way to justify doing all the addi-
tional setups if the partials dont have tiny numbers."
Milliken said, "Sean Quinn and Rick Gomes say
they cant use the schedule. Why is that?" Worthen
told him that much of the shop floor reporting was
missing or wrong, forcing Worthen to spend several
hours each day trying to scrub the data using informa-
tion on work order pieces completed in each opera-
tion which the operators recorded by hand in the
Work Order Jackets.
Milliken asked why the data reported through
the shop floor computer terminals was so inaccurate.
 CasezT Bayonne Packaging, Inc.
Worthen told him that operators recorded pieces
completed in the Work Order Jacket and their start
and stop times on setup and run. The Estimator used
that data for estimating standard times, and Payroll
got attendance data when the operators swiped their
bar-coded ID cards through the terminals. Milliken
knew that operators got a 30-minute meal break
in the middle of their 8-hour shift. Roll stock use at
the sheeter, plates in Comp, and ink in Print were
recorded by different, manual systems, and the expe-
rienced operators there maintained their own local
inventory records to make sure that they did not run
short. As a result, no one felt a real need for accurate
terminal-based shop floor production reporting.
Milliken asked what rules the computer-based
scheduling system used. Worthen told him that the com-
puter recalculated and printed a new schedule tvyice a
week for two "buckets"-the machine capacity in hours
available in each work center in the Monday-Tuesday-
Wednesday and the Thursday-Friday-saturday (half-
day) buckets. The system added up the standard setup
and run hours for every order released to the plant and
"filled the buckets" by scheduling orders by priority.
Priority was set by the 'tritical ratio'. The ratio's
numerator was the number of hours between the cal-
culation date and the due date, and the denomina-
tor was the total standard setup and run hours for all
remaining operations plus 48 hours for each remain-
ing operation. The lower the ratio, the higher the pri-
ority. Worthen added, "My rule of thumb is that if the
critical ratio when the job starts is lower than 2,Ihave
to watch that job, it's born in trouble."
While Worthen was explaining this, Milliken
sketched his understanding of the rules with an exam-
ple (see Exhibit 7). He showed this to Worthen, who
nodded and remarked, "Nobody ever got that before
the first time I told himl'
Milliken asked, "Has this extra two days at each
work center for scheduling purposes, in addition
EXHIBIT 7 Example of a Scheduling Critical Ratio
Comp J
Sheet 2
Print 6
Die-cut J
Fold & Glue 8
Total hours: 22 setup and run + (5 ops x 48 hours each):262
Today: January 2. Due date: January 25. Hours: 23 x 24: 552
Critical ratio: 552/262 :2.11
c-367
to the work time there, got something to do with
partials, like the orders really turn into two orders on
their way through?" Worthen said, "No, it's a bunch of
things that cause orders to just sit around and not get
worked on; I'm just telling you that in my experience,
anl,thing less than a two ratio is almost always latei'
Milliken asked, "\Arho has authority to expedite
orders?" Worthen said, "Well, Dave Rand of course.
Wascov gets on the horn to him, or he would call lohn
McNulty [Milliken's predecessor] directly to get orders
expedited. Since |ohn's gone, Wascov's been calling me.
Quinn and Gomes complain, and Joe Pensiero in Fin,
ishing actually gets it worst of all since he's dead last after
any other delays. But the system actually works pretty
good. If an order gets expedited after it's out on the floor,
we give it to Neil Rand. He takes the Work Order right
through whatever is left and makes sure it happens, puts
it on a machine right away with no delays, wherever it's
routed. Red carpet treatmentl' Worthen grinned. "Of
course Neil's worked all over the factory since he was a
kid-het actually a good setup man himself in Fold &
Glue. His orders are never late unless we hand it to him
already past due-so of course Wascov is always trying
to get expedites authorizedl' Milliken asked politely,
"Neil is a family member?" "Yeahl' said Worthen. "He's
Dave's uncle. He wasnt ever really executive material,
but he's a great guy; everybody loves himl'
Back in Milliken's office the mid-afternoon lanu-
ary sun was already sinking. Aware that President
Rand wanted his recommendations by the end of the
week, Milliken pulled out a fresh pad of paper and
started organizing his thoughts. He had quite a few
questions to answer, among them:
1. Why were delivery, cost, and quality all lanl<rng
last October? It seemed like a good month to ana-
Iyze because he had fairly complete data for it, and
it probably showed Bayonne operating under its
greatest stress.
c-368 Part z Cases in Crafting and Executing Strategy
) The plant had seemed relatively busy as he walked
through, though he knew that operators and super-
visors tended to look that way while the boss was
touring. Still, given Bayonne's delivery perfor-
mance, he wondered if capacity were adequate, or
if some or even most of the work centers would be
over-stretched even with better management than
he had observed. How did the quality problems
play into this? Were orders being run on the right
1'€lanks"are die:culpaper shapes.ready to
'
be folded and glued into the final product. To
create,bl?nks fron printed gheels, the die. ' had the. garyle paper thickne€s, bJank shape.
cutter sliced through the paper to cut out the
shape, and made other, more shallow impres-
.sions lo er.eate the creagesJor.;foldln g;; . ., 1
2
Orders were "ganged" when they were similar
enough in some setup characteristic so that
machines? Could he quantify the effect of the runs
being broken into by the expediting and partialing?
3. What was the practical effect of the informal sys-
tem Bayonne used to schedule the order in which
jobs were run? The computer system was obviously
useless right now, but would it be worth trying to
fix the data and then get adherence to the schedul-
ing system?
'several orders could be run sequentially after
machine A high speed louched the s"word, lhe
a Singld setup. ln.di+cutting; if several orders sword guided it up and folded it over along an
indentqd told linerpre€sed into the blank by the
and cfease lines, they could normally all use die-cutting operation.
the same die and be run on a single setup.
3
"swords'were long thin.smogthlyipurving l
metal pieces. Wtlg.! the side or tab on a blank
lying flqt and tiaGling down the length of the