Home Uncategorized Using a formal systems diagramming approach, analyze Bayonne's organizational performance and develop a robust effect-cause-effect tree diagram using the 5-Whys tool, as done previously in the course.

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Using a formal systems diagramming approach, analyze Bayonne’s organizational performance and develop a robust effect-cause-effect tree diagram using the 5-Whys tool, as done previously in the course.

Must be APA format and follow the guidelines in this order listed below :

Create a robust causal loop diagram that incorporates appropriate causal loop logic in the analysis, and which also identifies common system archetype patterns within the diagram. This diagram should describe fundamental system behaviors and outcomes. The diagram itself should be one page and can be hand-drawn or drawn with software. Tables are not appropriate; it must be in the form of a diagram.
Write a summary description, including specific recommendations, that links directly to both your 5-why and associated CLD analysis (which includes embedded archetype relationships) for improving the packaging company’s operations and the organization as a whole. (1-2 single spaced pages).

MAKE SURE YOU CREATE A ROBUST CASUAL LOOP DIAGRAM. Reference page listed in attachment

________________________________________________________________________________________________________________

HBS Professor Roy D. Shapiro and Boston University Professor Paul E. Morrison prepared this case solely as a basis for class discussion and not
as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is
fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the
narration.

Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

R O Y D . S H A P I R O

P A U L E . M O R R I S O N

Bayonne Packaging, Inc.

Cold grey light came through the window of John Milliken’s cubicle in the Production office of
Bayonne Packaging at 6:30 AM on Monday, January 2, 2012. The new VP of Operations, Milliken had
arrived a half-hour before the first shift started 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 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.

Company and Industry Background

Bayonne Packaging, Inc., was a $43 million company located 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 outside counsel. Bayonne was a “specialty packaging” paper converter that
produced customized, complex-design packaging that was used by industrial customers for
promotional materials, software, luxury beverages, and gift food and candy. Except for a few low-
volume operations such as laminating and gold- or silver-foil finishing, Bayonne provided all the
necessary services from 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 “blanks,”1 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 fulfillment house. In some cases Bayonne provided
additional finishing work if needed such as attaching string-and-button fasteners, Velcro dots, or
other attachments.

1 “Blanks” are die-cut paper shapes ready to be folded and glued into the final product. To create blanks from printed sheets,
the die-cutter sliced through the paper to cut out the shape, and made other, more shallow impressions to create the creases for
folding.

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This document is authorized for use only by Roman Moore in MMSL-6645-7/WMBA-6040B-7/WMBA-6040-7/MGMT-6645-7-Improving Business Performance2020 Fall Semester 09/07-12/27-
PT4 at Laureate Education – Walden University, 2020.

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2 BRIEFCASES | HARVARD BUSINESS SCHOOL

The paper packaging industry grew rapidly in the 1980s and early 1990s as consumer goods
companies sought to make a greater impact with their promotional materials or moved their
promotional budget from print media and broadcast forms to the package itself at the point of
purchase. In addition, the explosive growth of software packaging, which featured expensively
printed large “boxes,” 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
$10 million in sales in 1982 to $32 million in 2001. The company then faced 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 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 2011 Rand had fired the previous long-serving VP 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, we’re delivering 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 can’t even hit two out of the
three. What started to go so wrong for us? Your predecessor couldn’t 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 better.”

Touring the Factory in January 2012

John Milliken graduated in 2001 from Rensselaer Polytechnic Institute with a BS in Mechanical
Engineering. For the past five years he had been the Operations Manager of a small packaging firm
serving the northern New Jersey pharmaceuticals industry, so he came to Bayonne familiar with the
general manufacturing 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 January. Digging into the pile, Milliken focused on October 2011 since that was
Bayonne’s highest-volume month and, as October 31 closes the fiscal year, it would show him
complete and audited 12-month financial statements for the company. He reviewed the Income
Statement, keeping in mind Bayonne’s practice—a common one—of recognizing 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 standard 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 lines or excess glue. Schuler showed him a report from October, their worst month of fiscal
2011, indicating that 6% 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

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HARVARD BUSINESS SCHOOL | BRIEFCASES 3

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.

“What’s your staffing, and your procedures for preventing or finding defects?” asked Milliken.
“The supervisor signs off on the first good piece the operator runs,” said Schuler. “That goes in the
Work Order Jacket.” The Work Order Jacket 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 customer’s
signed proof along with samples 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 Jacket, and against any special instructions
like special packing or ship-to. Usually it takes about 15 minutes to do an order. Of course we might
not have the Work Order Jacket at that point if it’s been partialed since the jacket gets filed up in the
Production office after the first shipment.” 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.

Sales Management

Milliken next spoke with VP Sales Alex Wascov and asked him about his biggest concerns. “On-
time delivery,” said Wascov. “We’re selling a piece of an expensive promotional campaign. The
customer has bought ads, Internet, direct marketing mailings, point-of-purchase display units and
coupons, commission payments to the retail channel so they’ll push the product, people handing out
samples on the street—you name it. It’s all scheduled to hit, to have impact, on a specific date. If our
product isn’t there, the customer goes nuts. We have orders as small as 1,000 pieces, but we sell some
of those for a high price per piece—they’re just as important to the customer. In October, since you
ask, we were late more than 20% of the time. Two years ago I hit the roof if it was 5% in a month. The
factory doesn’t agree with me on this, they take a bow for being “on time” if they get a partial out. But
that’s nowhere near good enough for the customer. You try getting the customer to give us a second
look if we’ve been late once. I’m telling you, it’s getting worse not better, year after year.” Milliken
nodded. “The second biggest problem is the boxes popping open with not enough glue or no glue at
all. Sometimes there’s too much glue laid on so it bleeds out, it looks bad or you can’t open it because
it’s stuck so bad. Don’t get me wrong—we have a beautiful product, great designs, classy printing.
But the glue problems are real, or sometimes the product is just missing some Finishing piece.
Delivery is the big issue, though.”

Milliken asked why customers sometimes wanted to “move up” or expedite a due date to receive
product sooner than they had originally been promised, assuming schedule was part of a coordinated
marketing 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 customer 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.

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4 BRIEFCASES | HARVARD BUSINESS SCHOOL

Hoping to switch away from this litany of woe, Milliken asked, “Other than the problems, how is
Bayonne doing?” Wascov looked immediately happier. “Great!” he said. “We’re grabbing into new
markets, getting aggressive about taking customers we’ve never had before. This year for the first
time we’ve 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 my sales
people to do what it takes, price aggressively to the market, and boy they surely did. Dave Rand
complains about the margins, but he doesn’t 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 amount of business we’re pulling in is great.
If we could just get a track record for delivering on time we can win a lot more customers too,
especially with the kinds of products we haven’t touched before, just over the river. You know how
much promotional material money there is in Manhattan?!”

Composition, Sheeting, Printing, and Die-Cut

By mid-afternoon Milliken had worked his way 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 Jagenburg 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 finished 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 the sheeter and the Heidelberg printers,
and how often a lack of stock caused delays.

Quinn told him that he scheduled the sheeter by what needed to be printed in the following day
or two. 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 Jersey, 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 sold from the start with shorter-than-standard lead times or,
about twice a day, dates expedited after the order was placed.

In Quinn’s 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 scheduled. “As much as we can by having the
same die,” Quinn said. “We sell enough of the same package designs so we can gang orders.2 Jerry,
the cost estimator, 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 ganging. 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 didn’t gang, I couldn’t 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.

2 Orders were “ganged” when they were similar enough in some setup characteristic so that several orders could be run
sequentially after a single setup. In die-cutting, if several orders had the same paper thickness, blank shape, and crease lines,
they could normally all use the same die and be run on a single setup.

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HARVARD BUSINESS SCHOOL | BRIEFCASES 5

While he talked, Quinn illustrated his scheduling by pointing to a board where small magnetic
clips each held a piece of paper with a Work Order number and its die number. Most were placed
neatly in columns 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.
Milliken 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 useless,” 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
couldn’t 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 doesn’t have to happen too many times
before you just don’t worry about the printout.”

Fold & Glue

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 3A machines which were “window/patch” machines, using rotating cylinders 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’s already orders ahead of them here lined up. So I can’t gang
orders like he can. With those, and the rush orders too, I have to break into runs, get the order done,
and then go back to the first order I broke into—so that makes for partials.” “What about the glue
problems?” asked Milliken. “Getting the hot melt glue guns synchronized to the belts and swords3 is
the tough thing about a setup,” said Gomes. “If you do the setup quick and dirty, it runs slow—but I
can’t 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 course.”

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
automobile-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

3 “Swords” were long thin smoothly curving metal pieces. When the side or tab on a blank lying flat and traveling down the
length of the machine at high speed touched the sword, the sword guided it up and folded it over along an indented fold line
pressed into the blank by the die-cutting operation.

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6 BRIEFCASES | HARVARD BUSINESS SCHOOL

Queens or the Royal, and anything less on the Staudes. ‘Course, a lot of times we can’t do that.”
Milliken asked about the shop floor schedule. Gomes said, “Just personally, I don’t 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 didn’t 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 of shift, and checking oil and grease points at the start. If something breaks
down, Maintenance is good about getting right on it. We’ve got a pretty good supply of spare parts
there in the cage.”

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 Jim 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 generally 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 don’t 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 unnecessary work—and then they bump something else, so the ripple
effect is just more jobs late. Of course, they don’t 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—it’s easier that way to justify doing all
the additional setups if the partials don’t have tiny numbers.”

Milliken said, “Sean Quinn and Rick Gomes say they can’t 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 information on work order pieces
completed in each operation 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. 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 experienced 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
computer recalculated and printed a new schedule twice a week for two “buckets”—the machine
capacity in hours available in each work center in the Monday-Tuesday-Wednesday and the

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HARVARD BUSINESS SCHOOL | BRIEFCASES 7

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 “critical ratio”. The ratio’s numerator was the number of hours between the
calculation date and the due date, and the denominator was the total standard setup and run hours
for all remaining operations plus 48 hours for each remaining operation. The lower the ratio, the
higher the priority. Worthen added, “My rule of thumb is that if the critical ratio when the job starts is
lower than 2, I have to watch that job, it’s born in trouble.”

While Worthen was explaining this, Milliken sketched his understanding of the rules with an
example (see below). He showed this to Worthen, who nodded and remarked, “Nobody ever got that
before the first time I told him.”

Operation Standard setup and run hours
Comp 3
Sheet 2
Print 6
Die-cut 3
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 = 2.1

Milliken asked, “Has this extra two days at each work center for scheduling purposes, in addition
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, anything less than a two ratio is
almost always late.”

Milliken asked, “Who has authority to expedite orders?” Worthen said, “Well, Dave Rand of
course. Wascov gets on the horn to him, or he would call John McNulty [Milliken’s predecessor]
directly to get orders expedited. Since John’s gone, Wascov’s been calling me. Quinn and Gomes
complain, and Joe Pensiero in Finishing 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
treatment.” Worthen grinned. “Of course Neil’s worked all over the factory since he was a kid—he’s
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 authorized.” Milliken asked
politely, “Neil is a family member?” “Yeah,” said Worthen. “He’s Dave’s uncle. He wasn’t ever really
executive material, but he’s a great guy; everybody loves him.”

Back in Milliken’s office the mid-afternoon January 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 tanking last October? It seemed like a good month to
analyze because he had fairly complete data for it, and it probably showed Bayonne
operating under its greatest stress.

2. The plant had seemed relatively busy as he walked through, though he knew that operators
and supervisors tended to look that way while the boss was touring. Still, given Bayonne’s

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8 BRIEFCASES | HARVARD BUSINESS SCHOOL

delivery performance, 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 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 system 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 scheduling system?

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4420 | Bayonne Packaging, Inc.

10 BRIEFCASES | HARVARD BUSINESS SCHOOL

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

Standard Timesa Standard Hours

Machine or Work Center Setup Run
Number

Mach.
Sheets/Pcs
Scheduled

Orders
Sched.

Total
Setup Hrs

Total
Run Hrs

Total Hrs
Per Mach.

Composition (plates)b 40 2 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 3,162,737 310 258 438 348
Bobst die-cut (sheets)c 30 0.0075 2 3,108,971 310 155 389 272
Int. Royal/Queen F&G (pieces)d 180 0.0023 3 6,209,329 77 231 238 156
Int. Staude F&G (pieces) 40 0.015 4 2,242,039 233 155 561 179
Int. 3A window/ patch (pieces)e 100 0.011 2 782,274 88 147 143 145
Finishing (pieces)f 30 0.1 N/A 687,601 28 14 1,146 N/A

Note: 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 In Composition, Setup time is per order while Run time is per plate. Approx. 2/3 of 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 Staude, but no order ran on both.

e 30 of the 3A orders ran on the Royal/Queens, the remaining 58 on the Staudes.

f 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.

Bayonne Packaging, Inc. | 4420

HARVARD BUSINESS SCHOOL | BRIEFCASES 11

Exhibit 3 Material Flow Through Operations, October 2011

Machine/ Work Center Pieces Ina Pieces Out

Sheet 9,555,097 9,488,211
Print 9,488,211 9,326,912
Die-cut 9,326,912 9,233,643
Royal/Queen 6,209,329 5,588,396
Staude 2,242,039 2,085,096
3A 782,274 768,193
Finishing 687,601 675,335

Total pieces shipped: 8,441,686

a Material scheduled at Sheet, Print, Die-cut has been converted from sheets to pieces, sheets averaged 3 pieces

Exhibit 4 Value of Actual Shipments in October (dollars)

Date Daily Cumulative Orders Shippeda Late Partialed

1-Oct 189,380 189,380 15 4 3
3-Oct (3,405) 185,976 6 2 1
4-Oct 140,208 326,184 5 0 1
5-Oct 3,674 329,858 7 1 2
6-Oct 76,914 406,772 9 1 2
7-Oct 366,641 773,413 12 2 3
8-Oct 7,711 781,124 11 0 1
10-Oct (23,639) 757,485 9 1 2
11-Oct 163,777 921,262 12 2 1
12-Oct 243,332 1,164,594 9 0 2
13-Oct 56,747 1,221,341 7 0 2
14-Oct 208,154 1,429,495 15 1 4
15-Oct 113,677 1,543,172 12 1 2
17-Oct 134,586 1,677,758 8 0 1
18-Oct 204,803 1,882,562 6 0 1
19-Oct (5,080) 1,877,482 15 1 3
20-Oct 211,883 2,089,365 12 0 2
21-Oct 456,738 2,546,103 18 2 4
22-Oct 184,201 2,730,304 14 1 3
24-Oct 192,185 2,922,489 16 3 3
25-Oct 191,585 3,114,074 15 3 4
26-Oct 284,708 3,398,782 19 4 7
27-Oct 338,036 3,736,819 17 5 6
28-Oct 222,682 3,959,501 22 8 12
29-Oct 419,952 4,379,453 28 12 15
31-Oct 685,559 5,065,012 34 19 20

a Counts each partial separately 353 73 107
Total pieces shipped: 8,441,686

4420 | Bayonne Packaging, Inc.

12 BRIEFCASES | HARVARD BUSINESS SCHOOL

Exhibit 5 Flow of Orders Through Production Department

Quote

To Customer

Composition

Dept.

Design
OK?

Sheet
Dept.

Print
Dept.

Die Cut
Dept.

Royal/
Queen

Order
Size?

Staudes

3A?

Finish

Dept.

Yes

Yes
No

Large Small

Bayonne Packaging, Inc. | 4420

HARVARD BUSINESS SCHOOL | BRIEFCASES 13

Exhibit 6a Bobst Die-Cut Machine

Exhibit 6b International Queen Fold and Glue Machine

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Bayonne Packing 1

Bayonne Packing 3

Figure 1: Bayonne Packing Casual Loop Diagram

Figure 2: Bayonne Packaging 5-Why analysis

Cost – production cost exceeding revenue and inadequate inventory management

Why?

Why?
Why?
Why?

Problem: Bayonne Packaging’s First Loss in 2 decades

Quality – products do not meet customer needs and need to be sent back.

Company focused on reducing operating cost and had unbalanced strategic process flow

Business Diversification – wanted to maintain its core business and diversify its business simultaneously

Delivery – persistently late or incorrect deliveries

Low Customer Satisfaction & Retention Rate

Figure 3: Bayonne Packaging Cause-effect-cause Diagram

Loss of Revenue

Increased Cost

Poor Maintenance

Delivery Delays

Customer Dissatisfaction and Poor Customer Retention

Decreased Quality

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