BA339:05 Winter 2016

Cody Layton

Scharffen Berger Chocolate Maker Case 1. The ball mill has potential to be a major step forward in
meeting the rising demand for quality chocolate produced by Scharffen Berger. The ball mill has the
ability to reduce the particle level of the chocolate from one hundred microns to twenty-five microns in
just three hours, instead of the forty to sixty hours that this process takes with the conche alone. The
chocolate would still need to have some time in the conche for proper aeration, but this would only be
ten hours. The addition of the ball mill would cut the grinding and aeration process from forty to sixty
hours, down to a combined fifteen hoursbetween the ball mill and conche. The addition of this new ball
mill has the ability to increase capacity by at least 75 percent. If I were Jim Harris, I would go through
with the implementation of the ball mill, as this is a simple way to increase capacity, while still managing
to produce the finest quality chocolate. The quality of the chocolate after preparation with the ball mill
was already cleared by Scharffen Berger, after figuring out that the first batch they tested contained
another companies inferiors beans. The second and third batches that Scharffen Berger tested, seemed
to have no compromise to the products quality. The ball mill is most valuable for products with higher
sugar content and would provide quality benefits by decreasing flavor degradation from excessively
manipulating the ingredients. To successfully integrate the ball mill in substitute for operating entirely
off of the conche requires splitting tasks and the use of parallel work stations of skilled workers to
reduce each task time. After gaining new capacity through the implementation of the ball mill, a
reevaluation of the production line is needed to identify where the next big area of improvement or
investments could be made to further efficiency in the chocolate production process.2. To answer this
question, it is essential to look at Exhibit I, Figure I. This figure shows the current state capacity
expansion for the 62% cocoa recipe. Using this chart we can seethe conche’s limitations to meet the
forecasted 150% increase in demand being considered. After adjusting for the other ingredients used in
the conche production, with an output of 816kg per day of nibs, we can conclude that the conche is the
largest bottleneck in the chocolate production process. Following the conche, the roaster and the
melanguer are shown to be the next two constrained resources. This means that both the roaster and
the melanguer need to operate for more hours each day if the company is going to reach the output
goal. At this point we must look at “Figure 2 – the Future-State Capacity Expansion for the 62% Cocoa
Recipe”. This figure reveals the 150% increase in production that is desired, and what is needed to
accomplish that goal. The 150% increase in production is based on the current conche production of
2040kg each day. In order for production to keep up with the increase if demand of 150%, the daily
production of nib from the conch would need to be 2040kg per day. As revealed in the production
discussion, and in Figure I, the current nib production rate from the conch is well below this capacity
requirement. The

Cody Layton

conch is only able to produce 816 kg per day. The analysis in Figure 2 was to determine whether the
capacity with the addition of the ball mill could increase over the entire production line by increasing nib
production in the conch to the desired 2040kg per day.Moving beyond just the addition of the ball mill,
many other pieces of the production lineneed to increase their output if the increase in demand is going
to be met. The roaster needs to increase production from 1185kg of nibs per day to 2072kg per day. The
winnowers output needs to increase from 1971kg of nibs per day to 2218kg per day. The melanguer also
needs to increase its nib output from 1472kg per day to 2208kg per day. The conche, which is the major
time consuming setback in production would now have an output rate of 2040kg per day of nibs. This is
high enough to satisfy the 150% increasethat is being thought through with the addition of the ball mill
for this recipe. The ball mill would also produce 2040kg per day of nibs. The last step in the production
process that needs to be reviewed for the increase of capacity to 150% is the tempering and molding
process. This process needs to increase from 1360kg of nibs per day to 2040kg per day. One option to
make this happen, as presented in the paper, is to use more third party co-packers since they have the
access capacity.Another change that was mentioned in the paper that could help increase capacity was
theoption of transferring liquid chocolate to the co-packers in special tanks. This could potentially
increase capacity as it would avoid the need for duplicate tempering, allow more control of molding, and
would create more capacity on the current molding machine. The issue of risk was brought up regarding
this option within the paper, as this is a difficult task to require from the packers. This risk could be
controlled if there was a Scharffen Berger employee at the third-party packing plant that controlled
quality.

3. One major concern from the strategies of increasing capacity listed above is the option of adding
shifts to the older machines. This solution simply does not make sense when trying to maintain an
efficient and lean management style. This option would also be responsible for adding more cost, due to
increased wages, instead of just becoming more efficient. Scharffen Berger could create more gains by
taking a closer look at their entire supply chain, and working to make the whole process leaner. Another
concern from this situation is the possibility of combining the machines that perform similar functions.
Thismay result in more downtime and could be a challenge for scheduling. Scharffen Berger could
overcome this potential issue by creating detailed flow patterns for each step to be used as a basis for
reallocating equipment and parts that are no longer needed. Because Scharffen Berger uses so many
complex artisanal machines, combining equipment wouldbe very difficult. Scharffen Berger is better off
increasing shifts to achieve more productivity until more equipment is added in response to the rapid
demand increase. The brand image of Scharffen Berger is also at risk with trying to increase productivity
through more outsourcing and labor automation. Scharffen Berger holds the reputation ofa
handcrafted, artisan, and quality chocolate. Seeking to standardize testing or any other BA339:05
Winter 2016 2/2/2016

Cody Layton

quality measures presents the possibility of diminishing the value of operator tasting and the artisanal
image. Scharffen Berger could prevent this from becoming a reality by doingboth auto-sampling and
random taste sampling to retain this value proposition. Another risk, that was touched on briefly before
is the quality risk associated with sourcing more of the company’s capacity to the third-party packers.
This is a threat to thechocolate quality, as a major component in getting the product ready for
consumption andretail would not be happening by Scharffen Berger employees. This risk is easily
removed if Scharffen Berger will train a quality manager to be present at each of the packing facilities