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Case Study: “Sausages Made To Order?”

About the Company Bradley Smallgoods A meat-processing company in Melbourne, Australia. Formed in 1947, a subsidiary of a large food-processing company. Annual turnover of Aus$110 million from sales of 14,000 tonnes of product. Sell to national markets (predominantly made in the state of Victoria) and some exports. Has been making fresh sausages from meat trimmings, grain and seasonings filled into a

casing for almost 50 years. Originally made only pork sausages and they were primarily sold through corner shops and delicatessens. Customers of the deli counter in a supermarket want a variety of sausages such as bratwurst, pork, honey and soy, beef and tomato, and chicken.

Bradley’s processes in brief: Bradley purchases boned pig meats, processes them into a range of cured, preserved and fresh meat products known as

smallgoods, sells the sausages to 3 market segments: supermarkets (60%), delicatessen shops (20%) and

other food manufacturers (20%). Bradley’s Manufacturing process:

Bradley’s typical schedule for its sausage production:

Scheduled production of sausage – produce to stock (tonnes)

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Bradley’s Supply Chain

The integrated supply chain diagram

Materials flow: Bradley purchases the pigs from a piggery in

northern Victoria, which then are slaughtered and dressed at an abattoir adjacent to it.

The carcasses are delivered to Apollo Meats, where Apollo will bone and trim the meat. This meat is then refrigerated and delivered to Bradley twice a week.

Bradley distributes its sausages from its chilled store at the end of the production line.

Delivery for Safeway Supermarket, its major customer, is to Safeway’s cold store by using ‘pans’ (pantechnicons) pulled by a prime mover. Bradley hires a transport company to deliver these pans to Safeway’s Distribution Center in a narrow time slot.

Safeway is the largest supermarket chain in Australia, with 150 stores in Victoria. Its

customers buy sausages to keep in the freezer until needed. The majority buy sausages for a

particular occasion, such as a barbeque.

Information flow: Safeway places orders for sausage varieties twice

a week. It estimates its requirements a month in advance but without any commitment.

Bradley has a weekly requirement that Apollo processes a number of carcasses for delivery every 2 working days. This number is changed without notice when Bradley so wishes, on the Friday before a working week.

Production scheduling is carried out at Bradley using a stand-alone spreadsheet. The scheduler uses this sheet to plan production 4 weeks ahead, but there are daily changes to the schedule as customers’ exact needs are obtained.

The only computer information Bradley has on the stocks of sausages is the financial value of the pallet loads in its despatch store. To find out stocks of individual varieties, sales staff have to

ask the store person. Safeway has detailed information about its

sausage stocks at its cold store but does not share this with Bradley. Delivery information is

compiled from the loads assembled in despatch.

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The Personnel

Bradley Smallgoods Paul Liddy, Operations Manager Mikhail, Production Supervisor Chris, Production Scheduler General Manager Shift Supervisors

Safeway Supermarket Gwen Davies, Senior Buyer Rachel, Order Clerk Apollo Meats Brian, Manager Zoltan, Boning Supervisor

The Case

Background: Paul want to try to improve the process since Bradley’s profit is too low. The long-term objective

is to streamline operations so that customer service levels will increase and costs will be reduced, so he introduces the concept of changing the sausages production to Make-to-Order and Just-in-Time approach.

Paul arranges meeting with Brian from Apollo, and Gwen from Safeway to discuss his improvement project. Paul’s statement: “I want to move from making sausages in large batches in advance, to making exactly the varieties and quantities you want when you order them”.

Result from the first meeting:

Gwen’s comments: Brian’s comments: That sounds like a good proposition. We

would get fresher sausage, provided you can react quickly to our afternoon order.

We could not tolerate any drop in delivery performance. Already we have seen 8% of deliveries miss the required time this year.

My boning room is not set up to deliver meat exactly when you want it.

I only operate one crew of butchers, so I need to arrange my production schedule a week in advance

Paul and the rest conduct their study and propose below changes: the increased frequency of Safeway ordering, the increased number of sausage batches, and the extra shifts needed at Apollo.

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The study findings, showing the current situation and the expected changes:

Reactions to the Proposal:

Bradley Safeway Apollo The GM is entirely in favors of

the change.

However, Bradley’s shift supervisors were not

convinced, as they could see problems in changing over,

which they didn’t want to do during the Easter period, in 2 weeks’ time.

They could not envisage the real savings in their area, and argue that a lot of their work is related to the batch of sausages made. So, more batches equal more work.

Gwen accepts the main results of the study, and

agrees that orders could be placed every 4 hours during

the working day. Expected benefits: getting

fresher sausage and fewer delivery failures.

However, she cannot predict the size of individual orders.

Her biggest problem will be to get her superior and store managers to accept Paul’s proposals.

Brian is quite negative about his ability to bone some

carcasses for Bradley during every shift.

Zoltan pointed out that traceability and cleanliness

would be compromised by changing from boning for a food service company to Bradley products during every operating shift. He would have to stop the entire operation for 15 minutes, and he could face an industrial dispute from the boners.

Paul’s Dilemma: to go or not to go?

Should he go ahead with his proposal to make sausages to order? What are important factors to consider, in order for him to implement the change successfully?

Please come to our presentation for the answers on Wednesday, 14th October 2015. See you there!!