SCENARIO
A bouquet manufacturer making about 15,000 bouquets per week, employing 4 experienced staff full time receives an unexpected order on Monday at 9:00 a.m. for 2000 rainbow mini carnation bouquets from one of his most important customers. Apparently the farm bouquets the mass merchandiser purchased had terminal quality problems. Delivery is expected by Tuesday morning at 9:00 a.m. at the warehouse.
The recipe calls for six stems of minis, a maximum of four colours per bouquet, and a stem of leather. Product is available to make the order. The pack size is 20 bouquets per case.
The question is can he fill the order?
BACKGROUND INFORMATION
Labour cost is about $10.00 per hour including benefits. The sleeve for this bouquet is clear polypropylene, costs 6¢ each and thank goodness the right size is in stock.
MANUAL ASSEMBLY
Productivity from past experience shows that his employees can make this bouquet at about 50 bouquets per person per hour with each individual employee making the bouquet, tying it, dropping it into a sleeve, doing the final trim with a guillotine and placing it in a bucket.
POSIE PACKER BOUQUET ORGANIZER
Productivity using this mechanical aid, increases by 50% to 75 bouquets per person per hour, 3 people are assembling the bouquets and one person tying them, using a mechanical tyer, and dropping them into a sleeve, then putting 20 in a bucket. The organizer does the final trim cut.
POSIE PACKER AUTOMATIC WRAPPER
Productivity using this mechanical aid increases to 150 bouquets per person per hour, 3 people are assembling the bouquet and one person is sealing the bottom of the bouquet and putting them in water. Since the machine makes its own customized sleeve on demand, the sleeve is always the right size and it's cheaper. The machine does the final trim cut.
ANALYSIS
Under the manual system it is doubtful whether the order can be handled. The order means that it will be a 10 hour day for the employees, and their productivity will decline especially in the last 2 hours. The only other alternative would be to bring in temporary help on short notice with all the related problems associated with this option such as training and they will be productive. The order also has implications for their regular volume of 15,000 bouquets per week, which already stretches capacity to the limit.
The Posie Packer Bouquet Organizer represents an alternative that makes it possible to do the order in about 7 hours but what about the regular weekly volume of 15,000 bouquets? In the short term, temporary help is required. Concerns about having the right sleeve size is also eliminated.
CONCLUSION
If the assumption is made that the increases in productivity are similar for a wide range of bouquets and that volume is 15,000 bouquet per week, the following mechanical aids offer the following potential savings for this bouquet manufacturer on a weekly or yearly basis:
The organizer option labour savings of $1,005.00 weekly or $52,260 yearly
The wrapper option labour savings of $2,001.00 and film savings of $300 totaling $2,301.00 weekly or $119,652 yearly.
The mechanical aids taps the hidden profits that already exist in the business. If the savings were to be translated into sales dollars, assuming 10% gross profit, then the savings are the same as increasing sales by $10,000 per week with the organizer, or $23,000 per week with the wrapper. Plus, both alternatives give a little piece of mind, in knowing that you have the capacity to process those little surprise orders.
Numbers involved in a "chop & plop" operation
Information given:
- 3000 cases per week packed 15 bouquets per case
- labor cost including all employer costs are about $10.00/hr.
- presently an employee generates about 18 cases of finished
bouquet per hour in a manual system using bench operated
guillotines
- using a Posie Packer cutter, either bouquet organizer or
underwater cutter, productivity is increased by 200 - 300
%. This assumption is based on my experience as well as
that of other customers.
Assumes 3 bouquets are cut per stroke of the guillotine, therefore 5 strokes per c. Total time per case includes opening the box, evening up the bouquets, cutting, setting down till full pail count is reached, and putting into water.
Cost to process 3000 cases x 3.33 minutes + 9990 minutes / 60 minutes = 166.50 man hours per/wk (about 18 cases per man hour or .555 cents labour per case)
Machine aided operation
Assume only a 200% increase in productivity
Cost per case would be reduced to .2775 cents per case Saving per week (3000 x .2775) $832.00
Assume a 300% increase in productivity
Cost per case would be reduced to .185 cents labor per case Savings per week (3000 x .55) $1110.00
Return on investment calculation calculated in days when investment is returned
Cost of a Bouquet Organizer/Power Cutter about $8000.00
Cost of an underwater cutter is about $18,500.00
Bouquet organizer: at 200% increase in productivity 9.6 weeks
ROI $43,264.00 (52x832)
= 480.71%
$9000.00
at 300% increase in productivity 7.2 weeks
ROI $57,720.00 (52 x1110)
641.33 %
$9000.00
Underwater cutter: at 200 % increase in productivity 22.23 weeks
ROI $43,264.00 = 233%
$18,500.00
at 300 % increase in productivity 16.66 weeks
ROI $57,720.00 = 312 %
$18,500.00
Based on these numbers, operating a "chop and plop" operation manually is a very expensive option.
It should be noted that these calculations are understated. The assumption is made that an employee does work constantly for 8 hours. Reality has shown that an employer is lucky if he receives 6.5 hours of production per day per employee after allowance has been made for coffee and lunch breaks etc.
The key to the operation is that the cutting system has a delivery system that can be used by several people at the same time maximizing productivity for all of them. This 'elasticity of production capacity" is a feature that has been designed into all of Posie Packer's machinery.
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