Charlie and the Chocolate Factory

Background:

The chocolate factory was originally operated to serve local customers demanding quality and personal relationship. For several years it served business with supermarkets without having fully adapted its operation management. Big retailers are much more demanding on price and quality, which is very different from traditional customers. In the meanwhile, this transition was accompanied by sluggish sales improvement.

1. On the basis of the 4 V model, how would you characterize the products manufactured by Charlie? How did the model evolve over time? What does it imply?

Volume: Charlie has grown from a small volume (characterized by artisan chocolate), which tends to increase because of increasing demand from large retailers, and therefore requires more standardized operations, in which the company is not always able to respond.

Variety: The variety of products is relatively high (see appendix 3), has increased in recent years and is certainly not very controlled. Indeed, some products have low average volumes (see volume ratio and number of references)

Variation in demand: Variation is strong due to seasonality (high consumption during Christmas and Easter). Over the years, the seasonality remains stable.

Visibility: The visibility of operations is low for the end customer.

Overall, the daily operation at Charlie's Chocolate demands more industrialization and standardization, which is increasingly important to meet the constant changes in market. The company, however, hasn't shown its ability to adapt quickly.

2. Explain the logics of Charlie's production planning? What is your assessment of it? How would you organize the production of the various types of chocolates? Why?

As for today, Charlie's Chocolate Factory operates based on long series shifting to maximize the capacity by limiting the number of change sets. This principle results in a lack of responsiveness to constantly changing demands and an increase of stock. It reduces operational cost and it seems appropriate to maintain relatively long series, at least for retail activity which constitutes the bulk of turnover.

Meanwhile, it would be beneficial to work with more agility to enhance flexibility and to reduce inventory cost, for an example by install several small manufacturing utilities.

Manufacturing process can also be optimized to minimize the time for change: milk before white before black rather than the reverse to save time for thorough cleaning. Similarly, the optimal order of arranging coating machine of different types of chocolates is one that minimizes the time change, such that production of chocolates could also start from the "clear" to the darkest chocolate.

Activity of planning is still at its infancy at Charlie's. Given the increasing volumes of business and the growing importance of the business from large retailers, it is imperative to develop information systems to schedule planning based on actual orders and forecasts. An MRP system could be a reasonable project to start. Anticipating customer demands distributors could be further refined by the introduction of collaborative tools between Charlie and his dealer customers.

3. What is your assessment of quality management in the firm?

In the food industry, quality is so important not only to meet customers' expectation, but also to meet possible critics. Moreover, health standards are very strict, can vary from one country to another depending on specific regulations and must be respected.

Quality is generally related to customer expectations. But Chalie's customers and their expectations of quality have evolved over time. Once again, the company has not sufficiently adapted and only maintained certain quality level that was based on demand from traditional customers. Now the company nevertheless has to meet different expectations, which can be categorized into two major types:

* Local businesses committed to the values of craft quality and taste of chocolate.

* Supermarkets want an acceptable quality level of sophistication of chocolates at a very competitive price. Customers of the supermarkets want a level of impeccable goods quality from a number of criteria set in advance in a contract (with such standard items on the conservation, presentation, ...) and service quality particularly in logistics (dependability, speed, delivery within a specific location with respect to slot