BIZ2121-04: Productions and Operations ManagementProfessor Sung Joo Bae

TEAM PHAROSConnie Chung

Ren VangJae Kwan JungLian Yun Shi

Yong Seok Kim

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TABLE OF CONTENTS

INTRODUCTION 3

SWOT ANALYSIS 5

PROBLEMS & MUSSELMAN’S SOLUTIONS 8

RECOMMENDATIONS 10

CONCLUSION 13

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INTRODUCTION

Company Background

Founded in 1949, Knouse Foods is a cooperation of 1,500 men and women working

together to provide the highest quality fruit products for their customers, opportunities for their

employees, and services to their community. Knouse Foods operates seven processing plants in

three states. Their brands include Musselman’s, Lucky Leaf, Apple Time, Lincoln, and Speas

Farm. Over the past 50 years, Knouse Foods has become one of the largest suppliers of

processed fruit products in the industry.

Their goal is to offer customers healthy, convenient, appetizing products that are sure to

please every member of their family. From apple sauce and apple juice to vinegar and ready-to-

use pie fillings and so much more, they offer a wide variety of fruit products to diversify

consumers’ meal planning, enhance their cooking and baking, and brighten their life with their

highest quality processed foods.

The Process

First, leaves attached on apples are removed while the apples go through a conveyor. They are then sent to an inspection area, where a special camera takes a picture of the apples’ insides to check the status and quality.

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Apples that had came through the inspection area reaches washing area, in which the apples’ surfaces are washed with brushes and water jets.

After being washed, the apples are graded and classified. Employees stand along the conveyor and look for any defected, decayed apples and remaining leaves. Apples classified as inappropriate for applesauce are removed to a bin for later use to make apple juice or thrown away.

Next, machines are used to peel the satisfactory apples. The machine not only peels, but also removes the core of apples. Peeled apples are then sent to another area to be chopped.

Chopped apples go through the cooker where they are softened by high-pressure steam. The resulting product is then mixed well. In the next process, waste is disposed, which might be formed during former processes. Then, the applesauce is complete.

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The applesauce is transferred to another set of machines, which inject it to aluminum containers. The machine put the same amount of applesauce into each container.

Containers with applesauce are sealed and are assigned special codes, which are invented to designate each product so that the company can recall all the products they sold. It also makes it easier to identify defected products.

SWOT ANALYSIS

Strengths

Knouse Foods operate six processing plants in two states, covering nearly 2.4 million

square feet on close to 300,000 acres. Every inch of every plant is devoted to producing the

finest and freshest fruit products for their valued customers. Their unwavering commitment to

the highest quality standards and absolute customer satisfaction has made them one of the largest

apple processors in the world.

From a spoonful of delicious applesauce to millions of jars, bottles and cans of quality

processed fruit products earned Knouse Foods a stellar reputation as one of the most trusted

names in the industry. Their brands (Musselman's, Lucky Leaf, Apple Time, Lincoln, and Speas

Farm) have been family favorite for more than 50 years. Being one of the largest suppliers of

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processed fruit products in the industry with a cooperative network of quality growers, assures

customers fruit products that feature consistent texture, natural flavor, and great taste.

Being such an established brand is one of Musselman’s biggest strengths. Known for its

great tasting and healthy products, the company produces a wide variety and options of

applesauce including applesauce blended with other fruits and lite applesauces for those who are

counting calories. Musselman’s has also made many great achievements such as producing the

first applesauce in single serving cups, applesauce in 48 and 24 ounce plastic jars, as well as

being the first company to produce applesauce sweetened with Splenda.

With such a notable reputation, Musselman’s were able to build a loyal customer base.

The company is known to be a family favorite for over a hundred of years and continues to be

one of the leading applesauce producers. Having such a strong reputation along with high

achievements gives Musselman’s a competitive advantage against its competitors.

Weaknesses

When observing the video, it can be noted that Musselman’s produces its applesauce with

heavy automation. Using heavy automation to product applesauce can cause some problems to

the system. For example, utilizing only machines for the process eliminates human labor, which

can be an issue if the machine were to break down. If a machine is unable to operate, the whole

system will have to come to a halt and the company is forced to pay a high cost and an immense

amount of money to fix the machine and continue their process.

With a high use of machinery, it is important for a company to have fast and efficient

machines to process in a timely manner. Unfortunately, Musselman’s machinery does not satisfy

those conditions. Their machines are not only large, but slow and inefficient as well. For

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instance, during the process in which the apples go through a conveyor that de-leaves the apples,

it can be noticed that many of the apples still had leaves remaining. Another example is during

the sealing process. The machines that place the lids on the top of the cups filled with applesauce

operate at a slow rate. With this, it can be concluded that the machines used in the Musselman’s

factories are not as efficient and fast as they can be.

Opportunities

In terms of opportunities, Musselman’s is able to maintain its success in the market because

of the stable demand for applesauce. This can be evident with the fact that the company has been

in the business for over a hundred years now. Additionally, the demand for healthy food like

applesauce is increasing. Nowadays, more and more people are beginning to be concerned about

their health. Thus, they want to have a healthy snack like applesauce to satisfy their cravings and

their taste buds without harming their health. The stable demand for snacks like applesauce gives

Musselman’s reassurance and security about their success and longevity of the company.

Threats

Even though Musselman’s is a well-known brand with a long list of achievements, the

company still experiences the pressure of competition. Mott’s Company is also a popular brand

that produces applesauce, as well as other products like juice and fruit snacks. Tough competitors

such as Mott’s Company pushes Musselman’s to maintain their top spot in the industry.

Another threat to Musselman’s is the threat of substitution. Because applesauce is a

standardized product rather than a customized product, any merging or current company can

easily imitate the product. Since applesauce is easily imitable, it is crucial that Musselman’s gain

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a competitive advantage through their analysis of competitive priorities to stay profitable in the

market. If not, the company will lose revenue, which may result in company failure forcing

Musselman’s to shut down their business.

PROBLEMS & MUSSELMAN’S SOLUTIONS

Problem I: Storing Apples

For the production of applesauce, keeping harvested apples fresh or in good quality for year

round is quite difficult. Since it takes about a year apples to grow, they are harvested only in the

fall for production. One important aspect about apples is that they continue to ripe or take in

oxygen even after they are harvested. This means that apples do not have a long shelf life

because they can rot or over ripe easily. For companies like Musselman’s, it is important to have

enough quality apples in stock to produce applesauce or other products to meet demands

regardless of the current season. Hence, if apples are not stored properly, the company can lose

much of its inventory to make their applesauce; thus, are unable to meet customer demands. As a

result, the company may lose sales and customer satisfaction. Additionally, its operation costs

may increase as well due to lower volume of production. Therefore, it is crucial to address the

storage of apples for the production of applesauce.

Musselman’s Solution: CA Rooms

To solve the issues of properly storing apples, Knouse Foods introduced a storage facility

with Controlled Atmosphere (CA) rooms located in Peach Glen, PA. These rooms allow for

regulations of “temperature and humidity, as well as oxygen and carbon dioxide content.” The

purpose of these rooms is to stop the apples’ from taking in oxygen and putting them “sleep.”

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This enables the apples to “retain the crisp, juicy, flavorful attributes” for about a year from the

time they were harvested. Musselman’s utilizes such facilities to store its apples in cold storage

at 34 degrees and 2% oxygen to keep their apples from aging. This allows them to produce

applesauce year round and keep the product on the grocery shelves as fresh as possible.

Problem II: Environmental Impact

Though the production of applesauce is important, one must also consider the impact that

production has on the environment. For instance, with massive and heavy machines like the ones

shown in the video clip of Musselman’s applesauce, a large amount of fuel is needed because

energy consumptions by those machines are tremendous. Furthermore, emissions from

transporting materials and running the manufacturing plant as well as the packaging materials,

plastic containers, bins, and other production materials can have a negative impact on the

environment. For example, packaging materials or toxic wastes may end up in nearby lakes or

rivers, threatening the home of animals as well as their safety. Thus, it is crucial to address the

environmental impact of producing applesauce.

Musselman’s Solution: Sustainable Practices

To address the environmental concerns of applesauce production, Musselman’s

implemented sustainable practices to minimize pollution and other negative impacts on the

environment. One of the sustainable methods that Musselman’s used was to collect water from

processing operations and use it to “irrigate grass fields”. In addition, the Peach Glen facility,

which is one of the Musselman’s factories, uses 14,000 solar panels. Apart from that, the trucks

used for transporting apples to the factory runs on bio-diesel fuel. Moreover, Musselman’s took

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the initiative to reconstruct their “packaging to reduce waste and to remove “wasteful packaging

lines completely.” Most importantly, the company utilizes every part of the apples from the peels

to the cores. For instance, the peel and the core of apples are used for producing apple juice, and

the “pressed apple” flesh from making the juice are used to feed the cattle. Such sustainable

practices as these can ensure that the company is efficiently utilizing its resources and supplies

for maximum production and lower operation cost as well as reducing its environmental

footprint.

RECOMMENDATIONS

Improve Automation

Musselman’s process has been proven successful and working properly when it comes to

preparing apples and transforming them into Musselman’s infamous applesauce. However, the

machines carrying the process are not necessarily shining to its best potential. The machinery

that Musselman’s utilizes can be improved for maximum potential. Improving automation will

allow Musselman’s to have faster machines and a more efficient process.

In the video, it demonstrates how apples are renovated into applesauce. The process is

shown to be decent and able to fulfill the mission of making applesauce in a sufficient way. At

one point of the video, it shows the realigning of the apple so that the cavity can be removed then

prepared to be peeled. The process seems to be rather slow as it deals with only a certain amount

of apples rather than a mass amount. In addition, Musselman’s branch of producing personal size

applesauce cups also encounters another type of issue dealing with a slow process. The video

shows one man refilling cups into the machine constantly so that the process can be continued at

a steady yet fast rate. Using human power to do something that require a continuous action can

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slow down the process as humans feel exhaustion after working hard.

Due to these issues, it is critical for Musselman’s to invest in better and faster machines.

This will allow the company to complete the jobs faster and more efficiently. Musselman’s

should have a machine that will be able to align the apples to the desired position at a mass and

carry on with the process smoothly without any issues. Addressing the issue of refilling the cups

by hand, Musselman’s should have a machine that will automatically refill the cups into the

machine to prevent the possibility of having a delay. This will also save on labor costs and

unnecessary energy of the worker. Musselman’s investing in better machines and tackling these

issues will allow the company to be more capable of meeting demand promptly and increase

capacity in shorter period.

With better machines, Musselman’s also needs to focus on achieving a more efficient

process. In the video, the process begins with the apples being transported on a conveyor belt

with the apples being rotated to separate out the leaves. As the apples rotate on the conveyor belt,

the leaves would fall down through the gaps in the belt. Most leaves are taken out, but a decent

amount is still caught between the apples as they move on to the next step of the process, which

may cause delay. The process continues with the apples being moved and put through an area

where jets spray water to clean the apples. Sanitation of the apples is important as they are

consumed. Musselman’s current jet system does not operate as well as it could. The video show

only a few jets spraying the mass amount of apples that pass by on the conveyor belt at a

relatively fast pace. This means that not all of the apples are fully cleansed. Although the process

seems to be acceptable and suitable, Musselman’s can improve automation to have a more

efficient process to bring the company to its highest capability.

As the apples are being transported on the conveyor belt to separate the leaves,

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Musselman’s can incorporate a blower into the process to blast away the leaves that did not go

through the gaps. This will save time during the inspection area and does not require much

money or change in the factory. Musselman’s can also change the jets that are used to wash the

apples to wider-range jets to clean the apples better and at a mass. The company can also have

multiple jets installed at different levels so the apples can be cleaned multiple times, reassuring

that the jets reached all the apples and cleaned them properly.

Considering these automation improvements will greatly benefit Musselman’s. This is

because having these changes will speed up the process and create efficiency. Having such speed

and efficiency will generate more revenue for the company as it is able to deliver better and

faster than before when they did not improve automation.

Conduct Monthly Inspections

With a process that relies on automation, it is also important for Musselman’s to conduct

monthly inspections to check if their machinery is working properly. This will reduce the

possibility for defects and prevent major problems from occurring. Having monthly inspections

are useful for reporting issues that are found early on in the process. Discovering possible

problems with the machines early on will save Musselman’s time and money because they would

be able to fix the problem before producing a large amount of inventory that may be flawed due

to the error. Identifying the problems during the beginning of the process will also prevent more

severe and serious problems from developing later on in the process, which would put the whole

inventory in jeopardy. Reducing the chances of production failure through these monthly

inspections will save Musselman’s a tremendous amount of money, which can be allocated to

other areas within the company for improvement and advancement.

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CONCLUSION

So far, it is possible to say that Musselman’s applesauce has been successful even though

there was a minor problem about imperfect containers in June 2009. As the company

immediately recalled all the products that were reported to have a problem, the accident ended

with no or little effect on their reputation. Many people love Musselman’s applesauce because of

their excellent taste and quality.

However, success so far does not guarantee further success. Problems with the process

have been identified. This means that there are some possibilities of Musselman’s applesauce

being in trouble or even wiped out unless Knouse Foods take steps in toward the right direction

to solve these problems. It is much easier to lose brand reputation Musselman’s has gained than

to win some.

Supply chain management is a continuous, endless job, not a one-time task. Even a

company or a brand with a good image among customers would try to improve its process

efficiency and quality to remain successful and maintain their competitive advantage.

Musselman’s applesauce, too, need to be continuously managing and solving current problems

by staying focused on its process to prevent further problems and improve.

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