WCO implementation yields first-rate line efficiencies for Swire’s mammoth Huizhou plant

Executive summary

The global market place has become increasingly competitive and volatile, thus resulting in the need for the main players in the beverage industry to continuously improve their processes, especially on bottle filling and crowning operations. As one of the largest Coca-Cola bottlers in the world, Swire Beverages’ Huizhou plant was under increasing pressure in terms of both cost and capacity. The introduction of world-class operations (WCO), underpinned by the TRACC Integrative Improvement System, resulted in total savings of more than RMB 7.6 million and ROI in excess of 300% on a single PET line.

RESULTS
  • Total savings of over RMB* 7.6 million (*Chinese Yuan) from 2011 to 2018 on PET Line #12 alone
  • ROI in excess of 300% on Line #12 alone
  • Number of rejects reduced by 80% over seven years
  • Line efficiency increased by more than 4% as a result of WCO implementation
  • Better employee engagement, healthy talent pipeline, agility and flexibility in supply chain capacity, and a living continuous improvement culture
Challenges

Swire Beverages produces and distributes a total of 58 soft drink brands across a franchise population of more than 720 million people. The phenomenal growth of the Coca-Cola Company brand in China placed immense pressure on Swire’s network of bottling facilities not only in terms of cost, but also in terms of capacity. Huizhou, one of the largest plants in the Swire portfolio, bore the brunt of the pressure.

In-house capacity in high seasons, summer and the Chinese New Year, has traditionally been a constraint for the Huizhou plant. To fill the capacity gap, the plant had to pay other Coca-Cola plants to make and ship the products to fulfil Huizhou’s ever-increasing demand.

 

To fill the capacity gap, the Huizhou plant had to pay other Coca-Cola plants to make and ship the products to fulfil demand.

 

Material loss due to rejected defects was another major loss area and improved machine maintenance was identified as a top priority. Plant management also had to contend with machine downtime, most notably at the air conveyor and Finished Goods Inspection area. The air conveyor used to get stuck frequently enough that it required a dedicated operator to keep a check on it.

Solution

CCi’s integrative improvement solution, TRACC, had been successfully introduced at several Swire plants since 2009. As a wave 3 plant, Huizhou was thus fortunate to receive plenty of internal support from SBOX (Swire Beverages Operational Excellence), the group’s WCO core team. A balanced mix of external consulting support from CCi, and coaching and training from Swire’s internal master facilitator and master trainers, made WCO implementation virtually fail-proof.

The WCO launch campaign was built on three pillars:

1. Leadership commitment and support
Management actively participated in the WCO launch campaign, as Swire Beverages identified WCO as one of the strategic enablers for its end-to-end supply chain success. Senior managers at both group and plant levels were assessed and developed for their leadership in applying WCO. As a result, the plant management team have been motivated to use WCO to improve their way of work, until it becomes the way of work. In Huizhou’s case, plant managers and all functional managers take a formal role in WCO implementation and are measured for their WCO progress.

2. Capability building
The line supervisor, two team leaders and the two shift teams were trained and developed in various aspects of the day-to-day management and operation. Their new-found capabilities — most notably in 5S (managing the workplace), Autonomous Maintenance* (servicing and caring for the machines) and Focused Improvement (solving problems in a structured way and conducting projects) — contributed immensely to less downtime and fewer rejects. The line supervisor received DMAIC training in 2012 and was formally certified as a 6 Sigma Yellow Belt in 2015. He also became the team coach for Line #12 in 2012.

3. Introduction of Leader Standard Work
Formal performance coaching sessions and informal coaching conversations during gemba walks have become the new normal since 2012. Instead of telling the team leaders and team members what to do, the line supervisor adopted a leadership style and communication approach that inspires thinking and participation by the coachees. Front-line leaders and operators are now empowered and encouraged to find and apply solutions for minor issues on a daily basis. Also, process level standardisation has been applied to reduce human errors. For example, the improved SOP in the syrup mixing process drills into detail such as how many seconds it will take to execute a specific step, thereby eliminating guesswork and ambiguity.

 

Front-line leaders and operators are empowered and encouraged to find and apply solutions for minor issues on a daily basis.

 

Results

Since the introduction of WCO at Huizhou, PET Line #12 alone has contributed combined savings of more than RMB 7.6 million from 2011 to 2018. The savings consist of mainly three components — outsourcing manufacturing cost, material loss, and labour cost.

Machine downtime was one of the first issues to be addressed with the introduction of the Autonomous Maintenance and Focused Improvement TRACCs. Once these best practices gained traction, the number of rejects reduced by 80% over a seven-year period. Line efficiency increased by more than 4%, which now contributes positively to the reduction of outsourcing cost.

Line Efficiency of PET Line #12

Labour cost reduction started manifesting itself once the line started running more smoothly with less downtime and fewer issues to attend to — specifically at the air conveyor and Finished Goods Inspection. Now, the air conveyor jams much less frequently and operators from nearby work stations can monitor and fix it in time. Fewer rejects at Finished Goods also no longer requires a dedicated operator pinned to the workstation to remove defects.

Key Learnings

WCO’s benefits are not just about cost saving
Cost reduction is the easiest return on investment to calculate. However, the true power of WCO is getting the organisation ready for its future operational challenges. In 2016, the order sizes became significantly smaller for Line #12 as Swire Beverages decided to provide its customers with fresher products in a timelier fashion. The line efficiency took a hit, inevitably due to an increased number of changeovers. But Huizhou’s high maturity in set-up time reduction helped them adapt quickly and seamlessly to adjust to the new norm of smaller batch sizes and more SKUs.

WCO is all about people, and how they are led
WCO has a significant training component, where the workforce, especially the front-line leaders and team members, gets trained and developed. But their behaviour did not change until their direct supervisor had changed their leadership style by applying new practices such as coaching, gemba walks and structured problem-solving. This went back to the very top of the organisation. A strong and clear message has been reinforced in various ways on numerous occasions that “We must learn from the best to become the best”. Such commitment to continuous improvement has distinguished Swire Beverages from organisations that only focus on lean tools and individual improvement projects.

 
The return on investment in WCO in Swire Huizhou has been outstanding. The return from Line #12 alone is more than 300%, considering the training hours, training cost, fees for the continuous improvement system (TRACC), external consulting, reward and recognition, benchmarking visits and off-site training. That is comparing the return from Line #12 with the investment in WCO for the whole plant. The intangible benefits are even more significant: better employee engagement, healthy talent pipeline, agility and flexibility in supply capacity, and above all, a living continuous improvement culture.

Swire Huizhou’s success illustrates the importance of best practice maturity and demonstrates how the growing Chinese beverage industry is embracing continuous improvement solutions while still applying local cultural principles. From the strategy level to the operational level, the plant overcame operational challenges to reinforce its leadership position in China’s competitive consumer beverage market.

 
 

The true power of WCO is getting the organisation ready for its future operational challenges.

 

Company Background

Swire Beverages is one of the largest Coca-Cola bottlers in the world and has been a Coca-Cola franchisee since the mid-1960s. It has the exclusive right to manufacture, market and distribute products of The Coca-Cola Company in Hong Kong, Taiwan, 11 provinces and the Shanghai Municipality in Mainland China, and an extensive area of the western USA. This represents a total franchise population of 727 million.

The relationship with Coca-Cola began in 1965, with the acquisition by Swire of a company which held the franchise to manufacture Coca-Cola in Hong Kong – a business today known as Swire Coca-Cola HK Limited. Swire Pacific acquired the Coca-Cola Bottling Company of Salt Lake City in 1978.

Swire Beverages started its continuous improvement journey with CCi and TRACC in 2009. It has since become the most visited reference client in China.

Disclaimer:

This resource has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained herein without obtaining specific professional advice. Competitive Capabilities International (CCi) does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this resource or for any decision based on it.