Improved operational efficiency helps Swire meet strong demand for soft drinks in China

improved operational efficiency
Executive Summary
The tremendous growth of the Coca-Cola brand in China placed pressure on Swire Beverages’ network of bottling facilities in terms of both cost and capacity. As a result, it was imperative to fully utilise the existing capacity through an empowered front-line capability. Swire needed a solution to manage the forecasted growth of 13 of its plants, as well as build internal capability. The introduction of TRACC, CCi’s integrative improvement solution, at two of their plants proved to be the turning point.

 

  • Results
  • 12% increase in net line utilisation
  • 15% drop in water consumption
  • 25 million litres of raw water savings per year

 

Challenges

Swire produces and distributes a total of 58 soft drink brands across a franchise population of more than 460 million people. The phenomenal growth of the Coca-Cola Company brand in China placed pressure on Swire’s network of bottling facilities not only in terms of cost, but also in terms of capacity. This highlighted the need to improve line utilisation and to develop front-line capability.

In order to handle this accelerated growth of the beverage market in China, Swire needed a solution to manage the forecasted growth of 13 of its plants, as well as build internal capability. Each of these plants operates relatively independently, but each facility does not manufacture all stock-keeping units (SKUs) that they sell. As a result, additional plants were needed to supply products due to facility capacity restraints.

Solution

Rather than selecting a pilot project on a specific bottling line, Swire management opted to roll out the full bundle of TRACCs at two pilot plants — Nanjing and Zhengzhou. The main aim was to improve net line utilisation (NLU) and machine efficiency (ME). Additionally, TRACC was implemented at the site level to optimise materials and resource capacities across each stage of the bottling process, improve plant throughput by reducing changeovers, and perfect the product mix of the individual bottling lines.

In spite of initial implementation challenges such as a lack of employee engagement, management actively participated in the launch campaigns. This was followed by the introduction of a formal reward and recognition scheme and the establishment of change implementation structures.

Results

Since the introduction of TRACC, Swire has been able to cope with rapid growth in both complexity and sales volume against a background of more demanding customer service levels. This was mainly as a result of improved operational efficiencies and a stabilised workforce.

Net line utilisation increased from 67.9% to 80%, an overall improvement of 12%. Water consumption dropped by 15%. Wastewater discharged from the water treatment system is also recovered and reused, saving 25 million litres of raw water per year. As part of the site selection process, a source vulnerability assessment was conducted to avoid adverse water impact from future plant operation. Subsequently, a source water protection plan was drawn up to ensure sustainable water supply to the plant and the community.

“Since implementing TRACC, employee morale, motivation and sense of ownership have increased tenfold. Employees share their thoughts and offer possible solutions to problems during gemba walks, something that has never happened before,” said WCM Manager Huang Zhimin. “TRACC has provided our work teams with a common language and consistent improvement direction.”

TRACC is a powerful system with a strong logic. It requires constant learning and understanding. 
— Yu Hui,
Plant Manager,Swire Coca-Cola Guangzhou

 

improved operational efficiencySwire’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, Swire synchronised its supply chain network, overcame operational challenges and reinforced its leadership position in China’s competitive consumer beverage market.

TRACC has provided our work teams with a common language and consistent improvement direction. 
— Huang Zhimin,
WCM Manager

 

TRACC is currently actively deployed at 14 plants across 48 lines, including the large plants in Guangzhou, Huizhou and Luohe. More than 600 manufacturing and supply chain Profit Improvement Projects (PIPs) have been completed successfully over the past seven years — culminating in savings of close to RMB* 57 million. (*Chinese Yuan)

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. Soft drink production and distribution is one of the group’s core activities. It has the franchise to manufacture, market and distribute products of The Coca-Cola Company in Hong Kong, Taiwan, seven provinces in mainland China, and an extensive area of the mid-western USA. Swire has annual sales of still and sparkling drinks in excess of 1 000 million unit cases in these franchise territories. By producing beverages locally, the business aims to bring economic benefits to the local community in the form of investments, job opportunities and taxes, while amplifying this influence through the partnerships with the customers and suppliers for mutual business growth and supporting local development.

 

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.

Sign up to our monthly TRACC Community newsletter for CI insights, interviews and news!