Building On The Core

By ROBERT A. JACOBSON

One of the world’s oldest brewers and bottlers had a virtual monopoly on beer and soft drink sales in its home region of the European nation where it was founded in the 19th century. But its sales were poor in the rest of the country, and the organization had become so used to working in its traditional mode that it had no idea of how much better it could be.

A productivity firm recognized the opportunity to make widespread changes within the plant’s operations to address the woeful lack of sales beyond its home region. The firm proposed a 10-month program of revitalization and renewal. The partnership resulted in savings and sales increases of more than $9 million annually.

The firm began with detailed analyses in seas including energy and water use, regional office structures, sales and customer service, distribution, purchasing, maintenances, production, return-bottle sorting, storage and parking, administration and top management practices.

The brewing company had always been a family owned business with shares divided among several branches. The management style had been essentially the same for more than 100 years. One of the family members, representing the group with the most stock, had traditionally been managing director or CEO. The CEO walked around, observed what was happening and made decisions. This process provided quick answers, but the results often reflected a lack of planning and suggested a failure to take advantage of more beneficial opportunities.

The focus for change at the top management level was the creation of a working management group, development of methods for strategic planning and an emphasis on quality control. Since the CEO realized there were better ways to proceed, he took charge and began turning over authority to a new group of people. When the rest of the company saw this happening – the breaking of historic tradition – it was apparent that everything was open for renewal.

The productivity firm encouraged organizational members to identify operational problems and generate solutions. This initiative exposed hundreds of opportunities. Most important, it got people involved in solving their own problems and led to significant savings. Other substantial improvements included realigning sales and distribution offices throughout the country based on new approaches to marketing and fulfillment. Suddenly, the company became a nationwide player. Buying had been widely dispersed, but after a centralized purchasing department was created, large savings were quickly realized. Maintenance had traditionally been handled by on-scene operators, but, with a shift to technical experts, there was a dramatic decline in costly downtime.

Lack of production planning had caused inefficiencies in output. Requirements could change three or four times a day, accompanied by loss of motivation and much overtime expense. After the productivity firm introduced new planning systems, overall production increased by as much as 25 percent on all three of the company’s bottling lines.

Ironically, finding ways to make changes, to effect cost savings and increase profitability was easier in this traditional company than one might have thought. The key was getting top management to agree that everything was open for consideration. Fortunately, new markers were readily available. Also beneficial was the willingness of company employees to adapt. With management in the lead, and the productivity firm there as a partner in implementing change, a revolution turned a traditional bottler into a highly efficient sales and production machine.

Robert A. Jacobson is chairman of the board of the Association of Productivity Specialists.