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Training and PIP successes for Arca Continental

Training and PIP successes for Arca Continental

Executive Summary
Mexican-based Arca Continental, Latin America’s second largest Coca-Cola bottler, made rapid infrastructural investments over the past few years. Although they showed encouraging production improvements as a result, they soon realized that these improvements would not be sustainable if they did not invest in the training of frontline employees in equal measure. This prompted the introduction of a TRACC-based improvement system, with the main aim of developing certified internal trainers and the introduction of Profit Improvement Projects (PIPs). Despite some challenges in organizing team and team leader training in a threeshift environment, all attempts have been met with success so far. Some 30 internal trainers across all disciplines have already been certified and the 11 identified PIPs have all yielded encouraging results.

 

RESULTS
Salta plant:
  • Changeover time on the pilot line was effectively reduced to comply 100% with the changeover matrix
  • Average loss in the syrup room decreased from 0.7% to 0.58%
  • A substantial reduction in material costs by reducing the consumption of thermo and stretch film
Tucuman plant:
  • A reduction in loss of empty returnable bottles from 6.2% to 5%
  • A reduction of 4% in loss of finished products once they’d left the plant
Formosa plant:
  • 63% reduction in the time of mechanical line stops

 

Situation
Over the last few years, Arca Continental has invested significantly in infrastructure, information technology, and distribution and logistics systems, in line with its strategic plan to strengthen operations. This included the expansion of the Tucuman plant in Argentina and a new production line at the Guayaquil plant in Ecuador with a production capacity of 48,000 bottles per hour. Although both these facilities operate with world class technology and equipment with a subsequent increase in productivity levels, it was soon realized that this would be unsustainable if frontline employees did not receive adequate work practice training. This prompted Arca Continental to develop and introduce a TRACC-based business improvement system known as ACCM (Arca Continental Clase Mundial), which translates to Arca Continental World Class.

Arca ContinentalA major challenge in the startup of Profit Improvement Projects (PIPs) was to define the scope of the PIPs in a realistic manner. The majority of PIPs had a scope that was too large, making it difficult for the PIP teams to manage. It took quite a while to achieve success; hence some of the PIP teams becoming demotivated. In addition, successful completion of the PIPs wasn’t recognized soon enough, resulting in delayed celebration and communication.

ACCM implementation manager Andrés Ibañez says: “During our first year with PIPs, we wanted to improve too rapidly by selecting many improvement areas in the supply chain instead of picking one critical area. We subsequently decided to split a large PIP into smaller, more manageable PIPs.”

A general implementation challenge was the availability (or lack) of middle management to have meetings and to be part of the ITF and SSC. Furthermore, it has proved to be very difficult to train all the work teams without using overtime.

Action
The journey toward world class at Arca Continental Argentina kicked off at the start of 2012 with an Executive Leadership Committee (ELC) workshop followed by the Stage 2 implementation of the Leading and Managing Change TRACC. Three pilot areas were identified in these early stages: Salta — Line 1 (returnable glass bottles 237, 350, 500, 1,000 and 1,500 ml) and syrup room; Tucuman — Line 1 (one-way PET bottles 500, 1,500, 2,250 and 3,000 ml) and syrup room; and Formosa — Line 3 (returnable glass and PET bottles).

Because unions play such an important role in Argentina, representatives of the unions form part of the ITFs.

The next step was to train the three Implementation Task Forces (ITFs) to implement the Stage 2 foundation TRACCs. Because unions play such an important role in Argentina, representatives of the unions form part of the ITFs. Previous experience with Administration Participativa (AP), an Arca improvement program, proved to be a good predecessor to the Teamwork TRACC since many teams had been formed prior to the introduction of ACCM. A big difference with the Teamwork TRACC, however, is that with AP the work teams meet weekly, while with ACCM/TRACC team meetings are held on a shift basis. Another difference is that with AP one of the team members temporarily takes up the role of facilitator and this role is rotated among the team members. With AP the teams depended heavily on management and administrative support, while with ACCM the teams have more autonomy.

So far, approximately 30 internal trainers have been certified and more than 50 people have been trained in facilitating Profit Improvement Projects (PIPs). Not only representatives from production, maintenance and quality departments were trained in this structured approach to solve problems, but also logistics, health and safety, administration, sales and HR professionals. After thorough loss and waste analyses, 11 PIPs were identified. Although most of these were related to the pilot areas, some were also defined in the logistics area.

Despite some challenges in organizing team and team leader training in a three-shift environment, all attempts have been met with success so far. Daily team meetings, supported by visual boards, are now the norm. ACCM takes visual management seriously — a logo and short explanation have been developed for every foundation best practice and are displayed in public areas such as meeting rooms and the staff canteen.

Arca-Continental-Infographic

Results
The Salta plant delivered three successful PIPs. The most successful PIP by far in terms of financial savings was the reduction of changeover time on the pilot line. Historical data showed that the average changeover time was 127% above the changeover matrix. The objective of the PIP — to reduce the changeover time to comply 100% with the changeover matrix — was easily achieved. By developing OPI diagrams, drawing spaghetti diagrams and writing SOPs on the improved changeover process, the Salta plant shaved off 15 minutes of every changeover.

The first spaghetti diagram revealed the long distances operators have to walk during each changeover; there was a lot of going back and forth between two locations. By rearranging the layout, walking distances were reduced by 50%. Operators were issued with two-way radios to improve communication and an operator was added to allow for parallel activities. The large amount of time saved per month was used to bottle more soft drinks to accommodate the increase in demand. This successful PIP is now being replicated to another bottling line.

By rearranging the layout, walking distances were reduced by 50%.

Another very successful PIP that the Salta plant carried out was reducing the loss of the most important raw material for soft drinks production: sugar. Before starting the PIP, the average loss in the syrup room was 0.7%. By improving awareness of the costs of this loss to the operators, making small adjustments to the process and developing SOPs, the objective of 0.58% was achieved.

On top of this, a company-wide PIP is underway to reduce consumption of thermo and stretch film, used for wrapping one-way bottles (e.g., to form six-packs) and pallets. Standards are set in one plant and the other plants have to comply with these standards. Savings of 2.1 % in the use of film have been estimated as a result of this PIP in the Salta pilot. This means a substantial reduction in material costs.

The newly formulated PIPs in Salta are not only focused on the manufacturing process, but are also applied in the logistics area — predominantly to reduce loss of finished products in expedition and loss of returnable bottles in the market.

Arca ContinentalThe Tucuman plant has completed four PIPs. The most successful PIP in terms of financial savings was a reduction in loss of empty returnable bottles (6.2% to 5%). By mapping and measuring the process flow from beginning to end, many points of loss were identified. For instance, three unknown holding points in the value chain were uncovered, so the inventory of bottles in the market, plants and warehouses was actually bigger than anticipated and the relative loss therefore less. Besides the high costs of package material like bottles and cases, the supply situation in Argentina is not very stable. (At times, the production plan has to be changed because of a lack of returnable bottles of a certain size.) A positive outcome of this PIP was a better adherence to production plans.

Another important PIP was the reduction in loss of finished products once they had left the plant. A reduction of 4% was achieved. The newly formulated PIPs in Tucuman are extended to both commercial and human resources areas.

The use of ad hoc cross-functional teams has increased the internal understanding of business processes.

The Formosa plant also completed four PIPs successfully. Similar to the PIP in Tucuman, the most successful PIP in terms of financial savings was a reduction in loss of empty returnable bottles. A PIP was also carried out to reduce the time of mechanical line stops caused by a lack of critical spare parts. The time of stops caused by the unavailability of such parts was reduced by an impressive 63% per year.

These newly formulated PIPs are also extended to the plant’s commercial and environmental (reduction of water consumption) areas.

Besides the tangible effects of the completed PIPs like reduction of raw material costs, improvement in efficiency and higher production plan adherence, many intangible results were also derived from the PIPs. In terms of improvement projects, there is now a common language called ‘DMAIC’, which is being used to solve chronic complex problems with standardized DMAIC tools. In addition, there is a greater focus on clearly defined improvement objectives across the entire organization. The use of ad hoc cross-functional teams has increased the internal understanding of business processes. Finally, being part of a successful PIP team has proven to be highly motivational.

An important lesson learned from the implementation of the above-mentioned 11 PIPs was to involve the Finance department from the beginning to the closure of the PIP — firstly to validate the estimated potential savings and later on to confirm actual savings achieved.

COMPANY BACKGROUND
Based in Monterrey, Mexico, Arca Continental was formed in 2011, when Grupo Continental merged with Embotelladoras Arca. The conglomerate is now the second largest Coca-Cola bottler in Latin America and boasts an annual turnover of over US$4 billion. Arca Continental produces, distributes and sells nonalcoholic beverages under the Coca-Cola brand, as well as a range of snacks and confectionery under the Bokados, Inalec SA and Wise brands in Mexico, Ecuador and the US, respectively.
The company caters to 53 million consumers within its Coca-Cola franchise territory, which encompasses northern and western Mexico, Ecuador and northern Argentina. Boasting a workforce of over 39,000 employees, Arca Continental’s network includes 28 bottling plants, 110 production lines and 214 distribution centers.
The company’s Argentinian operations comprise three bottling plants, located in the provinces of Salta, Tucumán and Formosa, and 25 distribution centers. This division employs 2,200 people and supplies nine million consumers (approximately 23% of the Argentinian population) with 120 million unit cases per year. Arca Continental Argentina’s product portfolio includes Coca-Cola soft drinks, mineral water, flavored water, juices, energy drinks and isotonic drinks.

 

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.

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