|Every minute of every day, more than 140,000 bottles of SABMiller beer are consumed around the globe. To keep up with that demand, the global brewing giant needs to produce beer at a commanding rate. And it does — producing over 200 brands in more than 80 countries with a combined sales volume of more than 8.5 million hectoliters. But although speed and capacity are important, they are not the only factors in determining brewing excellence, says Ed Koch. In this exclusive interview with CCi, Ed reveals how SABMiller — now part of AB InBev — managed to scale and sustain continuous improvement at a global level with remarkable success.|
Traditionally, manufacturing excellence and continuous improvement have been treated as projects focused on costs and efficiency improvements at individual manufacturing sites — where legacy cultures and systems have often hindered the building of capabilities and culture to anchor and sustain performance improvement across the manufacturing network. As a consequence, many manufacturing executives find it difficult to connect all the dots across localized manufacturing business initiatives that holistically impact and enhance global business performance.
In contrast, SABMiller implemented a standardized approach and framework to continuous performance improvement that extend beyond traditional CI approaches. But how did they manage to scale and sustain continuous performance improvement at a global level? “The key challenges,” according to Ed, “were similar to any multinational, such as ensuring clarity around common objectives, aligning and motivating people to achieve extraordinary results for the organization, and securing and retaining talent.
We overcame these by establishing accountability through a belief in people. Core to our culture and our ways of working, performance management is how we manage the performance of teams and individuals against goals through personal accountability. This drives execution of the business strategy in a way that shapes a high-performance, high-engagement culture and ensures sustainable business performance.
It was in the late 1990s when SABMiller’s senior leadership set an ambitious goal to be the industry leader in all categories. An approach to take TQM and lean strategy to the next level was needed to achieve this goal. The result was the establishment of a single system focused on developing a shop floor continuous improvement approach and creating links with the end-to-end supply chain as a way to decrease total variability and replenished cycle times. This system – which employed the CCI-developed TRACC Solution to build internal capability and replicate sustainable CI best practices and learnings – became the precursor to what is known today as the SABMiller Manufacturing Way, SABM’s foundation for manufacturing excellence.
Because of the varying maturities of individual manufacturing operations, the Manufacturing Way is not intended to be a step-by-step guide to implementing manufacturing excellence. “Instead”, says Ed, “it is a leader-led knowledge and process framework that lays out the organizational models, competencies and standardized work that must align with and drive business performance.”
It is a leader-led knowledge and process framework that lays out the organizational models, competencies and standardized work that must align with and drive business performance.
– Ed Koch Global
Supply Excellence Director, AB InBev (formerly SABMiller)
SABMiller takes a three-stage approach to implementing and sustaining the Manufacturing Way.
Stage 1: Readiness
“This is the most crucial and difficult stage of the implementation,” Ed observes. “It focuses on organizational design and the alignment of multiple functional roles to establish stability and reliability, and create a baseline for the future consistency of manufacturing performance.”
An assessment of the maturity of the 11 individual work practices within a site is conducted with an internally developed tool called the Global Evaluation of Manufacturing (GEM). This tool has its roots in the TRACC Integrative Improvement System, a standardized and replicable improvement framework that delivers sustainable business improvement results through best practice and work process improvement. TRACC was initially used to start implementations in select markets (first 2-3 years).
GEM is the basis for benchmarking current performance maturity — an important input into the operational excellence plan — and is mapped against a set of key performance indicators (KPIs) that represents SABMiller’s output on a global scale. These KPIs are aligned across the key functional domains of quality, cost, productivity and sustainability, including the SCOR processes of Plan, Make, and Deliver for the supply chain. This alignment ensures breakthrough performance across the end-to-end value network.
The comparison of site maturity against overall business performance is what ultimately identifies the targeted functions that need to reduce losses and improve efficiencies. Thus, the resultant output and gap analysis of the maturity assessment becomes the burning platform for change. The challenges in this stage are more cultural than procedural.
“Communicating what needs to change and why is paramount. This requires not only educating site leadership teams on the principles of the Manufacturing Way and how SABMiller operates, but also instilling confidence that there are resources and support behind them for this journey. This buy-in from local leadership teams is essential, since it often becomes the steering committee for the deployment of future stages of the Manufacturing Way.”
To view an example of a typical Manufacturing Way adoption in action, refer to the case study Uganda’s Nile Breweries kick-starts SABMiller’s Manufacturing Way.
Stage 2: Foundational
In this stage, the emphasis is on aligning internal supply chain activities within a site by deploying the particular capabilities and competencies that become a foundation for continuous improvement over time. To do this, a site is divided into its natural work teams (such as bottling, packaging and maintenance) so that the baseline capabilities (5S, lean and safety) and basic work practices (maintenance and quality) that were identified for improvement during the initial maturity assessment can be implemented.
Additionally, SABMiller uses a rigorous “Training of Trainers” approach — based on the TRACC methodology — to develop specific skills and competencies to help drive collaboration and learning between functional workers. This is critical for individual and team functions. The deployment of new or improved work processes also contributes to the loss reduction and efficiency gains laid out in the initial maturity assessment.
Stage 3: Growing Excellence
Site-level capabilities are extended to the value chain and incorporate external stakeholders, such as suppliers and clients. The focus in this stage is on balanced improvement across all aspects of product supply. In country operations, where there are higher degrees of maturity, end customers and warehousing functions can be included. “There’s been tremendous improvement in Latin America, across Europe, and in Africa and India as well. In many markets, this is particularly impressive as some of the breweries operate very efficiently with older equipment,” adds Ed. “This goes to show that getting things right is not so much about having the newest technology, but about the right people with the right approach.” (A fitting example of this is the Industrias La Constancia (ILC) brewery and soft drinks bottler in El Salvador. See the case study, Historic award for SABMiller’s ILC brewery.)
“For SABMiller, this phase is ongoing,” Ed asserts. “Each brewery has a role dedicated to the Manufacturing Way. Additionally, the company’s leadership continually evaluates the GEM maturity in its operations to understand the functional interdependencies and performance improvement opportunities. A critical requirement is to maintain the alignment of manufacturing performance with the end-to-end supply chain.”
The implementation time frames for each stage vary, and are dependent on the size of the plant, the complexity of its operations, the cultural propensity to transform and the existing maturity of capabilities.
SABMiller’s integrated performance improvement has been a multiyear journey and has paid substantial dividends. The tactical and measurable gains from a consistent and systematic way of deploying manufacturing capabilities added substantial impetus to SABMiller’s meteoric rise to become the world’s no. 2 brewer.
At a functional level, the group has seen a year-on-year qualitative improvement in the following areas:
- High levels of employee engagement
- Standardization through shared learning
- Accountability at source
- Leaders who walk the talk
- A strong continuous improvement ethos
Quantitative gains include:
- More than US$200 million in manufacturing savings (net P&L benefit) over two years F15-F16
- Significant improvements across the board in quality — 25% reduction in water usage, 25% reduction in energy consumption, 15% in extract loss
- Increasing machine efficiency to support 10% to 15% volume growth helped delay capital investments in capacity by four years
- Packaging line efficiency increased 15% over a four-year period in one large brewery
- Certain plants have shown improvements of up to 33% in EBITDA, while simultaneously improving customer service and reducing working capital
According to Ed, SABMiller wanted to establish a “mindset of restlessness” in order to achieve operational excellence the SABMiller way, “… as we could definitely show a link between having the right manufacturing practices and achieving the right results.” The proof is indisputable: Leading organizations such as SABMiller that successfully navigate a systematized, continuous performance improvement journey have seen superior organizational effectiveness and capabilities as a result.
|Ed Koch is an operational excellence professional with over 20 years’ experience in implementing multisite lean programs to improve manufacturing performance. He started his career with Unilever after which he joined SABMiller. Over the past five years, Ed has led global operational excellence programs for SABMiller to improve quality and service while delivering manufacturing benefits in excess of US$500 million. SABMiller has since been taken over by AB InBev, a deal nicknamed “Megabrew” by industry analysts. Ed’s new title is now Global Supply Excellence Director, where he is primarily responsible for driving excellence into the global supply chain for the benefit of customers, employees and shareholders. He is based in the UK.|
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