Improving Logistics for a Global Brewery
See how BCG helped improve cost-efficiency in manufacturing and supply chain for a global brewery and beverage company.
Our client is a large global brewery and beverage company that needed to improve profitability, despite margin pressures. The company's main problem was that it was underperforming by market standards relative to its peer group. This included:
Low return on investment (ROI)
Unimpressive return on sales (earnings relative to sales)
Bottom-level asset productivity (sales relative to net assets)
The client had defined operational excellence as a must-win battle. The company needed to improve profitability to meet market expectations and wanted to transfer successful production-excellence methodology to the logistics department.
BCG was asked to merge operational excellence with the strategic agenda to improve cost-efficiency in the manufacturing and supply chain, and also to define and roll out the program.
We applied a range of analyses across different areas to highlight best practices that could help achieve significant improvements in logistics effectiveness and efficiency, while simultaneously developing capabilities for continuous improvement. The project was designed to take place in four phases:
Define focus areas, scope, and structure; prepare project organization
Establish the fact base and analyze the root cause for the current situation; look at specific areas of company activity; identify opportunities and improvement potential
Separate initiatives by those requiring consultation with unions, negotiating with customers, or investment; verify potential improvement levers, develop solutions, plan implementation, and establish a measurement and followup system
Improve productivity; boost the rate of change
After looking at eight areas of company activity—including brewing, filling, warehouse, maintenance, utilities, and planning, across a group of nine countries—we identified 28 potential improvement levers.
We presented a final list of ten recommendations, which represented up to 85 percent or more of all possible cost savings, and assigned an expert within the client company to manage each. The client experts relied on BCG and the logistics excellence handbook to guide them through project execution.
The impact of these recommendations included:
Depot network adjustments
Increased driver productivity
A new management tool in depots
A new planning tool
Vehhicle capacity adjustments
Increased labor productivity in depots
New in-cab technology
A new warehouse management system
Implementation was completed on track, as every location reached its improvement target. The company's top five locations achieved, on average, 118 percent of their target savings after 18 months. Overall the program overachieved targets slightly and generated a recurring bottom-line impact of € 90 million.
As a result of this project, the client:
Established a reliable benchmarking approach to assess potential for each country
Created strong program credibility through trainings and kaizen events
Ensured bottom-line impact by rigorous program management