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Fixing the Drinks

The client

Our client is the Australian licensee of one of the world’s best known soft drink brands and independently manufactures its own soft drinks and mineral waters. At any one time, the company has in excess of 100,000 items of drink dispensing equipment in use. These showcase the company’s products and keep them cold for immediate sale and consumption.

Approximately 20,000 are refurbished each year through the equipment service (EQS) division within the company. Additionally, this division is responsible for setting up and testing new equipment purchased from Australian or overseas manufacturers. A call centre and fleet of field service technicians keep the equipment running.

Objectives

  • The refurbishment activities of the equipment service division were carried out in each state with varying degrees of quality standards, processes and cost structures. Over the past few years there have been several attempts to streamline these services, without success or even internal agreement. Consideration has also been given to making this division a standalone profit centre.
  • An internal project team was assembled in order to assess potential options for improvement. Our firm was retained to assist the team evaluate possible scenarios and develop a business case for the preferred option.

 

“The company is marketing led with one of the most powerful brands on the globe. Repairing and refurbishing vending machines is not core business. However, it provides vital support in displaying the company’s branded products and in driving impulse sales.”

Behind the machines

The company owns a large fleet of drink dispensing equipment, with types and models sourced from a mix of local and international manufacturers. Specifications vary considerably and have changed over the years in line with the company’s marketing and branding decisions. Among other things, this resulted in a large inventory of spare parts.

Maintenance and refurbishment of dispensing equipment was structured on a state-by-state basis. Sales managers in each state had long been supported by local refurbishment and repair shops that shared sites with the bottling plants.

Transport and logistics was initiated by regional sales reps. However, they were primarily concerned with the speedy replacement of equipment, and neither saw, nor were concerned with, the costs generated by repair and refurbishment activity.

Fizzy Logic

The company’s senior management knew that the repair and refurbishment activity could be improved. They suspected that replacing the individual state operations with a national refurbishment facility would reduce cost and inventory and enable logistics to be better coordinated.

It’s the real thing hopefully..

The senior management decided to investigate the concept and commissioned GPR Dehler to assist an internal company team.

Our role was to help expedite and bring structure and discipline to the process. This enabled the team to work to agreed goals, with clear roles and responsibilities and to avoid distracting internal issues that would otherwise have consumed significant time and resources.

As several of the team members were likely to be personally impacted by the decision, the objectivity brought by GPR Dehler was considered particularly valuable in validating assumptions, identifying the benefits and clarifying the costs.

A comprehensive analysis of the existing refurbishment process, supply chain and fitout costs was undertaken. It highlighted a number of costly deficiencies. For example, batch processing was labour-intensive, workplace design lacked flow and efficiency, the total spares inventory had a very high carrying cost, few of the processes were common or standardised and each state operation had a unique mix of skills underpinned by different industrial agreements.

Things go better with…

The team investigated a number of alternatives, taking into account factors such as movement of materials, labour costs, site costs, freight options, in-transit damage etc. The conclusion was to endorse the concept of a single national refurbishment facility. The recommendation was that it be sited in specially fitted-out premises close to a major transport corridor. Sydney was considered an ideal option as the majority of dispensing equipment is located on the Eastern seaboard and Sydney is conveniently located between Melbourne and Brisbane.

It was deemed that the new facility would increase the efficiency of the refurbishment process by 35%; drive down spares inventory by around 40%; provide a platform for expansion of the business to meet the requirements of organic growth and acquisitions; and improve customer responsiveness by integrating customer service, refurbishment and field service functions.

Furthermore, the new facility would be able to meet all of the client’s future needs and would be sufficiently cost-competitive to allow the business to seek and win external refurbishment customers.

Insert coins and press

Once the broad benefits were clarified, we set about defining the changes required to bring the national facility on line. This included designing and developing:

  • A well-planned refurbishment process that integrated logistics, job planning, inventory management. Regional depots to control the distribution and transport of dispensing equipment.
  • A method for managing national inventory.
  • A management operating system that includes appropriate performance measures.
  • Integrated information technology and control systems.
  • Appropriate organisational structure.

The factory was specified and designed in detail in collaboration with an industrial designer. This covered everything from overall dimensions of the building to specifics such as where to site loading and unloading docks, the number of levels, where to locate the drains, the required power supply, right down to the positioning of air conditioning vents.

Show it to the board

The project team completed its task on time, constructing a clear, detailed and sound business case for senior management to present to the Board. This captured the total costs of the new facility, the projected financial and customer service benefits and demonstrated that the company would recoup its investment in approximately two and a half to three years.

At the time of writing, a decision from the Board is pending.

Easy on paper

This project, like many of our engagements, looks straightforward on paper. The reality is far from it. Our skill is not just in identifying problems and designing solutions, but in making those solutions work often in a tough business and cultural environment.

GPR Dehler has an excellent record of implementing change programs in Australia, New Zealand, Asia, Europe, North America and Southern Africa. Everything we do is geared towards achieving results not writing reports. We have the management and planning skills as well as hands-on consultants with experience to overcome obstacles and transform good ideas into effective and successful programs. Significantly, we do this with minimum disruption to our clients’ business operations.