Lean Manufacturing & its relevance to onshore bottling

Lean Manufacturing & its relevance to onshore bottling

from a contract bottling perspective

Three channels that use offshore packaging

• Offshore corporations that own New Zealand wineries (more than 2/3 of NZ’s wine industry)

Three channels that use offshore packaging

• Offshore corporations that own New Zealand wineries

• Offshore retailers and distributors

Three channels that use offshore packaging

• Offshore corporations that own New Zealand wineries

• Offshore retailers and distributors

• Speculative ‘Brand Engineers’ exploiting a supply imbalance and a high currency

Bottled vs Bulk exports (MAT)

Bottled vs Bulk exports (MAT)

20% up this month on last year!

Offshore Value capture

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Brand control & Producer reputational damage  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Brand control & Producer reputational damage  

Competing with yourself  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Brand control & Producer reputational damage  

Offering customers only high-value option  

Capture of Value  

Offshore Manufacture

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Brand control & Producer reputational damage  

Competing with yourself  

Capture of Value  

New Zealand capability  

Offshore vs Onshore manufacturing  Onshore in NZ Offshore

Oversight of process  

Provenance   

Linkage with your offshore customer  

Brand control & Producer reputational damage  

Competing with yourself  

Capture of Value  

New Zealand capability  

Cost 

$18.82$20.59

$18.82$20.59

$19.72

$18.82

$16.68

$20.59

$19.72

Packaging cost: NZ vs offshore:

Price Diff: %

In New Zealand $18.82 -

Australia: $20.59 +1.17 +6%

Europe $19.72 +0.90 +5%

USA (California) $16.37 -2.45 -13%

Lean Works for Wine Works

Our Enemy: Offshore Bottling

• WineWorks implemented lean into our sites 5 years ago, with a vision of combatting our new enemy: “offshore” bottling. We needed to become more efficient and cost effective.

• The key to everything is having the ability to measure your performance in all areas of your business. If you don’t know where your are, how can you find your way forward?

First: Call the engineers !!

• The following presentation is from an engineering aspect, and is in no way the only thing we needed to do.

• There is never only one thing, and changes take place in all areas of the business. HR, Planning, Logistics, Production, Transport, Procurement etc.

• Three basic legs: 5S, Visual Displays and Kaizen

Operator Setup done by Engineers

0

5

10

15

20

25

30

35

40

May Jun Jul Aug Sep Oct Nov Dec

Ho

urs

Setup Hours

Planned/Preventative Maintenance

-5

5

15

25

35

45

55

May Jun Jul Aug Sep Oct Nov Dec

Ho

urs

Maintenance

Reduction in Mechanical Failure

02468

10

1214161820

May Jun Jul Aug Sep Oct Nov Dec

Breakdowns

Engineers Call Outs

02468

10

1214161820

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Call outs

Kaizens & 5S

• Ideas are one of the key aspects of lean, and most of what we achieved in the following section came from 5S, Kaizens and team work.

• 3 basics:

Visual Displays

Kaizen 5S

Total Cost/Case

Year 1 Year 2 Year 3$1.50

$1.60

$1.70

$1.80

$1.90

$2.00

$2.10

Cost/Case

Cases Produced

Year 1 Year 2 Year 35,800,000

6,000,000

6,200,000

6,400,000

6,600,000

6,800,000

7,000,000

7,200,000

7,400,000

7,600,000

7,800,000

Cases Produced

Cost/Case vs Volume

Year 1 Year 2 Year 3$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Cost/CaseVolume

Filler Spend $

Year 1 Year 2 Year 3$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Line 1 FillerL2 Filler

Labeller Spend $

1 2 3$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

Line 1L2 Labeller

Electrical Spend $

Aug Sept Oct Nov Dec Jan Feb Mar Apr May$0

$5,000

$10,000

$15,000

$20,000

$25,000

Year1

Year1Linear (Year1)

Electrical Spend

Aug Sept Oct Nov Dec Jan Feb Mar Apr May$0.00

$5,000.00

$10,000.00

$15,000.00

$20,000.00

$25,000.00Year1

Year1Linear (Year1)

Electrical Spend

Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun $-

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

$8,000.00

$9,000.00

Year2

Year2Linear (Year2)

Electrical Spend

Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun $-

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

$8,000.00

$9,000.00 Year2

Year2Linear (Year2)

Cost/Case vs Volume

Year 1 Year 2 Year 30

0.5

1

1.5

2

2.5

Cost/CaseVolume

17 % Cost reduction

The end

Offshore advantage: Overcome by Lean Manufacturing

Price Diff: %

In New Zealand $18.82 -

Australia: $20.59 +1.17 +6%

Europe $19.72 +0.90 +5%

USA (California) $16.37 -2.45 -13%

Offshore advantage: Overcome by Lean Manufacturing

Price Diff: %

In New Zealand $18.82 -

Australia: $20.59 +1.17 +6%

Europe $19.72 +0.90 +5%

USA (California) $16.37 -2.45 -13%

+ 17% !!