Chain, keep us together: supply chain challenges in the drinks sector

As Britvic‘s Supply Chain and Operations Director for the GB business, Nigel and his team take the lead the moment a contract on materials or ingredients is signed. This includes importing products, forecasting how and where the company will use them, storage, planning, production and distribution.

Not only is there over 1,000 people working in the GB supply chain, the company also has four production sites in Brazil, two in Ireland and one in France. Nigel’s role focusses on the service Britvic supplies to its stakeholders, cost, quality, inventory levels (which are becoming increasingly important), and future-proofing the supply chain through establishing a long-term strategy across the company’s warehousing, transport and production facilities.

Can you explain the scale of operations at Britvic and how that impacts your supply chains?

NP: In GB we have production sites in Beckton in East London, Rugby and Leeds, which all feature warehouse facilities, while we also have a national distribution centre (NDC) in the Midlands in Lutterworth.

In those three factories we have 20 production lines, making everything from glass bottles, bag in box, cans and PET, producing 200 million cases per year. We have 400 suppliers across 40 countries, providing both wet and dry ingredients. In terms of inventory, we have the ability to hold 125,000 pallets in our warehouses at any one time.

To give an idea of how much investment has gone into our facilities, 13 of our 20 lines are either brand new or have been replaced in the last five years. We have another production line in GB which we lease and one warehouse which is third-party logistics; everything else we own ourselves. There have been several factors that have impacted manufacturing supply chains in recent years.

Thirteen of our 20 lines are either brand new or have been replaced in the last five years – Nigel Paine, Supply Chain and Operations Director, Britvic

How has Britvic responded?

The last few years has been interesting to say the least. Many of the 40 countries that we import from are in Europe, so Brexit certainly slowed down the availability of materials, which in turn lengthened lead times.

There were additional delays due to administration and for the first six months there was a lot of disruption which required forward planning. The real pressure, however, was on the increased levels in stock holding of raw materials to make sure we could cope with any disruption, which in turn placed added stress on working capital. Fortunately, the situation is nearly back to where it was pre-Brexit in terms of supply chain impact.

On top of that we’ve also had to deal with COVID. It’s important to mention that at no time during the pandemic did we shut down a single production line, and we’re really proud of that. That’s down to the incredible attitude from the staff who really wanted to succeed.

In truth, the biggest issue associated with COVID was around the engineers who we need to bring in to service the high volume of equipment we have. We tend to share them between our sites, or we use our OEMs, particularly from Europe.

Therefore, getting them onto site at the relevant time proved difficult due to the COVID-19 protocols and restricted travel from Europe, etc.

Of course, the most recent disruption, which is still ongoing, is the constraints that have been brought about through the conflict in Ukraine. We’ve felt that through increased fuel cost and even uncertainty around fuel availability – we’ve had a number of planning meetings in case gas lines get shut down, and those use up time and resources. Even though there haven’t been any issues around fuel availability thus far, we must have contingency plans in place.

What has really disrupted the production of soft drinks, which will also ring true for a lot of food manufacturers, is the availability of carbon dioxide. That supply line has been disrupted several times over the last few years. However, Ukraine is a huge crop producing nation and therefore, uses a lot of fertiliser. A by-product of that is CO2. So, the knock-on effect of the conflict has become quite important for us and we’ve had to work differently.

We’ve had to increase our storage of liquid CO2 on-site to make sure that we can cope. We’ve looked at different partners and getting production from other industries that aren’t so reliant on gas.

In addition, anyone that has ordered a new car in the last few years will know that the lead times are currently horrendous. So too are the motors on production machines and PLCs. Getting spare parts for equipment is really hard so again, when we can find spare parts, we’re looking at increasing our stocks just in case there is future disruption.

However, in my two and a half year tenure as supply chain director, the biggest impact on the supply chain came around 18 months ago from the European-wide issue where we couldn’t get enough drivers within the GB transport industry.

This stemmed primarily from the tax rules on foreign workers in Britain. That had a massive impact on the availability of transport – not only for us to reach our customers, but the transport of materials and for our customer base to deliver to end outlets. This created a backlog throughout the entire supply chain, to say nothing of the cost involved. It quickly became a seller’s market so even if you could find the transport, the cost was very high.

Across its GB factories, Britvic can boast 20 production lines, making everything from glass bottles, bag in box, cans and PET, producing 200 million cases per year

We were able to solve this challenge because we have a great transport partner and we worked really hard with our customer base around extended lead times; adding on a day from order to delivery so that everyone could work within the constraints. We also worked with our suppliers to share transport where we could.

It was all hands on deck and it’s changed the market going forward. Working in partnership with customers and suppliers was so vital during those challenges and it’s opened the door to do more in the future.

What technologies has Britvic deployed to advance your supply chain?

Over the years, we’ve embraced automation on a large scale. Two of our four warehouses are completely automated, lights out facilities, from end of line all the way to back door of transport. I’d like to do the same at our other two facilities in time and we’re developing that proposition as we go forward.

I mentioned that 13 of our 20 lines are new over the last five years, and it’s great to have that new equipment, but we’re currently playing catch up when it comes to digitalisation.

Our key focus in recent years has been to address three primary areas. Stage one was to deploy energy and water meter monitoring, so that we could see where it’s being used and whether that could be more efficient. That’s been rolled out and put into action.

For stage two we’ve been working with a third-party called Lineview Solutions to develop OEE monitoring across all of our 20 lines. We’ve started rolling that out over the last few months, and we’re working to quite an aggressive schedule; we’ll hit all 20 lines within a 12 month period.

Stage three of where we want to take digitalisation is to have slightly more future-focused thinking around condition-based monitoring. Effectively, that will mean putting monitoring in place to check for factors such as engine and motor vibration, etc. I expect that to roll out at the back end of our OEE monitoring.

Where we’re spending a lot of time on technology, and working with our partners, is around packaging. There’s a huge need within the soft drinks industry on recycling and recycled packaging. We do a lot of work with third-parties in terms of investing in chemical recycling and making sure that we can use more and more recycled materials within our production facilities.

How can manufacturers manage their supply chains effectively?

Since I’ve been involved in the supply chain at Britvic, there’s been a lot of investment. That’s important because the world’s moving fast; whether it’s around technology and equipment or the materials you want to use in the future, continual investment is crucial.

Equipment and technology are of course key areas, but I would also really encourage others to look at people development. By creating a blend of individuals from different functional, industrial and cultural backgrounds, it brings with it alternative ways of thinking which has been really useful for me to help our teams look at demand signals and work with our customer base.

What is also vitally important, particularly when addressing the issues that we’ve discussed, is working with partners. All the progressive companies that I see and work with value partnerships – and it’s not just something they say, they really work hard at it. If I think about our best partners, we have shared goals around performance, sustainability, wellbeing etc and we’ll also go out into the community together, to build and develop relationships.

Therefore, my advice to other supply chain directors is to value partnerships. Speak to as many people as you can to increase your network. Be curious to get insight and new ideas and don’t assume that everything is sorted. If we’ve learned one thing in the last two and a half years, it’s that you never know what’s going to happen tomorrow, and you have to be ready. Speaking to other people makes things easier.

Britvic’s sustainability ethos is ‘healthier people, healthier planet’

How integral is Britvic’s supply chain strategy to its sustainability goals and how are they linked?

Our ethos for sustainability falls under the title of ‘healthier people, healthier planet’, which gives you an idea of the angles we’re looking at. Everyone in Britvic, and especially in the supply chain, has an objective around sustainability goals which is targeted into bonuses.

There are many reasons why that is important. Looking at the planet element, some of the key areas we focus on are packaging, carbon output and water usage. From a packaging point of view, that all sits within the end-to-end supply chain. And what we’re trying to do is reduce packaging wherever possible, which could be as simple as lightweighting a bottle or a can.

It could also be removing excess material in secondary packaging, which could take the form of removing trays when we’re packaging our cans or moving to what we call ‘beyond the bottle’.

To give you an example, we do a lot of work on ‘bag in box’ dispensing where we take some of our brands away from standard bottles and into a new format. That has been pushed out to one of our premium mixer products, London Essence, which will help remove an amount of glass packaging in the industry.

In addition, 100% of our products can be recycled and we’re also increasing the amount of recycled material that we’re actually using in those products. For example, our biggest pack format would be cans – 74% of the material going into those cans is already recycled at the point of use and it is 100% recyclable after use.

The vast majority of the carbon that we use (direct emissions) comes from our supply chains, so we’re doing a lot of work around regimes in production and planning philosophy, for example, establishing longer runs to have less cleaning in place (CIP), and therefore use less energy.

We’re looking at the fuel we use in our trucks to see if we can increase the amount of HVO that we’re using, and increasing the amount of train transport for our product. We’re also paying close attention to how we choose our production locations. The vast majority of products we make are multi-site, so we are trying to make them as close to the customer base as possible to reduce our distribution in the final leg.

And finally, we measure water as the ratio we use against every litre of final product. This is really important in a location like Brazil, where there is a high level of stress on the water ecosystem. However, it’s still important for our operations in the GB part of the business.

We recycle as much as possible. Grey water post-rinsing is put back into cooling systems, and where we can, we avoid using water for things like cleaning initial foreign objects out of materials and use air rinsing instead. Some of the older technology on our production lines would have used water to cool down motors, so we’re also moving away from that method and towards air cooled motors.

Beyond factory operations we’re working in the community, and we’ve partnered with an organisation called The Rivers Trust, aiming at improving the local waterways.

What are Britvic’s supply chain plans for the future?

I wish I knew what the future will hold. I’m really excited that we’ve really kicked-off our digital manufacturing piece over the last couple of months. I think that’s going to make a big difference and I’m driving that hard; that’s my number one goal.

Beyond that we’ve just updated our sustainable sourcing strategy for our agricultural ingredients. And we’ve just become a member of the Sustainable Agricultural Initiative Platform, which is helping find solutions that will meet principles around ingredients like fresh fruit.

And finally, a key element of the business moving forward will be the ‘beyond the bottle’ piece. That will involve alternative packaging and looking at how we take water from plastic bottles to reusable materials and more than one use vessels. Helping develop the technology behind that is the future for now, but who knows what’s going to happen tomorrow?