Tim Brown talks to Richard Lloyd, global manufacturing director at Accolade Wines about his high aspirations for the site and what it means to win The Leadership and Strategy Award at The Manufacturer of the Year awards.
Richard Lloyd says his vision for Accolade Park has always been 100% clear; to set the benchmark for wine packaging and make Accolade Park the best facility of its kind in the world. In his words: “Someone has to be the best, why shouldn’t it be Accolade Park?”
To help achieve this, Lloyd has worked on embedding the five Lean Principles at the core of all activities whilst targeting all employees to be aligned, engaged and empowered to improve the site in every aspect day after day.
Richard Lloyd joined Accolade Wines, formerly Constellation Brands, in 2007 from Imperial Tobacco where he had quickly risen through the ranks to become Production Manager, having started as a graduate trainee.
He holds a BEng in Manufacturing Engineering from Nottingham University and recently completed an MSc in Lean Operations Management. He commenced work at the Bristol wine production site as packaging manager where the success of his leadership and improvement programmes have led to him taking the role of global manufacturing director.
CRP Print and Packaging is one of Europe’s leading independent print and packaging groups and the market leader in the design and manufacture of bag in box (BiB) packaging.
An on-going investment programme in the latest printing technologies, using unique materials and supported by the most up to date laboratory means the CRP is regarded as a technical centre of excellence for BiB packaging. Based in Corby, Northamptonshire, CRP has developed an award winning reputation for innovative products for leading wine brand owners in this speciality market.
A culture of working in true partnership has been a feature of trading with Accolade for more than ten years. The two companies work closely on continually improving product quality and service, to together build a reputation for expertise and acute customer focus.
CRP is proud to have a mutually trading relationship with the team at Accolade Park.
He says key to their success is the transition from ‘push’ to ‘pull’ based Lean, stating: “As in any business when we started the workforce looked to the management team to tell them what to do – a classic ‘push’ or ‘command and control’ system. Over time as we have encouraged the workforce to develop their capability to solve problems themselves, the leadership has been increasingly facilitative and has a key role in driving accountability and ensuring alignment and standards are met.
“It’s a big ask, but something many of our managers have delivered brilliantly. We aspire to a situation where our teams have the information, the capability and the confidence to make great decisions on the shop floor – so they can respond appropriately and effectively as conditions change. They solve problems, they create new solutions, they ‘pull’ our business forward to continually improved performance.”
The success of this approach coupled with the bespoke Accolade Lean Business Model was recently recognised when the company won the Leadership and Strategy Award at The Manufacturer of the Year awards held in November 2012.
“In the last 12 months, 75% of the employees at Accolade either changed department, shifts or teams to optimise our cross skilling, team composition and working”
The improvements achieved through the Accolade Park management model have been great, as has the feedback from industry and customers. As a result the company’s board have now set Lloyd the task of replicating the model globally. Indeed the company want its entire operation, from its Australian vineyards to its US-based production facilities, to be influenced by Lean in the same way as Accolade Park and for this internally designed Lean model to become the company’s global standard.
A new name and an even stronger desire for progress
Since 2009, over 120 million cases of wine have passed through the Accolade Wine factory in Bristol. However, in 2011 a major change took place in the business. In February of that year its former owners, Constellation Brands, sold the company’s European and Australian operating arm to Champ, a private equity firm based in Sydney Australia.
And in June of 2011, the company was re-branded as Accolade Wines.
Currently the third largest wine company in the world, Accolade is working towards realising the true potential of the wine packaging, warehousing and distribution site.
Accolade Park, located in Avonmouth, Bristol is a 885,000 sq ft facility which was constructed to satisfy the growth in demand for shipping wine in bulk and packaging as close to the customer as possible. Instead of transporting finished goods, as was common five years ago, the company takes delivery of wine in bulk 24,000L containers and the wine is packaged in the UK.
According to Accolade, there are a number of studies which show that wine is in better condition for the end consumer if it is bottled in country of sale, as opposed to country of origin.This is for a number of reasons including less temperature variability during transit and it also allows analysis of the wine quality to be conducted closer to the consumer. Satisfying an economic and quality imperative, the site has understandably proven to be enormously successful.
“We are in discussions at the moment to see that if we were to package and warehouse for competitors, could we put on a truck, our brands, someone else’s brands and the supermarket’s own label” – Richard Lloyd, Global Manufacturing Director, Accolade Wines
Every challenge is an opportunity
Despite the enormous improvement in efficiency provided by shipping wine in bulk, a continually increasing price competitiveness in the wine market coupled with the impact of high alcohol duty means that as a ratio of turnover, profit for the wine packager is relatively low.
Champ, who now own 80% of the company (Constellation has retained 20%) entered the market fully aware of the economic conditions. Strategically, Accolade is focused on driving increased profitability through the development of strong partnerships. The major supermarkets have been a particular focus and Accolade not only supplies them with product but also provides an additional service element and an incredibly responsive level of service and logistical support.
“At the moment we are packaging for Sainsburys, both our brands and their own label products,” says Richard Lloyd. “We also package some of Tesco’s own label products and we are in discussion with several others. We are looking to be the supplier of choice to the supermarkets and not just trade on commercial terms. So we intend to trade on our supply chain excellence at this site.”
Indeed, the popularity of Accolade’s offering is not just limited to its customers. For a large proportion of the wine companies that have a sales footprint in the UK, it not economically viable for them to package their wine in country of origin any more.
“The average price for a bottle of wine in the UK is just over £5,” says Lloyd. “The difference in cost in the supply chain of shipping in bulk versus finished goods really means that if you’re trading at the £5 price point, the margins become almost non-existent if you’re shipping in finished goods. As a result we have a number of our competitors currently knocking on our door to use the facility.” Indeed, in July Treasury Wine Estates signed a deal agreeing to have Accolade package its European portfolio at Accolade Park on a long term contract.
A closer look at Champ
Looking at Champ’s recent history, the firm found success with a similar acquisition in the beer industry when it purchased United Malt Holdings (UMH) in 2006.
Following the purchase and with the guidance of Champ, UMH leveraged its already impressive brewing experience and began to sellmalt to brewers and distillers made according to the customer’s exact specifications and requirements. The company was able to sell malt at a higher price because the specially made malt helped customers produce better products for less.
When UMH was sold to GrainCorp in 2009 for $655m AUD (approx £430m), Champ said the sale provided a return of 4.5 times the $90.5 million in equity invested, an internal rate of return of 80%.
The challenge for the company now is to choose the right partners. Finding itself in an enviable position, Accolade is looking to utilise this opportunity to not only grow its business but also drive down its own costs.
“When a truck leaves here heading for Sainsbury’s it has Accolade branded products and Sainsbury’s own label. Therefore we manage to get a full load every time, thus being more economical in terms of fuel costs,” says Lloyd. “We take an order on day one and deliver it on day two, seven days a week. If you operate that way you can optimise your load fill and offer an exceptional level of service to your customers.”
The company is looking to expand that philosophy even further. “We are in discussions at the moment to see that if we were to package for competitors, could we put on a truck, our branded, someone else’s branded and the supermarket’s own label. That is a very attractive offering for the supermarkets and that is important for us because that becomes another differentiator in terms of our relationship with them,” says Lloyd.
Champ very much sees the manufacturing supply chain element of Accolade Wines as a unique selling point which can be leveraged. Demonstrating an impressively functional form of participatory economics, by trading with customers, suppliers and possibly even some competitors on a long term basis, the company’s approach could in fact be economically beneficial to all parties as well as the environment.
From an operators standpoint
For many employees, being purchased by a private equity firm may be a cause for concern. But private equity has undergone somewhat of a renaissance over the last 10 years where adding value to purchased businesses is now recognised as the best way to generate growth.
According to Lloyd, from day one Champ has not only invested heavily in the site but has also continued the site’s long tradition of employee engagement, which again was another reason for the company’s win in the Leadership and Strategy category at The Manufacturer of the Year Awards. “In the first month Champ spent over a million pounds on robotic palletisers and new packaging equipment for the Accolade facilities. From January this year we will be the only site in the UK that can package glass, from the small 187ml bottles up to 75cl as well as bag in box, following further machinery investment”
From the outset Champ also ensured it communicated its plans directly to the staff. Lloyd says there was even an example where members of the Champ team stood at midnight in front of an entire night shift crew to introduce themselves and explain their visionin person.
Richard Lloyd says he has utmost faith in the company’s new owners. “If anyone goes and looks at the history of Champ, they have a very impressive record of improving businesses . We are going to be in a better place in three to five years time or whenever it is that they decide to move on.”
Skills to fit the bill
Accolade Park is set for expansion. Currently employing just over 500 staff, Champ has signed off on the recruitment of an additional 50 employees which will mean that from March 2013, the plant will expand to run its bottling operation 365 days a year, 24 hours a day.
The site has always been 365 days a year operation in terms of deliveries out of the warehouse but in terms of packaging it only operated 24 hours a day during peak periods such as the three months leading up to Christmas.
“We have found that out in the market it has become harder and harder to go out and find engineers,” says Lloyd. “So of these extra fifty employees that we are bringing in over the next six months as we move to operate 365 days a year, over half of the engineers for that recruitment will be graduates of the site’s engineering apprenticeship programme. So we are starting to grow our skill base organically.”
In the last year when positions have become vacant, 45% of job vacancies have been filled from within and the vacated jobs are back filled using external applicants. Of the remaining 55%, the company has been able to inject new blood into the site and has, over the last two years, hand-picked new staff members from the soft drink, dairy, pharmaceutical and aerospace industries.
According to Lloyd, the company has really been able to bring alive the age old concept of putting their people first and this commitment was also proven by the company’s success in at The Manufacturer of the Year awards in November where it was shortlisted in the People and Skills category.
Having only full time employees working on the packaging line, Accolade has been able to justify considerable investment in its entire staff. This has allowed the employees to develop professionally and given them the skills necessary to take ownership of the company’s improvement goals.
Every staff member at the Accolade site is certified with a wine qualification as the company has the firm belief that the staff should understand the product they are packaging. In addition, Accolade has made further training available to not only management but also the broader employee population.
In the last 12 months alone, 60 staff have undertaken an NVQ in business improvement techniques, a course designed around the site’s Lean principles.
“We’ve worked with a college to bespoke the NVQ training to our needs so there are modules in there which involve our lean methodology while satisfying the formal qualification. If we are going to be world class, it has to be the majority of the 500 people working here that will lead us and pull us to where we need to go,” says Lloyd.
The NVQ is a 12 month onsite course where staff are released from their normal duties for several days per month. They work in groups of 10 on live projects whilst completing the coursework modules. Each group has a departmental manager sponsor and Richard Lloyd himself sits in on quarterly presentations from teams on the progress of their projects.
A continuous appetite for improvement
Including the work of the NVQ projects, Accolade has developed an 18 month roadmap to improve processes at the site. In total 28 projects have been identified with a total of 12 running at any one time. Each of the current dozen projects is then presented visually in the relevant area of the factory so that all staff are made aware and kept abreast of developments.
Every person is involved with the major improvement projects in their department. Lloyd says that this is very important to ensure alignment in the organisation and says that he has complete confidence that each and every staff member is aware of the core problem which their department is currently focused on improving using the DMAIC improvement process. The DMAIC improvement cycle is the core process used to drive Six Sigma projects.
The high level of involvement and success at delivering successful returns from its continuous improvement programme saw Accolade shortlisted for the World Class Manufacturing award at The Manufacturer of the Year Awards.
One of the recent successes at the plant involved the reduction of wastage in the extraction process. According to Lloyd, when product is extracted from the bulk packaging vats, it is a recognised industry standard that about 120 litres of wine will remain trapped in the bag.
“With it being less that 0.5% of 24,000L delivery, it has been something that the industry globally has accepted,” says Lloyd. “With the amount of volume going through this site, we thought we needed to challenge this.”
The bulk wine containers are a multi-layered container that features a very strong oxygen barrier – oxidisation being the natural enemy of wine. But when the container is emptied, it ends up with a number of creases in the bag trapping the final bit of wine being extracted.
The solution was that when a bag is close to being empty, it is refilled with nitrogen (which does not harm the wine and indeed actually helps prevent oxidisation) to remove the creases. A mobile crane is then employed to lift and tilt the bag so that the majority of the remaining wine is captured. Now only 15 litres are left in the container, a saving of 105 litres per container.
“This is a solution that was found and designed completely by the tank house technicians,” says Lloyd. “This year it means we are going to be saving over three quarters of a million litres of wine with over 8000 containers being emptied.
“It is a phenomenal example of a solution came out from the guys on the shop floor and we’ve worked very hard to ensure we’ve recognised the guys that have gone and done the job. That has created further enthusiasm so they are now charging after the remaining 15 litres in the bag.”
Variety is the spice of life
Taking into account the time spent as Constellation Wines, the Accolade Wines site is now four years old and Lloyd says it has reached a good level of process stability. This he says has meant that the staff are able to transition between job roles easily which provides variety for the staff and a range of multi-skilled workers for the company.
Indeed every 12 months, at both operative and departmental management level, the company opts to move people around. And the scale of the change is incredible. In the last 12 months, 75% of the employees at Accolade either changed department, shifts or teams.
“At first that causes some unrest because after 12 months, the workers have new friends and have often built a really tight team. You have to look really closely at the frequency that you do this . We’ve got the point where we think 12 months is right. Seventy-five per cent of people is a bold statement but that is why I think our rate of improvement is still continuing now in the fourth year.
“We create strong relationships between people who, when the changeover happens, can end up on opposite shifts. In those cases, we have seen that the quality of the handover is dramatically improved.”
Like fine wine, it gets better with age
While Accolade recognises that its core geographies are Europe and Australia, the company is also looking to Asia and North America to facilitate further expansion. The company has acquired businesses in both those areas in the last 12 months. It purchased Geyser Peak Winery in the USA, a distribution company in China and is currently assessing the potential for investment in a packaging plant in Asia.
Back in Bristol, Lloyd says the next logical step for Accolade Park will be to install another bottling line and it is likely that this investment will be made in the next couple of years. That will bring a further forty or fifty jobs to the site.
The successes the company has enjoyed over the last four years have been the result of a dedicated approach to core areas of the business to ensure its staff, processes and equipment are constantly improved. The recognition Accolade received at The Manufacturer of the Year awards in November 2012 is testament to its achievements and further growth and development at the company is inevitable.